First Time Landlord: Needs Advice on Rental Deposit Deduction

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I don’t necessarily agree. Low rent can certainly mean that tenants do their own fixit. Some handy people do appreciate that.

But I don’t think anyone (unless you guys as landlords want to argue otherwise) thinks that the deposit should be used to recoup rent that the landlord wasn’t willing to explicitly charge. In fact, to answer your question, I would prefer that the landlord simply charge me rent rather than taking my entire security deposit, because I could make an educated decision about whether the rental is worth renting. Right? If the rent, is say, $2000, and I say, “Sure this place is worth $2000”, and then the landlord takes the entire deposit after a year, then the question wasn’t whether the place was worth $2000, but whether it was worth $2170. Maybe there was a nicer place available for that price that i’d rather have had.

Absolutely. I certainly wouldn’t consider it if I hadn’t already bought a house… at this point, I count the deposit as lost just in case.

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Teri, congrats on your new home!

Do not worry about the deposit. If PM deducts too much, you can still go to the small claim court to get it back.

Your problem is that you are too wealthy to cheat on the system. You’ll be on hook for whatever money you owed.

I had a tenant who owes me 6 months of rent. She had a husband going away with another woman and kept telling me that she would make payment soon. In the end, I had to use eviction threat to get her out, of course she promised to pay me back since I was such a great landlord. It’s already years ago and she has long stopped to respond to my request. Now even I have lost the courage to contact her again. If she was as wealthy as you are, I would have hired a lawyer long time ago. She owes 6 months of rent, destroyed the carpet and caused other damage as well. I refunded her zero deposit and sent her a large bill instead. I’m mad, not sure whether she is happy or sorry.

Teri, you should be happy with what your new home and feel fortunate that you are wealthy enough that you have to pay last month rent. You do not want to become penniless so that landlord will have no incentive to go after you.

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Were you or Are you self managing without property manager? I feel that is the issue.

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I do not have a property manager, but now I hire agent to find new tenants. I am too kind to reject borderline or unqualified tenants, which often turns bad. But after moving in, I manage myself. It’s just collect rent and make repairs.

What’s the value and cost of PM in terms of rent collection and maintenance?

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Anybody have experience with an ozone generator? My Nevada realtor recommended it…Supposed to work on all bad smells…HD has one for less than $100…

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No idea, not used.

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Never used that.

But there are user reviews on Homedepot.com or Amazon.com. I often check its score, read the reviews, especially the bad reviews. If it’s les than 4 star, be careful and read more reviews. If it’s over 4 stars, read the worst reviews to see what’s the problem.

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The reviews are good and I can always return it…Problem is it available online only…1-2 week delivery

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Cost, it depends on how you negotiate, range may be 5% to 10%, average 6%-8% depending on how good they are. Selection of PM is tough, pros and cons are there. But, once you find a good PM, there are values for his/her service.

PMs are not just collecting rent, they are you paid real estate consultant, they will balance between you and the tenants, face the first call from tenants for any issue…etc. They will be up-to-date on tenant legal compliance issue, still you are the decision maker and accountable.

IMO, had you properly hired a PM, you would not have faced all the legal challenges as PM’s responsibility is to appraise you what is right and what is wrong (either in your action or in tenant’s action).

For example, he/she won’t wait six months non-paying tenant. They would have taken right decision immediately after first non-payment (Pay or quit notice).

For the last 10 years, I faced all those similar issues you faced, but most of them handled by PM and my vacancy rate is very low.

Even before buying a rental home, I ask them to estimate possible rent , get his advice about some legal issue…etc.

But, you need to have right PM. I had bad ones too!

IMO, it is worth paying 6%-8%.You are hiring them for their experience.

However, for people like elt1, they do not need PM as he himself self-sufficient ! – This is just for example. There are plenty of self managing landlords are here.

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Try Amazon, they are fast.

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6-8% of monthly rent per month? No other charges?

Mine is:
0.75 month for leasing fee.
8% of monthly rent property management per month
10% of monthly rent for tenancy contract renewal

32

Yeah, PM can be helpful in dealing with some issues. I called some PMs before but did not really engage with them since no idea how to evaluate them.

Also have some distrust on PM. When I was renting, found a really good deal for a friend whose apartment always have a waiting list. The rent is 25-30% below comparable rentals. I have been wondering why the PM kept the rent so low. He can keep rent 5-10% below and it should still be fully occupied. It’s possible that he’s not knowledgeable about the market, also could be lazy and want to minimize turnover and maintenance. I think that there is a conflict of interest to some degree.

Since I already developed a relationship with tenants, now it makes no sense to switch to PM anymore. However, if someday I buy a muti-family with many units, I’ll have to hire professional managers. But with the high price in BA, it may never happen.

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You can file a notice to pay or quit one day after rent is due…You don’t even have wait till the 10% late fee kicks in…You need to read your tenants. .We had one who was always 2 weeks late and was happy to pay the 10% late fee…Had another last year starting getting later and later…had to hire a lawyer when he was 18 days late and get an unlawful detainer…then he paid…Had another lawyer up and then settled. .but now he has an eviction on his record…My eviction attorney is now my best friend in Tahoe…His fee is very reasonable and he gets results fast…Tahoe tenants are pretty low rent…transient and not concerned about the consequences of eviction on their record…

I can get management for 5% in Tahoe…But I like self managing because I get to know the tenants and they know me…We start off as adversaries and finally become mutually respectful…Some have even become friends. .one just bought a house with my wife as their broker…Some are just plain difficult. .And one that I got as a legacy is just plain insane. …The important thing to know is that you are in the service business. .I like to provide the best product and service I can…Hopefully that will provide the best return and some tenants will appreciate it…

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You are paying too high, flat 8% will do… Since my amount was high and I was the first client of my PM and holding him 10 years, I get a deal. Nowadays, my PM does not take any client as he is busy with his real estate business.

We have samshethrealtor, our member, who can also do for a flat % fee. It is up to you to negotiate with him.

You have few good PMs like H&M Property Management, CAL-WESTERN PROPERTY MANAGEMENT

Yelp them for review and choose the best you like.

Make sure you put a clause “The PM should not be directly or indirectly be a buyers agent for your tenant during the period of tenancy”. One PM represented buyers agent for my tenant and there was conflict of interest that resulted 10 days loss of rent to me as the PM was interested in close the home than finding a tenant. That PM was fired after that incident lost my multiple rental contract !

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PMs - Don’t use them. For now, If I can’t do it myself, I won’t do it anymore. Perhaps there are good ones, but I hold the same views about conflict of interest and them doing just the minimum to skate by. Sure, age has something to do with it so perhaps when I am say retired and traveling a lot more that a PM would be useful but not now. Hands on landlording to me is not that difficult and frankly I am too cheap to want to pay someone upwards of essentially a month of rent.

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Thanks for all your inputs. This is very much appreciated. I have finally sent a check for the deposit to the renter with a 12% deduction in the deposit.

I would appreciate if anyone can send me contact information of handyman in Santa Clara/Sunnyvale/San Jose.

Thanks
…mottai

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No, I haven’t bought yet. Just planning ahead. But if I were moving out of state, I also wouldn’t want to deal with small claims court because that would almost certainly involve having to be in-state.

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As an aside to this, let’s say a home renter were to leave their lease approx 2 months early but gave notice over 1 month in advance. If home owner were to try small claims court but had only a dl as I.d. but no ss #, and the tenant was unreachable by mail. What would his recourse be?

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Landlord can still go to small claim court and get a judgement without knowing tenants ssn. The government has tenant’s ssn and they will report the judgement to credit agency.

It would make more sense for the tenant to be honest and help the landlord to find a tenant as quickly as possible. Landlord can not charge the old tenant after new tenant moves in.

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41

Good advice.
If homeowner could maintain a home that didn’t violate health and safety codes the above would be possible. Unfortunately Mongolian mice don’t have the same definition of liveable residence as the local market. Finding Tennant’s to replace the early lease breakers is hard when common areas are stacked with egg cartons and fruit boxes from Costco.
If your residence had lack of heated water for bathing for 4 days or more, would you consider a lease break rational?