Tax Delinquent Property Allows Landlords To Buy Cheap. Post 204

Coach Mitch’s REFLECTIONS™

facebook   March 29, 2014

Editor: This question was posted on facebook.

Yes or No? In your opinion, is this onerous…

You have paid $35 application fee for new apartment, and told you got the apartment. You agree on a move-in date, and you hire a mover. You show up to give cashiers check for rent and deposit, sign lease, get keys and move in. The landlord at that time says, you can’t move in unless you agree to tell us the legal name of any overnight guests, and their home address, prior to them spending the night, or you have to pay $100 for the infraction. Is this onerous?

My Answer:  Mitchell Goldstein – Coach Mitch

As a longtime landlord I have seen how tenants, as a class of people, have become less and less responsible, for their actions, for the actions of their guests, for their pets, for their children, etc. A rental property owner has very little that they can do to defend their property – and that is the intent here.

I do understand that this is an emotional issue. I also understand that courts have ruled a tenant is to be seen as “owning” his apartment or house, including the yard around the house.

It is thought that security will cover damages. This is a myth; security does not come close to paying for the damage that “good” tenants cause, much less bad tenants. It is also a myth that landlords can successfully sue for damages. Most judges will either dismiss a landlords request for damages or require such a high bar of proof that it is not possible to prove damages unless a video of the tenant causing the damage is available. If you were a landlord, I guarantee that, after a while, either you would sell your property in disgust, even at a loss, or you would employ methods to control the actions of your tenants, such as using this lease clause, which, I agree, is in bad taste – but may be necessary!

I wrote the lease that the Schenectady NY landlords association is currently using as its template lease. It has a clause that makes the tenant responsible for their guests behavior. This landlord needs to update his lease and not spring surprises on a new tenant. I expect that a judge would find this clause unconscionable.

Writer Answers:  Mitchell Goldstein, for the first time in my life the word unconscionable was heartening to me, thank you.

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Editor: Interestingly, this online discussion had 134 inputs when I stopped watching the posts. Almost all the posts had some level of ambivalence or hostility to the landlord’s position. It was assumed that the landlord had ill intentions and tenants actions were ignored. The overwhelming sentiment was that the tenant could do what they wanted and should be able to do so without any interference. Rights to property were ignored altogether and the tenants “rights” to privacy seemed to be all that mattered. The irresponsibility of tenants seemed not to be a matter of any concern.

Caveat Emptor!

I am recognizing a very disturbing trend: that our fundamental rights to property are quickly being worn away by a view which is very socialistic, i.e. that private property is a part of “the commons.” A growing consensus feels they can have a voice in what should happen on a property. Everyone gets to put in their two cents and can determine what a property owner and tax payer does with their property.

Simply go to any town board or any zoning board meeting to see the level of empowerment that individuals feel they can assert and, in fact, that they feel obligated to assert their opinion regarding how someone’s property should be regulated, “for the public good” – because they say so.

People think their personal concerns are paramount

This is not to say that all comments or ideas are bad. It is to say that government’s proper role is to defend property, from all incursion, including the incursion from government. Look to Article V of the Bill of Rights for the idea that a man’s life, liberty and property shall be defended by government. This basic rule of The Freedom Philosophy has lost almost all virtue in the public mind. The result is the attitude that landlords are bad.

Landlording

Men long to have the security of a steady flow of income; the sort of income derived from rentals. Were it only true! I have long understood that landlording is a vastly overrated idea. The exception are units catering to the well off. The well off have the funds to pay big security deposits, to pay rents on time and to pay for the damages of partying. All other income classes do not; the middle class is just making it, the lower middle class is hanging on, the working poor live pay check to pay check and the non-working poor live off of you, the taxpayer.

There are several good rental models to work, but the ones I’m thinking of require specialized housing and specialized business plans. I would be careful with certain government subsidized housing, e.g. I have never heard any good landlord experiences with Section 8 tenants.

Invest in rehabbing people not houses

However, the government programs that cater to veterans or drug halfway houses, or homes for the mentally handicapped, etc. are programs where the real estate investor can do very well. The payments are high and professional help is expected and/or required and paid for by the program. Therefore, the investor has a steady, significant return with built in management.

I am also a fan of the Assisted Living idea. Your obligation is to be a baby sitter to the elderly, and to feed them three meals. The national average is about $3500 per month to house and feed one person. You can make onsite medical oversight available via licensed personnel at a higher cost. Figure four persons per single family house with one full time unlicensed caretaker. The income can be substantial.

Increase your margins

The tax delinquent lists have thousands of houses that would be perfect for any of these programs. Instead of paying retail for a house and having a significant mortgage; perhaps you can find a home at fire sale pricing and reduce your exposure. Contact your county Health Department and/or Senior Housing to get details about their housing programs and requirements.

See Coach Mitch’s “Ridiculously Simple System…” ™ for details.

Keep on rowing,