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Linny

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Posts: 41
Reply with quote  #1 

I believe I have found a tenant for my commercial property. He gave me a security deposit today with sufficient funds in the account.  He is young around 28 and has a real estate business with 5 other employees. He filled out my application and gave me his credit report which looks good.  However, I was doing some checking on the computer and found that he did not pay his 2006 property tax first installment for his home, which was due 3-1-07. This kind of worries me. Did he forget, or can't afford to? In your opinion, when I see him to sign the lease, should I address this with him? Maybe he will be miffed at me checking up on him in this way. I made a big concession with the rent, and he asked to let him in early before his lease begins so his workers could start remodeling. Is this something I should allow? I notice on his application his landlord and her phone number.  I should call, but can somebody tell me what I should ask?  If he is a good tenant? Pays rent on time? Stuff like that? Any suggestions would be appreciated as I will see him again on Friday to sign the lease.  OH by the way, no more signs from the last crazy tenant.

OHlandlord

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Posts: 3,814
Reply with quote  #2 
Hurray, your last crazy tenant finally got the message!  Now on to this one. 

First off, pull credit checks yourself.  How do you know the one he gave you is legit?  (I can make one on my own computer using a publishing program which would look identical to a real one in about 30 minutes.)   If you are not set up for this, have him pull them off the computer in front of you.  Next, check his business license.  Your county or state govt. should be able to verify when he was licensed and that his business is legit.  If he is a realtor, the state probably issued his realtor's license and the city issued his business license.  Check with the Better Business Bureau to see that the business is in good standing and that there have been no complaints made against him.  The property tax thing may be an oversight by his mortgage company, especially if it had been closed or sold recently.  Most mortgage companies pay taxes out of an escrow account nowadays.  You can check this by going to your county auditor's site and inputting his name or the address.  You can also see if the mortgage was sold (very common) and who the mortgage company is under your county treasurer or recorder's site.  If this is still in doubt, I would question him about it.  (A realtor should know all about the taxes.)

Other checks you should do are criminal background check -check local city municipal (civil judgments & evictions) and county common pleas (criminal) sites or go to the local police & sheriff's stations), zabasearch.com (his name & the business name) for previous addresses he didn't list, & check his bank to see if he has a business account with them. 

You may want to check out the current rental property address on your county auditor's site to find the owner's name & be sure you are actually speaking to his LL.  Then call his current LL.  Ask how long he has been there, how much rent he pays, if he has ever been late paying rent, when his current lease expires, if he has violated his lease in any way, is he a good tenant, why is he moving, if he remodelled the premises for his business and what he did to the unit, was the remodelling done professionally,  etc.  He should not be upset over these checks.  These are normal in renting property (even in residential).   I check out all my tenants this way, whether they are renting a 1 BD apt for $425 or they are renting a 4 BD Victorian house.  (If he becomes upset-that is a red flag!) 

Next comes the issue of early entry to the property.  How early does he want in?  If it is more than a month before the lease actually starts, you might ask for a nominal amount of $$$ for rent during renovations.  Has he given you a plan of what he expects to do to remodel the place?  Who will do the remodelling & will it be professionally done by licensed & bonded contractors with all required permits?  Will it be something that will remain after he leaves?  Can you re-rent the place in that configuration, or will he return the unit to the original condition upon vacating?  I assume he is paying for the remodel.  If his plans (& everything else check out OK) I would allow him access with the provision that he not operate the business until the lease actually starts.  Of course, get all monies up front before you allow him access.  Good luck with your new tenant.
Linny

Registered:
Posts: 41
Reply with quote  #3 

Thanks for all your suggestions. I checked his business license and he has a valid one for broker, expired for salesman.  Could not find his business with the Better Business Bureau, however, I did order a report from them. He has a mortgage with a Bank or mortgage company for his house. If property taxes are paid out of an escrow account, are they normally  paid three or more months late? Checked online court records, which show nothing regarding any civil judgments or evictions. Has a valid checking account and his check cleared with sufficient funds. Checked out landlord and called. Says he was a good tenant and paid rent on time, however, when I asked when his lease will be expiring, she said at the end of the month. He said he cannot move in until June 15th, because he was paid up until the 15th at his old place. This is a discrepancy. He wishes to get the lease and the keys on this coming Friday, May 25th in order for his men to start remodeling, which will only occur on the weekends, since they are doing other jobs during the week and he can get them at a discounted rate by doing it this way. That will give him approximately three weekends to complete the remodeling. He will then give 1/2 months rent on June 15th and move in the rest of his stuff and start working. July 1st, he will start paying the full months rent, every month. Am I giving him too much of a concession by allowing him in to renovate on the weekends? He has given a month's rent as security deposit already, but no more money until June 15th. Says he will provide me with a detailed list of work he intends to do at the premises. Any thoughts on this would be appreciated. Thanks  

OHlandlord

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Posts: 3,814
Reply with quote  #4 
Many mortgage companies now insist that you set up an escrow account to pay for the insurance & taxes.  The escrow money is figured into your monthly payment.  Sometimes mortgage companies can pay the taxes late on a property.  Mortgage companies don't always pay them on your county's schedule.  (Many pay them electronically instead of on-demand when the county sends them a bill.)  Some county's taxes may be due in January & July (ours are due in Feb. & Aug.).  If the county's dates don't coincide with the dates they have in the computer (employee error?), they may end up being paid late.  You can always ask him about this.  He may not even know the mortgage company is paying them late or he may be fighting with the mortgage company now to get them to pay on time.  This is not uncommon.

Business license, checking account, court records, & landlord all check out.  That is a good sign.  I would have him go ahead and pay the first 1/2 month of rent when you give him the keys.  Don't let him have access without paying for the rent ahead of time.  And I'd go ahead and cash that check he gives you to make sure it is good before he gets 3 weeks into the property.  Normally, I have the tenant pay for the first month in full, then prorate the second month's rent (just to make sure the money is on hand).

Discrepancy with LL's date may be that he is figuring it will take him the 2 weeks to move all his stuff (desks, paperwork, filing cabinets, computers, etc.) and set up all his computers before he can actually conduct business.  If he has 5 employess, he probably has to re-set all 5 (or 6) computers up before they can start working there.  If he has to get phones and internet service on, this may take him about 2 weeks.  Plus the fact that the next weekend is a holiday weekend means he probably won't get much (if any) work from those contractors this week.  I'm guessing that he has to put up walls (or cubicles) for each employee, run some new electric lines for the computers and maybe some new computer/phone lines for each computer/employee.

I don't see a problem with allowing him to do the renovations on the weekends.  However, I would insist on the rent up front before he gets the keys.  Before you give him the keys, I would also insist on a written plan of what is to be done to the property, who is going to do the work, a copy of the bond & insurance for the contractors (you don't want an injured contractor suing you), a copy of the required permits, & later a receipt showing that the contractors are paid in full (you don't want unpaid contractors to put a lien on your property for work he contracted).  And I would insist and put in his lease that he will not operate his business from the property before June 15th (when his rent is actually in force) or he has terminated his contract or he owes you the extra rent (I'd chose the extra rent - put it in the contract).   Also, you should agree in writing to the work that is to be done, that he will pay for the work, and if you want it removed at his expense at the end of his tenancy put that in there too.  If he doesn't agree to these items, I would find another tenant.  These things are to protect yourself.  As a businessman, he should understand this.
Linny

Registered:
Posts: 41
Reply with quote  #5 

Things seem to be getting a little complicated with this situation. After working up all the numbers, I called my tenant tonite to explain my situation. He is requesting to get the key on May 25th, even though his lease does not begin until June 15th. That is 21 days which equals a little over $1,200 for these period of days pro-rated based on his monthly rent.  He says his workers will only be working on the weekends, which is approximately 3 weekends or 6 days. I said I would be willing to give him credit for the 6 days totalling around $350.00 and the difference he would owe me for rent during the renovations(around $800.)  Well, he did not see it this way, as he will not be doing actual business until June 15th and that he was asking me to do this as a favor, so he could get the workers at a discounted rate because he knows them.  I explained that when someone gets the key, they get possession and rent is due- period.  He says he will not be working on those days and does not want to pay for them. I explained that I do want to help him in anyway I can, and the only way I could think of was to volunteer to let the workers in and out when they decide to go there and work. He agreed this would be okay.  I live about 5 minutes away, but still do I want to have to do this for three weekends? What did I get myself into? If I get the 1/2 month's rent up front, which I doubt he will want to do. I am still in essence giving away 21 days for free. I also don't want to seem petty. Also, I am meeting him tomorrow to give him the lease, he will look it over first before we sign. In your opinion, how many days should I give him to review the lease? He may believe he has until the 15th of June to keep the lease without signing!  His security deposit is refundable, until he signs the lease. After the lease is signed the security deposit cannot be refunded. I am putting my For Rent sign back up tomorrow, just in case this all falls thru. I'm new at this landlord stuff and I don't believe I like it too much so far! Any thoughts on this OHlandlord??

kurt

Registered:
Posts: 137
Reply with quote  #6 
A few notes..

He is a buisnessman, and should understand your in buisness to make money.. Granted try to be flexible, but don't bend to much otherwise in my opinion they tenant will take miles.. Might not, but it's safer to go with the odds in my opinion.

As for the time spent leting workers in/out let him know your time isn't free, your gas isn't free, and see his response.. IT hsould be gratefull... 

As Ohlandlord stated many times get every thing in writing, usually the more detailed on what the tenant is supposed to do the better<----.

Also let him know he is deteering oyu from renting the place for about a month, should show him the extra he's already geting from you and that hopefully he wont push for more. If he does you make the call on where your going to draw the line.. ALso he will know he has a timeline/dead line and will probably be more flexible as that timeline runs shorter to when he wants to start his buisness there.
Linny

Registered:
Posts: 41
Reply with quote  #7 

I was supposed to meet with my tenant yesterday, called at left a message, but he did not call back. I was going to give him the lease and his workers were supposed to scope out the place and make their plans. He seemed to be eager to start early. Now not so much after our last conversation. The ball is in his court now. I do not want him to keep the lease until June 15th, which is his start date. He can change his mind and request the security deposit back any time before that. I should not have taken down my for rent sign! What is a reasonable time to ask that the lease be signed? Hope he calls today, I have a bad feeling about this one.

kurt

Registered:
Posts: 137
Reply with quote  #8 
Think of it this way...He could be busy and might take a day or two to call back. But compare to how fast he replied before the last conversation and how long it takes now, sure it might be he's busy/some thing unforseen came up.. but don't  place all your eggs in one basket.. I don't know what would be considered a "legal" amount of time to call back or if there is even such in state law..To be safe three days should do in my book usually any prospective tenant that doesn't call back in three days despite calling them and leaving a message, it's usually a gonner deal.

Might want to read your lease because I believe as long as you have the security deposit he I would believe have a hold on the place. ALso depends on what was said for verbal agreement wise if there ws any that went beyond the deposit agreement.

Sorry wish I could be more help and more than apt OHlandlord will have good info and better advice. I tend to deal with "low end" units and usually don't get a lot of change in unit demands..Sure I get the twits that come in saying they would like to do ad carpet here, put this up there, and so on. And I tell them that's nice, but for the first 6 months I'd be just happy if you paid the rent on time and didn't damage the unit..And usually those twits end up being dead beats who can't seem to know how to hold a job or kick a drug habbit(which leads to no job and no rent being paid).
patadams

Registered:
Posts: 43
Reply with quote  #9 
I NEVER take down the FOR RENT sign until I the deposit, first & last months rent, and signed  rental agreement is received.  I even tell interested tenants that if they ask.  In the beginning, I got stuck to many times by overly interested tenants who suddenly vanish.  I now let them know right away during the interview process that it is first come first serve basis and that I do have some applicants already on file before them that I haven't yet checked out (even if I don't I tell them this).  Then, after reviewing their application and they check out, I let them know that they were approved and send them a rental agreement for them to sign and that if they are interested, they have 1-3 days (you choose) to sign the agreement and pay deposit plus 1st & last months rent.  I usually tell them that I have other tenants interested (even if I don't) that I could move on to.  This usually makes them make up their mind if they want it or not.  Otherwise, what is happening to you is what happens - I would end up thinking I have this interested person and then lose another month because they backed out. 
As for moving in early, that is usually a judgment call in each case for me, depending on how bad I need to get it rented, but I usually do charged something if it over 4 days early.  I then either pro-rate it or to start off on somewhat good terms, cut the pro-rated amount in half.  Sometimes I just say $50-$100 charge.  Since you are dealing with such a longer time period, I would think that you are being fair in charging for just the weekends.  At any rate, you learn from each experience and go from there for the next time.  But I would stick to getting the signed agreement, deposit, 1st month rent and pro-rated days before giving up the keys or letting them in.
OHlandlord

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Posts: 3,814
Reply with quote  #10 
I certainly wouldn't give him until June 15th to sign the lease.  That is way too long to keep you hanging with only a refundable deposit.  (Make that deposit nonrefundable in future.)  I'd call him once more and tell him you have the lease for his review but you cannot continue to hold the property more than X days without a signed lease (I'd give him until Wednesday max.)  Usually I'd give less time, but since this is a holiday weekend he may have gone out of town.  After that, I'd go ahead and refund his deposit and find another tenant.

Paying only $800 for rent during renovations over 21 days on commercial property seems fair.  I think he is just trying to get something for nothing.  In other commercial property, an owner might have the property remodelled for the tenant without cost or rent, but the tenant will have already signed and paid for the lease (with a non-refundable deposit, 1st & last months' rents) prior to any work taking place.  They also would have no access to the property until all renovations were completed to their specs.  So $800 and doing the work himself seems fair for 21 days of extra access. 

He may have not been able to return your call.  Maybe he went out of town.  He may be very busy over the holiday weekend.  (Many people are off during these days and may want to look at properties - it is prime buying season in the real estate business).  However, he may also be holding out to see if you'll cave to pressure and give him those 3 weeks for free.  Tenants (even future ones) see those days as no problem for you.  I had one tenant want to move her rent from the 22nd to the 1st of the month.  She thought she were going to get those 10 days for free.  They were more than a little surprised when I informed them that I would be happy to do this, but they would owe me $900 on the 1st instead of $675 on the 22nd.  Days = money to a landlord. 

His renovation costs are not your problem.  That is the cost of doing business.  If he is too cheap to pay the going rate for contractors, I worry about what else he is skimping on.  Besides, I really am not buying the "discounted rate for weekend work" idea.  Every contractor I know gets more $$$ on the weekend, not less.  I guessing these guys are either fly-by-night contractors (and may not be licensed, bonded, or insured) or the renovations will be done by him and his friends.  Again, no keys until all $$$, permits, copies of the items you need (insurance for contractors, licenses, etc.), copy of renovation plans, etc. are in your hands.  If he doesn't come up to the plate by Wednesday, next batter...
Linny

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Posts: 41
Reply with quote  #11 

I've called him twice, but no answer. I have also put my For Rent sign back up. If he requests his security deposit back, is it fair to deduct the amount of days he made me wait during this period? I did write down on the receipt that the security deposit was nonrefundable, however, he had a problem with that, and also made me think he would be signing the lease last Friday. So I removed that wording. Dummy me.

OHlandlord

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Posts: 3,814
Reply with quote  #12 

A security deposit is to ensure the tenant following the terms of the lease.  Since no lease was signed and you didn't notify the tenant (or applicant in this case) that it was nonrefundable (you actually removed that restriction), I can't see how you could keep it.  Legally you would have to return it.  Sorry.  I hope you find another tenant soon.  Just remember to screen the next one as well, don't make too many concessions to get it rented quickly, get all documents signed and all monies in hand before giving the keys, and make the deposit nonrefundable.

Linny

Registered:
Posts: 41
Reply with quote  #13 

Good news so far. The tenant will sign the Lease tommorrow and pay the first month's rent.  I will then give him the keys so he can start working on the renovations during weekends. He gave me a list which is not too extensive. He plans to move two small walls with windows, which are now part of a hallway. He will recreate a confrence room with these walls.  But there are 4 mirrors, each 8 x 4 which are glued to one wall.  They were put up by, not the last tenant, but the one before that.  I asked him if he can use the mirrors, but evidently he cannot as he wishes to make it an entire solid wall.  His contractor will see if the mirrors can be removed without damage, which I doubt as they are glued to the drywall.  I also suggested placing drywall over the mirrors creating a solid wall, this way they will be hidden from view, but still there for future use.  He said he would have his contractor determine if this can be done and still look good for his office. If the mirrors cannot be saved, or  hidden behind drywall, should I charge him for the removal of the mirrors?  If anyone has any idea how these mirrors can be removed without damage, I would like to know. They are 8x4 each, going about 3/4 up the dry  wall and together create a full wall of mirrors. There is drywall above the mirrors and to the right side.  They are in perfect condition and add very much to the spaciousness of the area.  I also understand that not every business can use mirrors like this and they may need to be removed. He plans to keep the rooms which are now offices as is.   

OHlandlord

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Posts: 3,814
Reply with quote  #14 

A couple of thoughts about the mirrors, like you -I am not sure they can be removed.  Perhaps they can remove the drywall itself (leaving the mirrors still stuck to the drywall)?  Could they pull a wire (like a piano wire or a saw wire) behind the mirrors to unstick them?  You didn't say how they were fastened to the wall.  If they are only fastened with a few dabs of glue, this MAY work.  (It may not and they might shatter.)  Are the walls that the mirrors are on going to be moved?  If not, could they build out that wall with 2x2s or 2x4s turned on side and drywall over them?  They would only lose about 3" this way and the drywall and framing could be later removed.  Otherwise, you will end up loosing those mirrors.  (Since you didn't install them, I'm not sure if you can charge him for them.)  However, they are part of the unit he rented.  You will have to negotiate this with him.

Linny

Registered:
Posts: 41
Reply with quote  #15 

Good point about the 2x2's or 2x4's, I will definitely mention this to him.  They are fastened by adhesive for sure, because I cannot see any screws, nuts, bolts or whatever else they use to hold up mirrors.  He is going to ask his contractors what is the best answer to cover the mirrors and depending on if it will look good for his office he may paint over them, use wallpaper, or drywall over them. I called several glass places and one said they are pretty successful in removing wall mirrors without damage, but cannot guarantee they will not break. This however will cost about $260.00 and he says he does not want to pay that much to save the mirrors.  Evidently his contractors will charge less to break them up. He feels if we want to save the mirrors we will have to pay the professional glass man to do it. Personally, I do not care if the mirrors are saved or not as many businesses unless they are a beauty shop, etc can use mirrors like that.  If they are saved though I can maybe sell them because they are in pristine condition. My Dad, however, is adamant on saving them.  We will see what happens on Monday when I meet to give him his copy of the lease.

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