In this week’s episode, Podcast Host, Andrew Schultz, goes over what to do if your tenant is a hoarder including what to expect when you want to take action.
Lease renewals are always a hot topic amongst landlords. But, how far in advance should a landlord propose the signing of a new lease?
Last, but not least, rental applicants that want to rent site-unseen from you are not uncommon. We’ll give you a few best practices on how to screen these specific tenants.
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Andrew Schultz: (00:00)
Hey everyone. Welcome back to another episode of the Rent Prep for Landlord’s podcast. This is episode number 368, and I’m your host, Andrew Schultz. On today’s episode, we’re gonna be talking about what to do about a hoarding tenant. How far in advance you should renew a lease and what to do when someone wants to rent an apartment site unseen, we’ll get to all that right after this books.
Voice Over: (00:23)
Welcome to the Rent Prep for Landlords podcast. Now your host, Andrew Schultz.
Andrew Schultz: (00:28)
Before we jump into today’s episode, don’t forget to check out the Rent Prep for Landlords Facebook group. It’s a great free resource for you to network with housing providers from around the country. And if you have a question or a situation that you’ve never dealt with over 12,500 members, chances are someone in the group has been there before and can lend a helping hand. Our goal is to hit 13,000 people by January 1st. So if you haven’t checked it out yet, do it today over at facebook.com/groups/rentprep. Don’t forget to mention the podcast when answering the questions. So we know how you found us.
Voice Over: (01:00)
Forum quorum, where we scour the internet for ridiculous posts from landlords and tenants.
Andrew Schultz: (01:12)
So we’ve got a real doozy for you to start off with forum quorum. If you’ve ever watched any reality television, chances are you’ve come across an episode of hoarders at some point, but what happens with, and you wind up with a hoarder inside one of your rentals. So that’s what we’re talking about here in forum quorum. This one comes to us via the landlord. Subreddit. We’re gonna go ahead and jump right in here. I need some advice on how to proceed with a hoarding tenant. I recently did some maintenance in her apartment for the first time in years, to discover mountains of junk boxes. Cetera, the whole apartment is just wreck. There’s a snuff space to walk from the door to the bathroom and bed, but that’s about it at the time. I was a first-time homeowner with a separate apartment on my property.
Andrew Schultz: (01:51)
So I did not cover my bases when we signed the lease. The original lease has since expired and I’ve lost that paperwork. And the tenant is now month to month. We’re considering taking the property off the rental market for the time reading to renovate the building. My concerns are for the property itself, as it is definitely being neglected. I’m wondering how I can go about getting this tenant out of my property legally. And again, this one comes to us via Reddit. So this is actually one of the reasons that I recommend regularly inspecting your rental units. A matter of fact, I think it’s critical to inspect rental units at least once every six months or so. Because it cuts stuff like this off before it ever has a chance to really take hold. Not to mention doing maintenance on a hoarder’s unit can be challenging at best and downright dangerous at worst.
Andrew Schultz: (02:35)
So when you do those regular inspection, that’s a good way to try to cut something like this off before it really has an opportunity to take hold of the unit. Hoarders can cause a ton of damage to properties. First, you have the weight of the hoard. This can be a really substantial impact on the structure of the property, depending on the weight of everything. And the couple of, of examples that I always think of are first off newspapers, you know, a stack of newspaper doesn’t seem like much, but newspaper stacks get very, very heavy, very, very quickly. And now imagine an entire room filled with those stacks. It’s a ton of weight to put on the structure of a building. Another good example is water. A gallon of water weighs eight pounds. It’s not light. And if you have ton of liquids in containers and if you’ve watched any footage or porterhouse, I think you can kind of read between the lines and understand what I mean here.
Andrew Schultz: (03:27)
If you have a bunch of containers of liquids sitting around that has a lot of weight to it as well not to mention all of the ancillary things that go along with that. If you have large amounts of waste in the house they did mention in the original question, some pet waste and things of that nature. You could also wind up with human waste. If plumbing stops working and someone doesn’t get called into repair it, things of that nature, you know, it’s a lot of factors to consider there when it comes to not just the occupant, but the contents of the property. When you’re dealing with a situation like this structures are built to accommodate certain weight loads and certain pressures and things like that. And having a house full of stuff can really cause issues that way. In addition, there’s obviously concerns about whatever they’re hoarding being hazardous, you know, or can it become hazardous over time?
Andrew Schultz: (04:14)
Keep in mind that if this is something that’s been going on for years, containers will degrade the leak. They’ll bring ache over time. If you have somebody that’s housing, something as simple as cleaning chemicals, you mix the wrong cleaning chemicals and you have a really, really nasty situation on your hands. So, you know, this is definitely not something that is a situation that can be ignored. It definitely needs to be addressed. All of that said hoarding is considered a mental illness. There are programs that can try to help people who are hoarders, which sounds like it would probably be appropriate here. Realistically, I think this person needs access to some sort of social services. There may be family members or friends that can help you or failing that you may be able to reach out to your local government to find some resources, to help through department of social services or office of mental health, something along those lines.
Andrew Schultz: (05:02)
As for getting control of the unit. Again, that’s gonna be another ballgame. Different states are gonna have different eviction and displacement laws. And typically you’re going to start by providing notice to the tenant in line with whatever your state’s guidelines are that you’re terminating their tenant effective, whatever date because this tenant is month to month. My recomme here is that you terminate because you wanna renovate. If you have to list a reason on your termination letter, you’re terminating the lease because you want to renovate the apartment. And then it’s a waiting game to see if the tenant moves out or not. If not, you’re moving on to a holdover eviction, and you’re definitely going to want to get an attorney here for some more assistance. They’re gonna be help you through that process a lot easier than I can do in just a couple minutes on a podcast, assuming the tenant does move out.
Andrew Schultz: (05:48)
You’re likely going to be left with a ton of personal possessions that you may need to hold for some period of time before you’re able to dispose of, again, check your state laws or alternatively, get the tenant to sign off on the disposal. Which I mean, obviously may be easier said than done. Especially if you’re dealing with somebody who this is their hoard, this is their life. They may not want to sign off on something like that. So you may have an uphill, you will have an uphill battle. There’s no may about it. You will have an uphill battle ahead of you for this. So as an option of last resort, you may want to reach out to building department, health department, fire department, to help you. But if you reach out to them for assistance, the chances are they’re going to wind up condemning the building.
Andrew Schultz: (06:29)
And at that point, it sounds like number one, you’re still living in half of this building. So that might be part of the issue. But realistically speaking, if they condemn the building, they’re probably going to require you to bring that building up to compliance, to get a certificate of occupancy again. So you may be opening the door to code issues or updates that you need to do that you weren’t planning on doing, you know, whatever the case may be. Again, getting the agencies involved that are going to condemn the property is an absolute absolute resort. I think your best-case scenario here is that the tenant moves at the end of their, you know, termination notice. That would be the absolute best-case scenario. Otherwise, I think things are gonna get tricky. You’re probably gonna need to get an attorney to assist you through the process.
Andrew Schultz: (07:13)
You may have to, in the worst-case scenario, seek some sort of a roundabout solution with getting a building condemned or something like that. Obviously, we’ve already said that’s not the best solution for a variety of reasons. At the end of the day, there’s a ton of nuance here. There’s a lot in landlording that isn’t black and white, just simply isn’t, there’s a lot of nuance to this business, striking a balance between being good to your fellow human being and looking out for your own best interests as, as the property owner can be conflicting. And this is a situation that calls for compassion just as much as it calls for resolution. And you have to work toward both in this scenario. Good luck to you and send us an update,
Voice Over: (07:50)
Water cooler wisdom, expert advice from real estate pros.
Andrew Schultz: (07:59)
We have two really good water cooler wisdoms for you this week. Our first one comes to us via the landlord Subrata and it’s all about lease expirations. Let’s go ahead and jump right in here. I have two single-family residences in which the leases expire March 1st, 2022. When should I contact the tenants in terms of signing for another year? Is it to now? So just for a little context, in case you’re listening to the back catalog, this episode is gonna come out at the end of December 2021. So effectively, we’re talking about a little over two months, we’d have January and February with the lease expiring March 1st, 2022, just for context purposes, ask with so many of our questions. This one starts with a very simple statement. Check your state laws. Different states are gonna have different rules on how much notice you need to give when changing the rent or terminating a tendency, et cetera.
Andrew Schultz: (08:49)
In some states non-renewal, isn’t always an option, especially if the state has just caused legislation for terminating leases. And if you’re not familiar with that, just cause laws state that the landlord cannot terminate a tendency for any reason, except for certain circumstances. So once you’ve leased to a tenant, they have possession pretty much indefinitely of that unit until you can evict them for nonpayment or for a just cause or a leave of their own accord. Some states will have just cause eviction laws. Some will not. You’re gonna wanna check your state laws. So you understand what you’re dealing with in that regard. So here in New York, we have to give 30, 60, or 90 days’ notice if we intend to vacate the unit or increase the rent by 5% or more. And this is based on the length of the tendency because we’re working on a men maximum of 90-day window.
Andrew Schultz: (09:37)
If we intend to do a non-renew or bump the rent up, we start our process at 120 days out, a full four months ahead of the lease end date. So what we’re doing in that first month is internally we’re making decisions on if we even wanna extend a lease renewal because we don’t have just cause eviction laws here in new work yet. And if we are going to extend that lease renewal, we’re determining what the rent rate’s going to be for that next lease period and how long that lease period is going to be typically for us, that’s gonna be one year. So at that point, once we’ve decided whether or not we’re going to offer that 10 lease, lease renewal and determine what the rent rate’s going to be, we’ll approach the tenant, either giving them their, or non-renewal notice or saying, Hey, we’d like to renew you for, you know, another one-year lease term, we’re going to bump the run-up by, you know, whatever percentage or whatever the case, your new rent’s going to be X.
Andrew Schultz: (10:27)
We need to know by no later than X date, what your plan is for the unit. If we don’t hear from you, we will remarket the unit as though it’s go going to be reoccupied at the end of your lease term. And then what we do is essentially give the tenant time to make their decision. We always try to give them as much time as possible to determine whether or not they’re planning on staying with us, or if they’re going to move on to another apartment. But we do try to give them as much opportunity as possible because we know that it takes time to think these things through find another place, et cetera, et cetera. So if we’re getting to the point where we’re approaching the deadline for, when we need to know if they’re planning on renewing or not, and they haven’t given us any indication, we will usually issue the non-renewal notice.
Andrew Schultz: (11:10)
Even if we think that that tenant plans on renewing, why would we do that? Well, it spurs action. When a tenant gets a non-renew notice and they plan on renewing, you’re gonna get a phone call or a text message or an email or whatever right away, they’re gonna be like, Hey, what the heck’s going on? I thought we were gonna stay for another year. You can always resend a notice, but you can’t issue a notice in the past if that makes sense. So we would rather be ahead of the game we’ll issue. The notice we can always resend it. Tenant decides that they want to renew. But if we wait until, you know, the day after that notice has to be served to go into effect, guess what? In New York, we’re waiting a full 30 days before that notice goes into effect now, and we’ve now cost ourselves 30 days in this, in this already too long timeline.
Andrew Schultz: (11:54)
So we try to be on top of that sort of thing and get those notices out the door before the deadline, just to keep the timeline as tight as possible. If we get to that 30-day point and the notice is issued and the tenant is either not communicated or is decided they’re moving on. At that point, we begin marketing the property and go from there. You may also have some special circumstances that determine when your lease renewal should be completed. So for instance, we used to manage a large number of student rentals, mostly single-family and duplex homes, kind of surrounding one of the local college campuses. The students would typically start looking to secure their fall semester housing as soon as they came back from winter break. So we’re talking like January, February, they’re looking for their housing for August of the following year.
Andrew Schultz: (12:36)
Based on that we would start asking about everybody’s plans at the end of October or beginning of November, which is crazy because most of these leases just started in August. So you’re barely unpacked. And now we wanna know if you’re sticking around for another year or not. So the nice thing with students was that many of them stayed for, you know, several years. And if someone was moving or graduating, a lot of times, the rest of the students in the house that were staying would already have a friend lined up that wanted that room. So at that point, it would just be a matter of doing some tenant screening and then going from there, this may also be something that you could handle right in your, or lease in the past. We’ve used a lease clause that automatically renewed the lease for an additional year with an increase in rent.
Andrew Schultz: (13:20)
If the tenant didn’t let us know if they were planning on staying or going prior to the final month of their lease agreement, some states do. And some states don’t allow for this type of lease language. This is definitely something that you’re gonna wanna run by your attorney to be sure of if before you put it in place, particularly because the language can have some impact in how things are worded. And in addition to that, this could have an impact on other areas of your operation based off these timelines. So you’re gonna wanna run that by an attorney if that’s something that you want to pursue, but my recommendation would be, find out what the guidelines are in your state, and then build your timeline based off of that timeline. So that you’re always staying one step ahead of the game. Our second water-cooler wisdom also comes to us via the landlord Soreta.
Andrew Schultz: (14:05)
And this one is interesting because it’s a topic that doesn’t come up super frequently, but every once in a while, you just need to know how to handle a unique situation. In this instance, it’s someone that’s relocating from once day to another and trying to secure a rental. Let’s go ahead and jump right in. I’m a first-time landlord. And I have an interested candidate that is relocating from Florida to Washington and is interested in a site unseen rental. I’ve just started asking them questions regarding the cause of the relocation and their source of income. Plus I’ll do a full review of their application information we proceed, but I’m curious for any experiences or stories from the group about this type of situation, any important steps that I shouldn’t forget. And is there anything that I need to add to the lease agreement in order to cover myself?
Andrew Schultz: (14:48)
Thank you in advance. So as far as the tenant screening goes, you’re gonna wanna treat them the exact same way that you would any other applicant. So when it comes to verifying income, you’re gonna have a few different scenarios that you may encounter here. Scenario one would be that they are staying with the same company, but they’re just transferring. And that transfers taking them to a new state chances are they’re going to have a letter for that, a transfer that can be verified with a human resources department. And they’re probably gonna have pay stubs to verify that they work at the company now. So you might be able to actually verify things a couple different ways there, this may just be a promotion or something similar. So there might be a pay bump that you wouldn’t see in the existing pay stubs, but it should give you at least a good basis for what it is that you’re looking at.
Andrew Schultz: (15:31)
And this is assuming they’re staying with the same company. These are the easiest ones to verify because it’s just a continuation of existing employment. Scenario two is that they are moving and starting with a new company. So typically in situations like this, they’re going to get an offer letter. And we’re going to verify the authenticity of the offer letter from the company that issued the letter. Essentially applicants are going to ask about submitting incomes for their current job. That’s fine. It shows that they have employment right now, but you’re not gonna be able to use that for income verification because they’re moving from a one state to another and they’re taking a new job. So it’s not like that income is going to be around any longer. That income source is effectively useless for screening purposes. Other than to know that they’re employed right now.
Andrew Schultz: (16:15)
But as far as for future employment that serves you essentially no purpose there. You’re gonna have to have some sort of an offer letter showing that they have that employment secured in the state that they’re moving to. Scenario three for us is somebody with a large amount of savings, but not a regular income. And in that scenario, we typically we’ll look for 12 months of bank statements showing 12 full months of rent on deposit for the entire duration for us. That’s sort of the hill Mary pass for income verification. If you can’t figure out any other way to show us that you have income, show us, you have a lot of savings. And I don’t think that we’ve ever actually had to use that as the final straw to, to verify someone. But we do have it as an option. If somebody really can’t find any other way of showing that they have income and trust me, we have plenty of ways to verify income.
Andrew Schultz: (17:02)
So I think that’s probably the reason we’ve never made it all the way down. The food chain to that last one. It is an option. If somebody wants to go that route, like that is an option, but it’s, it’s typically like I said, it’s a hail Mary, it’s a last resort for us. As for the other two scenarios, you are basically going to be looking for a job offer letter. We verify these letters for authenticity. And when we do that, we look for a few different things. First, we want the letter on a company letterhead. I don’t want just an email or something like that. I want an official letter on company letterhead. The letter must have a date that the employment offer was extended should also have the start date of the new employment and the base income for the position. We also want to know if that’s gonna be a permanent or a temporary position.
Andrew Schultz: (17:47)
So if this is a contract position and the contract is only six months long, I’m not going to extend the lease past the end of that employment contract, because you have a known end date for their income source. Like it’s not very often that, you know, when someone’s no longer going to have the money to pay your rent, when you do have that, you know, make sure that you, you use that knowledge correctly and say, well, I know that you have a six-month contract. I can only extend you a six-month lease. You can always extend it down the road with verification of continuation of contract or whatever the case may be, but protect yourself. Don’t overextend yourself to someone who only has a fixed amount of income for a fixed period of time make sure that you’re working with somebody that you a full-time permanent position or limit your risk in those scenarios.
Andrew Schultz: (18:33)
So in addition to all that, we do verify these letters with the company that issues it by contacting the HR department, whenever possible, be cautious about using the name or phone number on the letter, Google, and call the main switchboard. A lot of times you’ll find that you might be, get an offer letter and it might be signed by a supervisor or a coworker or a friend or something like that. Someone who’s trying to put the best foot forward for this particular candidate, or maybe you’ve got falsified information. You just, you just don’t know the best way to try to verify. One of these letters is Google the company’s name, find the made switchboard number, and call and talk to somebody in human resources. That way, depending on the size of the company, obviously, you know, it might, it might be something where you only have three or four people in the company, and you’re gonna talk to the owner and they’re gonna verify the information.
Andrew Schultz: (19:21)
You know, it may be a situation like that, but typically when you’re talking about a state to state transfer, more than likely it’s gonna be a larger company, and they’re going to have human resources to put departments that deal with this kind of stuff all the time. So anyway, back to the the main question, which was about the risk of site unseen rentals, now that we’ve talked about the screening side of it what about the risk of a site unseen rental? There are risks, and you have to decide if the risks are worth it to you. If you wanna rent to someone who hasn’t seen the unit or not, I don’t know of any law in any state that says that you must rent to someone who hasn’t seen the unit so long as one of your criteria is that every applicant must see the unit.
Andrew Schultz: (20:02)
So if you need, you may need to add that to your written criteria. If you don’t wanna rent site unseen and you don’t already have that in your criteria, but that would give you almost an immediate out in these scenarios. Hi, I wanna rent the apartment site unseen. I’m sorry, our selection criteria state that you must see the apartment prior to putting in your application or prior to signing your lease or whatever the case may be. So that is an option you, I, as far as I know, and I could be proven wrong laws change all the time. I don’t personally know of any laws that at prohibit you from renting the apartment to someone because they don’t have the ability to come out and physically see the unit. The main concerns here always seem to be what happens if they don’t like the unit or they don’t like the area or whatever the case after they move in, or what if they never take possession of the unit at all?
Andrew Schultz: (20:50)
My recommendation here is twofold. Number one, have a lease addendum for renting site unseen or not taking possession of the unit. The addendum needs to clearly state that the unit is being rented site unseen and that the tenant accepts the risks associated with that. And if they don’t take possession or are unhappy and they wanna move out, there need to be penalties outlined in that addendum to compensate you as the landlord for the lost marketing time and the lost rental income. This is something I strongly recommend that you have an attorney assist you with. As a language can get very, very, very tricky depending on your state’s laws. And this is not something where you wanna be starting into a six-month-long argue with somebody when they want out. And you just want a tenant. That’s going to continue to rent the unit and continue to pay the rent.
Andrew Schultz: (21:33)
My second recommendation here would be maybe you can have a friend or a coworker or someone that they’re going to be living with. You know, once they move to the area, walk through the unit on their behalf and they can do a zoom call or a video or whatever they wanna do to try to alleviate the concerns of the individual who is going to be renting the unit site unseen. I would still have that addendum in place regardless. But you might be able to parlay some of those concerns just by either, either having good videos or photos yourself or by having that person send someone on their behalf to walk through or whatever the case may be. There’s options out there for people who are looking to rent site unseen, you just have to know what your risk tolerance is and what your policies are going to be when it comes to dealing with people that wanna rent site unseen, and then whether or not that’s something that you wanna deal with at all right now, rental references are a crucial part of the application process, especially with the recent rise in fraud.
Andrew Schultz: (22:31)
Our latest post on the blog will give you the low down on how to write a reference letter for tenants and even includes a free template for you to start customizing. You can check that out today, over at rentprep.com slash blog. That pretty much wraps things up for this episode of the Rent Prep for Landlords podcast. Thank you all so much for listening. We truly do appreciate it. Our goal with the podcast is to help as many people as possible make educated decisions when it comes to real estate, and you can help us to reach our goal. If you heard anything in this week’s episode or any other episode that will help someone, you know, do us a favor and share it with them. If you’re looking to get in contact with me, I can be reached over at whatsdrewupto.com. And from there, you’ll find links to everything going on with me over at Own Buffalo, as well as other projects that we’re working on.
Andrew Schultz: (23:16)
We just launched a free investment property deal analyzer, which is available on that site whatsdrewupto.com. It is completely free. There’s no obligation whatsoever. And I also have a companion video that goes along with that, teaching you how I analyze deals and how to use our analyzer. I actually do a live deal analysis in that video for a listing that I had a few months back. It’s really interesting to see how we break those deals down. If you’re looking for top-tier tenant screening services, head on over to rentprep.com, there are multiple products to choose from including a tenant-paid option. And if you’re over 50 doors, ask about the enterprise-level programs and pricing. I’ve been an enterprise user at Rent Prep for years now, and it’s definitely changed the way that we screen our tenants. Check that out today, over at rentprep.com. Again, thank you all so much for listening. We’ll be back in two weeks with an all-new episode you won’t wanna miss until the, and I’m Andrew Schultz with ownbuffalo.com for rentprep.com. And we’ll talk to you soon.