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Deposits--always require them

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Services for Real Estate Pros with Homepointe

I had a recent situation where I picked up a new account and the owner already had a tenant lined up to rent the property.  Good news right?  Not always.  In this case the owner and tenant met at a local church they frequented and agreed to make a deal to mutually benefit each other.  The owner was relocating and could not sell property.  The property is located in South Natomas and had dropped substantially in value.  The prospective tenants had shaky income and poor credit--they also needed a place to live.  Perfect match huh?  The owner convinced the future tenants to accept the property "as is" for a 12 month lease and be responsible for the following:  EVERYTHING.  They were to pay the mortgage, water, sewer, garbage, landscaping, MANAGEMENT FEE, LEASE FEE and standard management $300 reserve! 

One problem:  they hired the manager 30 days before they were to make the move and they did not take my advice to require a deposit, do a background or negotiate the deal.  On the move in day the future tenant was to pay all the money at once.  They brought in less than 40% of what was agreed to as well as a laundry list of items wrong with the home.  Yes, the owners failed to inform the manager they had already given them access to the property to paint and slowly move in. 

How many things are wrong with this story?  The biggest problem is the lack of money up front in form of a security deposit to secure the property.  Now the owner has no funds to use as collateral--or to evict, without coming out of pocket.  We as managers see all kinds of story lines unfold in front of us--even with all the warnings in the world some owners just cannot help themselves.  Owners, let me help you--contact me anytime.

James Safonov

jsafonov@homepointe.com

www.homepointe.com

 

     

Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

James * YES!!  The property owner pulled the trigger to quickly accepting these residents.  I discuss/show a property at least 3 times BEFORE I get an application and I always discuss the REQUIRED move-in monies up front.

When doing PM in CA, I required move-in monies in bank/certified funds; however, since I am now in a market that rents 3 to 4 months out, I will take personal checks for move-in monies before preparing the lease packet.

The owner wanted to take the "easy-way" out and they "did not know enough to know they did not know enough"......Challenges and opportunities

Apr 03, 2009 11:21 PM
Betty Fletcher
Fletcher Property Management Inc CRMC® * www.FletcherPM.com - Little Rock, AR
MPM, RMP - Little Rock Arkansas Property Manager

James - It is very difficult to advise clients and then watch them do something different.  Sorry you  are left to clean up the mess.  We always require the security deposit (same as the rent) in advance of move in day and in certified funds.  We do have some owners who believe that the security deposit should be way less than the monthly rent.  We explain to them the potential pitfalls of that type of policy and then if they insist, we require them to put it in writing.  Good luck and let us know how things progress with the situation.

Apr 04, 2009 05:17 AM
Jim Cheney
Saint Francis Property Santa Rosa, CA - Santa Rosa, CA
Rincon Valley Realtor 707.494.1055

No good deed goes unpunished

Apr 28, 2009 12:59 AM
Thomas R. Martin Broker/Owner ICPM
Investors Choice Property Management - Sacramento, CA
Property Management the way it SHOULD be.

I think religion and rentals are both good, but not necessarily in combination. I have yet to see a direct correlation between someone's church going habits versus their ability to pay rent.

May 06, 2009 01:18 PM