Landlord Advocacy: Legalities of the Residential Buy & Hold Business Model on Long Island.
Applications and background checks. Should you do them? Absolutely. There’s a lot of reasons why you want to do them. Number one, you want to know who you’re dealing with. You want to identify who these people are that are going to be living in your house.
I had a client once, we took it to trial, we took it to two trials because he never checked out who his people were in the house. And they actually turned out to be gypsies. And when we got to our trial, we actually found newspaper clippings from other States where they basically scammed landlords and they would move in saying, “This is my name.” They would even show them ID. But they were somebody else, and when they’d get the trial they would say, “No, this isn’t me. I don’t know who you” And then we’d have to start over again, bring the case against someone else. And wasn’t them either. It was really like bizarre stuff. And they had attorneys and they were like, “These people are crazy. They’re calling us gypsies. These aren’t gypsies, they’re just normal people.” And then when the case is over and they left, and they left a mess of a house, and they didn’t pay the guy, the attorney just shrugged and he said, “What do you expect? They’re gypsies.”
So know who you’re dealing with.
You want to verify their income and their sources of income. Can they afford your rent? We like to use the federal guidelines of 31% of their gross income, no more than that should be allocated towards housing. It’s a pretty good rule of thumb. So you want to document their income. Emergency contacts. You want to know who your tenants’ emergency contacts are because things happen. I had a tenant once who was slightly autistic, got sick, was holed up in his apartment for months. No one ever heard from him. He was in there sick, wasn’t paying. I had an emergency contact though. It was the sister who actually helped him out a little bit. She actually came in there, moved him out, paid his arrears and that was it. If I didn’t have an emergency contact, who knows he’d probably still be in there right now.
What to look for in background check? Well, number one, you want to look for prior evictions. A good background check will tell you that. You want to check if they were ever foreclosed on. If they were, it’s an indication that maybe they’re not going to treat their monthly housing payment with much respect. Although a few years ago when the whole world was getting foreclosed upon, it wasn’t as much of an issue. You want to look, do they have bad credit due to late payments or for some other reason? Do they have a long history of credit problems? So those are the things that background check will tell you.
But then, there’s other things that a background check won’t tell you, but they’ll give you clues about. So they won’t tell you the circumstances surrounding the default. So if you have someone who is applying for a rental and they got really bad credit, but you dig a little deeper and you found, they had a one time instance where they got divorced and it was really nasty and their credit was shot. Okay. Before that, they had an 800 credit score. It might be okay. Or is it a chronic issue? What kind of job security do they have? You can’t tell that from a background report, but you can talk to them and say, “What do you do for a living?” And if they’re doing something that’s going to be obsolete, like if they’re a landscaper in the summer, but they don’t work in the winter, it might be a problem. So, my recommendation is always do a full background check, and thoroughly know who you’re dealing with.
Above is the full video transcript of following video:
About the Presentation by Mr. James Clark
The above is a clip from a presentation that attorney, Jim Clark made to the East Coast Real Estate Investors Association (“ECREIA”) in March, 2019 entitled: “Landlord Advocacy: The Legalities of the Residential Buy & Hold Model on Long Island.”
Mr. Clark will be leading a follow-up discussion on these topics, and specifically how they’ve changed under the New York Housing Stability & Tenant Protection Act of 2019 at the monthly meeting of ECREIA at 6:30pm on September 25, 2017 at Domenico’s Restaurant at 3270-A Hempstead, Tpke, Levittown, NY 11756. To learn more about ECREIA, click here.
In this clip, Mr. Clark discussed the importance of Tenant Applications and Background Checks, what you should look for in a background check and what a background check won’t tell you, but that you need to know.
During this presentation, Mr. Clark discusses solutions to some of the most common legal issues landlords face including:
How to hold title to a rental property
How do I know if it’s a good rental property?
Marketing Strategies For Your Rental Property
Applications and Tenant Background Checks
Anti-Discrimination Laws Effecting Long Island Residential Rentals
What About Lease Agreements
How About Security Deposits
Collecting Rent
What To Do When a Tenant Doesn’t Pay
The Landlord Mindset
East Coast Real Estate Investors Association is a member group of National REIA and conducts monthly educational and networking meetings for real estate investors. To learn more about ECREIA go to http://www.eastcoastreia.net.
For more information, or if you need help with a landlord-tenant or eviction matter, please contact us.
Buying and selling a home can be a stressful experience, but it doesn’t have to be. In our experience, our clients do best when they understand the process and have a real estate closing attorney working in their best interests.
While most people realize they will need to sign a lot of documents when closing on a new home, the rest of the process can seem like a mystery to the average home buyer. First-time buyers who have never been through this process before will find this especially true.
Knowing what is happening and when it’s supposed to happen can be a huge relief to new home buyers. And, it helps keep the buying process running smoothly and on track. Key dates are listed here, along with their importance in the real estate closing process.
1. The Contract Date
The contract date is the date by which all the others in the deal are timed. Once the seller signs the contract and accepts the deposit, the deal has begun. On this date, you have committed to buying a home, and the seller is bound to sell to you. Additionally, the house is taken off the market and you are the “equitable owner” of the property.
2. Mortgage Commitment Date
You will need to receive the mortgage commitment by this date. Clark’s Laws will need to preserve your right to withdraw from a deal if you do not receive it by the assigned date.
Being diligent in the mortgage application is important in order to meet this date. You will need to get the loan officer what they need, when they need it. Keep us informed if you will not be able to do so, and we can reserve your rights to having your contract deposit returned.
3. Termite Inspection Date
Completing a termite inspection and notifying the seller of a termite problem must be completed by this date. Should you fail to do a termite inspection, you will have waived the right to back out due to a termite problem.
Termite inspection is a separate process from the general home inspection. Unlike the regular home inspection, the termite inspection may cause a lender to not fund a mortgage on that property. Therefore, it is not an inspection you want to waive.
Securing the termite inspection early on will allow us time to determine whether the seller will remedy the problem, or if we need to exercise the right to back out of the deal. We recommend doing this before entering the contract, if possible.
4. The Closing Date
Essentially, this is only a target date. Both parties set the closing date as an estimate of when they would like to close. There is no need to take off from work or hire movers for this date just yet. Most of the time, the actual closing date is different than what is listed in the contract.
Closings involve the transfer of bank checks, funding approval from your mortgage lender, the seller being able to deliver the house, and signing the loan documents and delivering your funds. Due to this, the closing day will remain flexible since there are many moving parts.
Alerting your place of business about an upcoming closing is a good idea. As the purchaser, you will need to be present for a closing during regular business days and hours.
5. Rate-Lock Date
When you lock in a rate for your mortgage, you are paying your lender to hold a rate on your loan; but only for a limited time. You will lose your money and your rate, should you not close by the time the rate-lock expires.
Before locking in a rate, you will need to know you can close in time. There are many variables that go into closing. And, many of those variables are out of your control. So, how do you know that you can close before the rate-lock date? Unfortunately, you cannot. The risk is yours to take when locking in a rate by a target closing date.
Conclusion
Embarking on the purchase of a new home is an exciting time. However, navigating the steps to getting your keys in-hand can be a daunting process. James Clark has years of experience with residential real estate closings, allowing you to close with confidence.
Filed under: General Information
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The following is a clip from a presentation that attorney, Jim Clark made to the East Coast Real Estate Investors Association (“ECREIA”) in March, 2019 entitled: “Landlord Advocacy: The Legalities of the Residential Buy & Hold Model on Long Island.”
Mr. Clark will be leading a follow-up discussion on these topics, and specifically how they’ve changed under the New York Housing Stability & Tenant Protection Act of 2019 at the monthly meeting of ECREIA at 6:30pm on September 25, 2017 at Domenico’s Restaurant at 3270-A Hempstead, Tpke, Levittown, NY 11756. To learn more about ECREIA, click here.
In this clip, Mr. Clark discussed how most problems landlords deal with are best handled by being in the right mindset. What is that mindset and how can you use it?
Video clip transcript below. To view the full presentation, click here.
During this presentation, Mr. Clark discusses solutions to some of the most common legal issues landlords face including:
How to hold title to a rental property
How do I know if it’s a good rental property?
Marketing Strategies For Your Rental Property
Applications and Tenant Background Checks
Anti-Discrimination Laws Effecting Long Island Residential Rentals
What About Lease Agreements
How About Security Deposits
Collecting Rent
What To Do When a Tenant Doesn’t Pay
The Landlord Mindset
East Coast Real Estate Investors Association is a member group of National REIA and conducts monthly educational and networking meetings for real estate investors. To learn more about ECREIA go to http://www.eastcoastreia.net.
For more information, or if you need help with a landlord-tenant or eviction matter, please contact us.
Full Video Transcript:
Marketing Your Rental
Landlord Advocacy: Legalities of the Residential Buy & Hold Business Model on Long Island.
I am often asked, how much rent should I charge? And with this I often recommend that you find a middle ground. There’s a lot of reasons why you want to charge the highest rent possible because it’s more money. But usually in this situation, unless you’ve got a top notch rental that’s basically pristine in a very high demand market and you can absorb turnover, it might not be a good idea. So, you might want to consider setting your rent a little lower.
I have clients that intentionally put their rents below market because they know that’s like a tenant retention policy. They’re not going to move because if they move anywhere else, it’s going to be more expensive. And they just want the security of knowing that the money’s there all the time. Again, it’s a personal decision that you’d have to make.
Dealing with realtors, I often get asked should I have a realtor market my rental? My recommendation is yes, find a good residential leasing agent. They’re worth their weight in gold. You get more exposure. You get some vetting that happens. A good residential realtor usually does some checking and really doesn’t give you bad leads if they know what they’re doing. The downside is that the tenant pays the commission. Usually it’s like one month’s rent and the tenant pays it and sometimes might not have the money, but then again if they don’t have the money, maybe you don’t want them.
Another drawback of using a realtor is if you are marketing an illegal rental, a realtor won’t touch it. They really can’t. Another reason why you want to make sure everything is legal.
Subsidized housing, how do I market to Section 8 and things like that? Usually lower income people qualify for this. Lower income people also qualify for Nassau Suffolk Law Services. So they’re great when the rent comes in, but when the rent doesn’t come in you just got to prepare yourself for battle and that’s all there is to it. In my experience, the subsidies from DSS and SSI, they tend to be more problematic. When I’m in landlord-tenant court, there’s always a slew of those cases on the calendar whereas Section 8, not as many. But even on that end, you got to be careful because you can’t tell a tenant, “I don’t want you because you’re DSS. If you were Section 8, I would take you.” In Nassau County, you can’t do that.
So then the next question comes up, well, which Section 8 housing authority should I deal with? Because each town’s got their own housing authority, and then you got the CDC, which is all of Long Island. Usually I recommend going with the bigger housing authority. And the reason for that is because it’s a bigger pool of applicants, number one. Number two, if you got to get rid of them, they have a larger pool of houses that they could look at to go to. So you’re waiting with less time to get rid of them. Whereas if they were in a town, the chance of there being another Section 8 eligible property in that town are less.
The following is a clip from a presentation that attorney, Jim Clark made to the East Coast Real Estate Investors Association (“ECREIA”) in March, 2019 entitled: “Landlord Advocacy: The Legalities of the Residential Buy & Hold Model on Long Island.”
Mr. Clark will be leading a follow-up discussion on these topics, and specifically how they’ve changed under the New York Housing Stability & Tenant Protection Act of 2019 at the monthly meeting of ECREIA at 6:30pm on September 25, 2017 at Domenico’s Restaurant at 3270-A Hempstead, Tpke, Levittown, NY 11756. To learn more about ECREIA, click here.
In this clip, Mr. Clark discussed how most problems landlords deal with are best handled by being in the right mindset. What is that mindset and how can you use it?
Video clip transcript below. To view the full presentation, click here.
During this presentation, Mr. Clark discusses solutions to some of the most common legal issues landlords face including:
How to hold title to a rental property
How do I know if it’s a good rental property?
Marketing Strategies For Your Rental Property
Applications and Tenant Background Checks
Anti-Discrimination Laws Effecting Long Island Residential Rentals
What About Lease Agreements
How About Security Deposits
Collecting Rent
What To Do When a Tenant Doesn’t Pay
The Landlord Mindset
East Coast Real Estate Investors Association is a member group of National REIA and conducts monthly educational and networking meetings for real estate investors. To learn more about ECREIA go to http://www.eastcoastreia.net.
For more information, or if you need help with a landlord-tenant or eviction matter, please contact us.
Full Video Transcript:
How Do I Know It’s a Good Rental Property?
Landlord Advocacy: Legalities of the Residential Buy & Hold Business Model on Long Island.
Another question I get all the time is, “How do I know it’s a good rental property?” Well, since we’re talking about the legal aspects of it, I’m not going to really get into the financial and the physical characteristics, even though they’re very simple calculations. But the legal considerations when somebody asks me, “Is this is a good rental property?” It’s all about its compliance with the building codes. And what does the CO say? And are all the improvements on it legal?
If they’re not, it’s a minefield of problems, and I’ll tell you why. First of all, everybody here knows what a CO is, basically it’s the piece of paper that the town has, it says what’s on the property and what’s legal. It runs with the land. On the other hand you have things like permits, rental permits, those are personal to the owner. When you buy a property, you don’t get the benefit of that rental permit, you get the benefit of knowing that it was permittable at some point, but you don’t get the rental permit.
So, when you’re buying a rental property you want to make sure that all the improvements on it are legal. If they’re not, you want to factor in what is it going to cost to get it legal? And that means everything. How many bedrooms does it have? I have one client now that’s wrestling with the town of Brookhaven, because they’re saying they want to give him a rental permit for a three bedroom house, but he has a fourth bedroom in the basement. This is making a difference on the amount of rent he’s going to get with a Section 8 tenant. And so he’s probably not going to get that fourth bedroom, because it’s in a basement. A little detail in the CO, he would have been able to figure that out and price it in differently.
Another thing is the law recently changed, end of November 2017, so a little more than a year ago now. And they added a section to the real property law that protects tenants against houses that don’t have a CO for the improvements that are on them. So from the time that law was passed, when you enter into a lease with a tenant, you’re required, in your lease, to disclose what’s on the CO and that everything is legal, that all the improvements are legal.
What are the consequences for not doing that? Well, your lease is void. And the statute was written pretty strictly, and it’s not something you can write a paragraph in your lease that said, “Tenant waives the right to see a CO.” You can’t waive it. So, a lot of people end up getting leases and they think they have lease, but it ends up being void because of this new law.
To enter a written lease, that written lease now must include information about the CO. When I do it now, we include it as an exhibit. Now let’s just say you have a CO, but the CO doesn’t have everything legal. My people are saying, “Well, I’ll just attach the CO and it will be fine, right?” No, it’s not going to be fine if you have improvements that aren’t listed on that CO. The lease still would be void.
What happens if a lease is void? Now all those terms that you worked to put in to dictate how the relationship is going to play out, gone. You got a month-to-month tenancy that’s based on the statute. If you want to terminate it, look at the statute, all of your lease provisions that say if you got to evict somebody you get additional rent like attorney’s fees, gone. So, just something to think about.
My recommendation, after that, is to make sure your property is in compliance. Get a good look at your COs before you buy it. And if you have properties, pull the CO anyway, get a look at it and see if you’re in compliance. That you know that when you do enter your lease next time, you can actually have a lease as opposed to a voided lease.
Filed under: Residential Real Estate Law
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The following is a clip from a presentation that attorney, Jim Clark made to the East Coast Real Estate Investors Association (“ECREIA”) in March, 2019 entitled: “Landlord Advocacy: The Legalities of the Residential Buy & Hold Model on Long Island.”
Mr. Clark will be leading a follow-up discussion on these topics, and specifically how they’ve changed under the New York Housing Stability & Tenant Protection Act of 2019 at the monthly meeting of ECREIA at 6:30pm on September 25, 2017 at Domenico’s Restaurant at 3270-A Hempstead, Tpke, Levittown, NY 11756. To learn more about ECREIA, click here.
In this clip, Mr. Clark discussed how most problems landlords deal with are best handled by being in the right mindset. What is that mindset and how can you use it?
Video clip transcript below. To view the full presentation, click here.
During this presentation, Mr. Clark discusses solutions to some of the most common legal issues landlords face including:
How to hold title to a rental property
How do I know if it’s a good rental property?
Marketing Strategies For Your Rental Property
Applications and Tenant Background Checks
Anti-Discrimination Laws Effecting Long Island Residential Rentals
What About Lease Agreements
How About Security Deposits
Collecting Rent
What To Do When a Tenant Doesn’t Pay
The Landlord Mindset
East Coast Real Estate Investors Association is a member group of National REIA and conducts monthly educational and networking meetings for real estate investors. To learn more about ECREIA go to http://www.eastcoastreia.net.
For more information, or if you need help with a landlord-tenant or eviction matter, please contact us.
Full Video Transcript:
Introduction and Historical Perspective
Landlord Advocacy: Legalities of the Residential Buy & Hold Business Model on Long Island.
Before I get started, I just want to talk a little bit about the historical perspective on this.
Basically, it’s a business model that’s been around for thousands of years, thousands of years. In ancient Rome, peasants were bound to the lands and they were dependent on their landlords for protection. In feudalism, in medieval Europe, it became more formal, structuring society around relationships from holding land in exchange for labor. The relationship developed significantly over time, but it’s primarily characterized by the same thing. The landlord having the lands and getting payment from a tenant. And this hasn’t changed in all that time.
So think about that for a minute. We’ve had empires rise and fall. We’ve had revolutions ignite, the King of France got his head chopped off. We’ve had two world wars. We’ve had the plague. We’ve had the discovery and the founding of the United States of America. And through all that, that one simple transaction, the landlord tenant deal, the landlord’s got the land, the tenant pays the rent, withstood all that turmoil. So there’s not too many business models with that kind of longevity. So why is this historical perspective so important? Well, it’s because these ancient customs, they’re ingrained in who we are and our society and what we do and in all of us. Our present day legal system is based on all of this history.
And it’s a big deal because thanks to this history, the custom and these laws, landlords get rent payments every single month, without fail. So much so that it’s just a trace amount of rent payments that don’t get paid. All right? So if you’re in this business, the odds are overwhelmingly in your favor of getting paid. Now we never hear about that, because we’re always focused on the negative aspects of things and it’s really not fun to talk about a rent payment arriving on time. We’d rather hear about the evictions and the nightmare of getting your place destroyed and everything else. Those are the things that live, so to speak, rent-free in our heads. You know that these things are going to happen to us, but they’re rare events.
And if it’s done correctly, it’s a very solid business model. It’s a business model that’s stood the test of time. So other than the history of this whole thing, what are the benefits of buying whole model?
Number one, it’s cash flow. You know that the rents are going to come in, it’s passive money. Whether you go to work or not, whether you even wake up in the morning or not, you get paid.
Secondly, it’s the equity appreciation. So equity appreciation from the fact that you’re paying down your mortgage over time, or it’s equity appreciation from the fact that the market goes up.
And third, there’s also the tax benefits of having the real estate and being able to get the write offs.
So I know a lot of people are into the flipping model and as most of you that do that know, it’s essentially a job. If you don’t get out there and you don’t find another property, you don’t develop it, you don’t sell it, you’re not going to make money. So the buy and hold model is closer to pure investing. You put your money there and your money is working for you, as opposed to you working for your money.
Now, I guess compared to market investing, it involves a little bit more work. In the stock market, you buy a stock and it does what it does. You have very little, if any control over how a publicly traded stock appreciates. On the other hand, as a landlord you have far more control over how well that investment does.
So the key here is, how do you exercise that control? If you do it right, it’s a great way to go. I think there’s no better way to do it. One feature of the residential buy and hold models as compared to other types of buy and holds like commercial, is in residential, you’re up against the people who are buying these houses to live in. There’s that emotional component. In commercial, it’s really just the numbers, what’s the income? And then there’s a calculation. This is what it yields and this is what I’ll pay for it, not a penny more.
With residential buy and holds, especially if you’re going to buy a residential rental in a neighborhood that maybe has good school districts, desirable neighborhood, you’re going to be competing with people who are going to live in those properties and they’re not really concerned about the rental income. They’re concerned about what the comparables are and really that’s it. So for that reason, you often see people that get into this model are investing in lower price markets because throughout Long Island, Nassau and Suffolk, the rents are roughly the same. But if your entry point is less, your rate of return is more.
So some key questions to consider as you are considering this model. Do the numbers work for you? And I get a lot of questions about this. You think this is a good deal? Do the numbers work? This is a personal question. People get involved with this for different reasons. If you’re getting involved with it for the tax benefits, you’re going to have a different calculus than if you’re getting involved with it for the cashflow. So it’s going to become a personal question.
Can you handle the physical and mental toll that it takes on you? Because it will. At some point, the rent won’t come in on time. How are you going to feel about that? Tenant’s not caring for your house the way you would care for it yourself, or the good old 1:00 AM call. Now they’re not calling to see how you’re doing. They’re calling to say there’s a big problem. They expect you to do something about it right then and there.
If it works and it’s something that you want to try or maybe you’re already in it, how do you make the most of it? Well, that’s what we’re going to talk about here.
The following is a clip from a presentation that attorney, Jim Clark made to the East Coast Real Estate Investors Association (“ECREIA”) in March, 2019 entitled: “Landlord Advocacy: The Legalities of the Residential Buy & Hold Model on Long Island.”
Mr. Clark will be leading a follow-up discussion on these topics, and specifically how they’ve changed under the New York Housing Stability & Tenant Protection Act of 2019 at the monthly meeting of ECREIA at 6:30pm on September 25, 2017 at Domenico’s Restaurant at 3270-A Hempstead, Tpke, Levittown, NY 11756. To learn more about ECREIA, click here.
In this clip, Mr. Clark discussed how most problems landlords deal with are best handled by being in the right mindset. What is that mindset and how can you use it?
Video clip transcript below. To view the full presentation, click here.
During this presentation, Mr. Clark discusses solutions to some of the most common legal issues landlords face including:
How to hold title to a rental property
How do I know if it’s a good rental property?
Marketing Strategies For Your Rental Property
Applications and Tenant Background Checks
Anti-Discrimination Laws Effecting Long Island Residential Rentals
What About Lease Agreements
How About Security Deposits
Collecting Rent
What To Do When a Tenant Doesn’t Pay
The Landlord Mindset
East Coast Real Estate Investors Association is a member group of National REIA and conducts monthly educational and networking meetings for real estate investors. To learn more about ECREIA go to http://www.eastcoastreia.net.
For more information, or if you need help with a landlord-tenant or eviction matter, please contact us.
Full Video Transcript:
The Landlord Mindset
Landlord Advocacy: Legalities of the Residential Buy & Hold Business Model on Long Island.
The landlord mindset. Not something that that people often like talking about, but I thought it was a good thing to talk about here. The ability to absorb the hits, because they’re coming. Unless you’re very lucky. And especially in the beginning, the hits come often and early. And if you don’t do it right, the hits are coming as well.
What I try to tell people is that, “Yeah, sure. There are bad tenants, but a good landlord can deal with a bad tenant just the same as they could deal with a good tenant.” So you try not to hope you have a good tenant over a bad tenant. You make yourself a better landlord, that you can deal with it. So you can’t always control what they’re going to do but you can control what you do about it and how you respond to it.
It’s good to have the laws in your favor, but in the end, it’s going to be about the people. You know? And who are the people? The people are the tenants. People are judge that’s sitting on the stand if you got to evict somebody. The people are you. Out of all those things, you only have control over you. Right? And for some of us, we barely have control over that part either.
We’ve talked about this in the beginning, the negative seems to occupy a big part of our minds when we’re thinking about this stuff, and all the ways it can go wrong. It’s very interesting to talk about. That’s what we’ve talked about tonight, all the ways this stuff can go wrong. But what about the positive? All those rent checks that come in, how many of them come in and you never hear anything about it? What about the pay down on the mortgage and the building of the equity? What about the tax benefits that you’re getting year after year? It’s not exciting stuff, but what it can do for you is very exciting.
My own mindset was that these things are not free. Yeah, it’s a passive investment, but that passiveness always comes with a cost. And the thing was, I couldn’t dictate when that cost was going to come. I could not dictate when I was going to get that 1:00 AM call. But I knew it would come, and when it did, you basically just say, “Okay. Now it’s my time to pay the price.” And even if it turns out worse than I could ever imagine, I think about it and, yeah, that would be still a price that I would pay for all that passive income that I got. And so I would just smile and bare it and go take care of it.
If the problems still wear on you despite trying to get your head right, then consider getting a property manager. You know? There’s top-notch property managers in this room tonight that you’d want to talk to, and they know how to do it right. And that’s really what it comes down to is doing it right. If it still wears on you despite that, then consider another investment. Consider getting into the market.
But in the end, you’ll find that if you do it right, it’s a very good way to go. The key is doing it right. It means getting the skills to do it right, having the right mindset. It also means getting the right resources. Realtors that do this kind of thing. Maintenance crews that can handle a punch list like nobody’s business. Tenants, good tenants, and attorneys that can handle it for you when it gets bad. Utilize these people in a way that brings out the best in each one of them. And if you do that, then you’ll minimize the problems. When the problems do arise, you’ll absorb it and you’ll continue going on. And the more you continue going on in this business, the richer you’re going to become because of the equity, appreciation, the cashflow, and everything else. And in the end, you will be successful.
The following is a clip from a presentation that attorney, Jim Clark made to the East Coast Real Estate Investors Association (“ECREIA”) in March, 2019 entitled: “Landlord Advocacy: The Legalities of the Residential Buy & Hold Model on Long Island.”
Mr. Clark will be leading a follow-up discussion on these topics, and specifically how they’ve changed under the New York Housing Stability & Tenant Protection Act of 2019 at the monthly meeting of ECREIA at 6:30pm on September 25, 2017 at Domenico’s Restaurant at 3270-A Hempstead, Tpke, Levittown, NY 11756. To learn more about ECREIA, click here.
In this clip, Mr. Clark discussed his experiences and qualifications as a landlord attorney.
Video clip transcript below. To view the full presentation, click here.
During this presentation, Mr. Clark discusses solutions to some of the most common legal issues landlords face including:
How to hold title to a rental property
How do I know if it’s a good rental property?
Marketing Strategies For Your Rental Property
Applications and Tenant Background Checks
Anti-Discrimination Laws Effecting Long Island Residential Rentals
What About Lease Agreements
How About Security Deposits
Collecting Rent
What To Do When a Tenant Doesn’t Pay
The Landlord Mindset
East Coast Real Estate Investors Association is a member group of National REIA and conducts monthly educational and networking meetings for real estate investors. To learn more about ECREIA go to http://www.eastcoastreia.net.
For more information, or if you need help with a landlord-tenant or eviction matter, please contact us.
Full Video Transcript:
The Making of a Landlord Attorney
Landlord Advocacy: Legalities of the Residential Buy & Hold Business Model on Long Island.
Just want to talk a little bit about my background and what qualifies me to talk to you about this today. I’m an attorney. I represent landlords and active real estate investors. That’s what I do. But that’s just one moment in time. How did we get here?
Well, it’s over 30 years in the making at this point. I know I don’t look that old, but this has been happening … I’ve been involved with this since I’m a kid. My parents were both self-employed. They were in business, but they weren’t business people. They were self-employed. That means they did everything themselves and they worked around the clock and they worked hard, then when it came time for them to invest, they did it the same way, they did it themselves and they had rental homes. I would always hear about all the problems that they were having.
My mother bought her first house to live in and then when she moved out of it, she made it a rental. I think it was within a few months, the place got trashed by her first tenant. My parents, they worked all the time so if I wanted to see them I went to work with them. I remember going to work on that house and we’re clearing the house out with a refrigerator full of food that’s been there for two weeks with no power, things like that. So I got to see firsthand the emotional impact of this and what it does to people. I always think about that when dealing with my clients.
I remember another instance. My dad, he had a rental property, it was on Montauk Highway. I would pass by it on the bus every day. And I remember one day I passed by it in the bus and it was actually just a pile of rubble and I was like, “Interesting.” And then of course I went about my day at school. I didn’t think much of it at the time because they really didn’t tell me much, but I knew there was a lot of tension in the household at that time. Well, I found out later that he had a bad problem with tenants there, so much so that he went through the legal process. It didn’t work. He was in construction and he was kind of a rough guy. He’s like a guy that I would never mess with, so I was a good kid. He had heavy construction equipment and he was at his wits end and he also had friends in the police department and one day he called them up and he said, “Guys, can you just keep the property clear for me for just a few hours, make sure none of your people go there.” “Sure, no problem.” They were good friends. He went in there with his heavy equipment and a few guys and he physically removed the tenants himself, knocked down the house himself, and said, “Go try getting back in there now.”
Yeah, these are extremes. This is where I come from.
Anyway, this stuff … these are extremes, but I’ve lived through this stuff. I’ve lived through it from the side of being the kid in the house, seeing all that stuff going on, and it’s made it so that really nothing surprises me. So, you know, people come to me with problems all the time and they’re really bad problems, and I just deconstruct it and I think about how we can fix it because I’ve seen really bad stuff. I wouldn’t wish any of this on anybody, but you know, it’s made me who I am today and it’s made me where I’m very sensitive to what my clients go through. So when it’s just an eviction and some people would think, “All right, well this is the law, and this is what we’re going to do, and this is how we’re going to get them out,” I’m thinking about what’s happening in that guy’s house and what they’re going to be going through, through the whole process.
So later on, I end up in law school, and the first thing I did, because I was really wanting to get involved with landlord tenant stuff is I volunteered in a landlord tenant clinic. Basically helping tenants, reading cases, figuring out laws so that they could turn the tables on their landlords. Very interesting. I got to see what things look like from the tenant perspective. Then when I was working as an attorney, I worked at a big firm in Wall Street, I was making decent money so I started buying rental properties and it wasn’t long before I started having my own problems and the rents weren’t coming in on time and having to think about, you know, the business aspect that it’s like, “Wow. When it was working, my mortgage was getting paid down.” I was looking at the principal getting paid down every month. Like, “This is great. Time is on my side. I’m just working and that’s happening.” Then all of a sudden, somebody didn’t pay and I had a default and I got to see how time is no longer on my side because I need to pay this mortgage by the first of the next month and this guy is not paying me. Or having to deal with tenant turnovers.
So, through that I learned the business side of this. I still have some of those rentals to this day. Also, when I worked for the same firm, what they did was they had a program where they would let their associates working in any pro bono organization that they wanted to for a six month rotation. They’d pay me a Wall Street salary and I could work pro bono for someone. So I chose to work in the field of landlord tenant law and I went to work for an outfit called Nassau Suffolk Law Services. They work out here, and basically these guys are probably the meanest landlord-tenant warriors on the Island. This is what they do all day long. They have a staff of attorneys that work full time just dreaming up ways to keep tenants in their house when they’re not paying the rent and they’re really good at. So I worked side by side with these guys. I got to see all their cases. I got to see all their tactics. I became one of them for a little while. Very interesting. Very interesting.
I ended up becoming part of the committee that was redrafting the lease forms that most people use, and I got to see how every word on these leases are basically backed up by some case, some drama, and I’ve learned that how words matter. Every single word in that lease matters if you don’t get it right, there’s a consequence that if you’re called out on it.
In practice, representing landlords now, I always tried to seek out the cutting edge cases because I want to stay on top of my game. A lot of times I go to landlord tenant court after I’m done with my cases, you hear the law clerk under her breath, like, “All right, back to our regularly scheduled program,” because we do some really strange stuff. I’ve learned how to shorten a foreclosure process through the landlord tenant laws and just basically taking a shot in the dark and making it work.
I’m special counsel for an outfit that’s affiliated with town of Babylon that owns all the land on the Barrier Beach, you know, Oak Beach, Gilgo Beach. You know, nobody owns that land where those houses are, and so when there’s defaults there, I’m the guy that they call. And these are very complex arrangements. It’s very difficult to evict someone who has their house on the land. The town doesn’t own the house, they own the land. Well, how do you evict somebody? Well, we’ve figured that out.
I’ve also been involved with Section 8 leases a lot because they’re great when they’re paying, but when they go bad, they’re horrible, you know, number one, because you’re dealing with the Nassau Suffolk Law Services and number two, because you’re dealing with a federal regulatory scheme and the state regulatory scheme. I’ve taken many of those cases to trial to try and break new ground where there’s the conflict and it’s all a great learning experience. The purpose of it all was really to make sure that the run of the mill cases, the cases that I handle for people like you, I could just nail them. I know I can show up for the client and make it happen every time, and that’s why I do it. So that’s my background and that’s what I’m all about.
I’ve been fully immersed in this, you know, for over 30 years, like I said, and while I enjoy living on the cutting edge with where I’m going with the law, my goal with all that is to they keep my clients away from it because the cutting edge is sharp and sometimes it cuts and it hurts. So that’s what I try to do. This type of expertise, it’s both a blessing and a curse because I get most of my clients by referral and people know of me. My reputation is that I take these really messy bad landlord-tenant cases and I make something out of them. So, when people call me, I never know what they’re calling about, and it’s getting to the point where my associates, when they hear we got a new case, they’re all nervous because they know they’re in for a challenge. They don’t know what it’s going to be, but it’s probably going to be bad, or there’s always a possibility of it being bad. But that’s good because it makes us better, and it’s getting to the point now where my associates of some of the best landlord-tenant lawyers on the Island as well, because they’re dealing with it. They’re going toe to toe with these guys.
In my capacity and doing his landlord tenant stuff, I find that the same questions keep coming up over and over again. So what I’m going to do tonight for a little bit is to tell you some stories. I’m going to talk about these questions and I’m going to give you some answers. I’m going to give you some recommendations based on my experience and hopefully it’ll help you guys as you get deeper into this business model.
The following is a clip from a presentation that attorney, Jim Clark made to the East Coast Real Estate Investors Association (“ECREIA”) in March, 2019 entitled: “Landlord Advocacy: The Legalities of the Residential Buy & Hold Model on Long Island.”
Mr. Clark will be leading a follow-up discussion on these topics, and specifically how they’ve changed under the New York Housing Stability & Tenant Protection Act of 2019 at the monthly meeting of ECREIA at 6:30pm on September 25, 2017 at Domenico’s Restaurant at 3270-A Hempstead, Tpke, Levittown, NY 11756. To learn more about ECREIA, click here.
In this clip, Mr. Clark discussed how landlords should handle the situation of a non-paying tenant.
Video clip transcript below. To view the full presentation, click here.
During this presentation, Mr. Clark discusses solutions to some of the most common legal issues landlords face including:
How to hold title to a rental property
How do I know if it’s a good rental property?
Marketing Strategies For Your Rental Property
Applications and Tenant Background Checks
Anti-Discrimination Laws Effecting Long Island Residential Rentals
What About Lease Agreements
How About Security Deposits
Collecting Rent
What To Do When a Tenant Doesn’t Pay
The Landlord Mindset
East Coast Real Estate Investors Association is a member group of National REIA and conducts monthly educational and networking meetings for real estate investors. To learn more about ECREIA go to http://www.eastcoastreia.net.
For more information, or if you need help with a landlord-tenant or eviction matter, please contact us.
Full Video Transcript:
What to do When the Tenant Doesn’t Pay
Landlord Advocacy: Legalities of the Residential Buy & Hold Business Model on Long Island.
What do you do when the tenant doesn’t pay? Well, you always want to address it immediately. You want to make it where you’re the last one that they don’t want to pay. Because everybody’s got a pile of bills, and if you’re the guy that kind of says, “Ah, all right, get it to me tomorrow, or get it to me next week,” then they’re going to do that, and they’re going to take advantage of it, because they have other bills, that if they don’t pay them on time, they’re going to get dinged for it.
Notice requirements. You always want to look at the lease, look at the statute. If they’re late, how do you give them notice? Is it something where you have to personally serve them? Is it something you could do it by mail? Usually that’s governed by the lease, if you’re lucky enough to have a good lease. The problem with not giving correct notice is by the time you get to evicting them, they can get it dismissed, because that’s a jurisdictional item that you have to notify them properly.
So my recommendation is always having a system for dealing with defaults. Like what I do with a lot of my clients that are regular landlords is I have all their leases on file, and I know when the due dates are, and I just monitor it. And usually I don’t hear anything, which is nice. But when it doesn’t happen, I’ll get a call from one of my clients that says, “All right, XYZ didn’t pay. Can you get me a default notice out today?” And we already have it. We already have the lease, we already know what’s going on. Boom. Goes out the same day in proper statutory form. It really doesn’t cost them much, but then they know it’s done right. And then when we have to evict, then we’re not going to be challenged on it.
The following is a clip from a presentation that attorney, Jim Clark made to the East Coast Real Estate Investors Association (“ECREIA”) in March, 2019 entitled: “Landlord Advocacy: The Legalities of the Residential Buy & Hold Model on Long Island.”
Mr. Clark will be leading a follow-up discussion on these topics, and specifically how they’ve changed under the New York Housing Stability & Tenant Protection Act of 2019 at the monthly meeting of ECREIA at 6:30pm on September 25, 2017 at Domenico’s Restaurant at 3270-A Hempstead, Tpke, Levittown, NY 11756. To learn more about ECREIA, click here.
In this clip, Mr. Clark discussed the best way to hold title to a residential rental property and the factors that go into the determination.
Video clip transcript below. To view the full presentation, click here.
During this presentation, Mr. Clark discusses solutions to some of the most common legal issues landlords face including:
How to hold title to a rental property
How do I know if it’s a good rental property?
Marketing Strategies For Your Rental Property
Applications and Tenant Background Checks
Anti-Discrimination Laws Effecting Long Island Residential Rentals
What About Lease Agreements
How About Security Deposits
Collecting Rent
What To Do When a Tenant Doesn’t Pay
The Landlord Mindset
East Coast Real Estate Investors Association is a member group of National REIA and conducts monthly educational and networking meetings for real estate investors. To learn more about ECREIA go to http://www.eastcoastreia.net.
For more information, or if you need help with a landlord-tenant or eviction matter, please contact us.
Full Video Transcript:
The Best Way To Hold Title to a Residential Rental Property
Landlord Advocacy: Legalities of the Residential Buy & Hold Business Model on Long Island.
Number one question I always get, is how should I hold title when I’m preparing to purchase a rental property? Well, basically it’s a four level inquiry.
It all starts with the financing, because without the financing, without the money, there’s nothing else to talk about. But in addition to the financing, you’ve got asset protection, you got the estate and tax planning, and then the fact that you have multiple owners. So number one consideration is financing, because where your money’s coming from will have a big difference on how you hold title. If you go to a conventional lender and you’re looking for the cheapest money, your conventional lender is going to want to loan to an individual. So the question is done, you’re holding it as an individual, period. There are other financing sources around now, a lot of them, that will allow you to hold title with an entity, but they tend to be more expensive. If you’ve got room in your deal, I recommend consider it, because once you hold title with an entity, you’re going to be better off as far as liability protection goes, which that’s the next question.
Asset protection, that’s something you got to be worried about. And many people come to me and they say, “Well, should I put it in entity? Because I’m worried about if somebody slips and falls on the property.” Usually that’s not a consideration because you have insurance for that. More than that, if that’s your only thought of why you want to put it in an LLC, then that’s probably not enough. But on the other hand, there’s other liability that can come from other places that you do want to be concerned about.
I had a client just a couple of years ago, had many rental properties, residential rentals, owned them all in his personal name. He had an issue in that his car insurance lapsed, and he happened to get into an accident when it lapsed, and it was a bad accident and he killed the guy that he hit with the car, and they came after him and since he had no insurance at the time, all of his assets were subject to liability.
So now all of his rental properties that he owned in his personal name were fair game, and he had to sell some of them in order to make this go away. Now if he held title to these properties in LLCs, they may still be able to get to them as well, in that situation, but it’s a lot more difficult, there’s an extra layer of protection that would’ve helped them there.
Another issue is estate and tax planning. So, when you’re planning for your estate, basically you’re planning on passing your property onto the next generation. Rental properties become a big issue, because if you’re doing it right, you’re going to want to hold this rental property for a long time. And many people hold it and they want to hold it for generations and they want to pass it on to their kids. So if you hold title individually, it’ll just pass by virtue of your Will, fair enough. But if you have a lot of them and you have other estate issues, then you might want to consider holding it through a LLC. Some people say, “Well, how about a corporation that’s a better liability protection?” Well, actually it’s the same liability protection. But the problem with a corporation is if you hold it with an S corporation, the only people that can own that S corporation are individuals. Whereas if we hold it an LLC, the owners can be things like trust and then you can shift around the ownership a lot easier.
I had an older client not too long ago, he actually passed away. He had 20 something rental properties and he owned him in an LLC. And the LLC was owned by a trust. And this guy had six kids from two separate marriages, and they hated each other and they would all try to get on his favor one way or the other, because they wanted his property. And he came to me, probably like three or four times changing things around. The deed never changed, but the underlying ownership and who was getting it changed. So you can do things like that when you use an entity.
Multiple owner planning, let’s just say you buy a rental property with more than one person and you guys both go on individually. Well, in order to do anything with that property, you need two signatures. One from each owner. That’s just deeds. If you put it in any other entity, then you might not. I had two brothers that owned the rental property together. They were the best of friends. . . You know where this is going? They were both contractors worked in the same business. Great rental property investment. They planned on keeping it forever. They had a falling out. They don’t talk to each other anymore. The one brother took over management of the property, he wants to get rid of it. The other brother says, “No, not unless you pay me, pay me a lot.” And so they sit there, for years now just thinking about how they’re going to get out of the situation. Because neither one of them wants to start a partition action, because that’s expensive and they got a mortgage and by the time they’re done, there’s not going to anything left?
So these are the things that I think about when somebody asks me, “How should I hold title?” My recommendation is hold title with an LLC, unless the financial constraints dictate otherwise. If you’re buying a property because of cheap financing, then you have no choice. But otherwise use an LLC. The other question I get is, should I put it in separate LLCs or one LLC? For liability purposes, it’s better to have a separate LLC for each property, but for management purposes and for other reasons, you might want to consider putting all your rental properties into one.
I have one client who is executing a strategy of buying as many single family rentals as you can. He’s putting them all in the same LLC. When he’s done, he’s going to sell it off as a portfolio, do a Section 1031 exchange into a commercial property. With that strategy, it’s better to hold it in one LLC.
Filed under: Residential Real Estate Law
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In this segment Jim Clark answers the most popular questions that come up through his interactions with landlords and real estate investors through his presentations to local organizations, networking, one on one conversations as well as direct posting through his web site and social media.
This month Jim Clark devotes this entire segment to one of the most commonly asked questions – How to Make Offers That get Accepted. While every deal is different, the following strategy is tried and true. This is how some of the most successful residential real estate investors operating in the New York metropolitan area to get their deals from accepted offer to full contract when there is no real estate agent involved.
In this section we’ve provided the following tools to help get you going:
The Offer to Purchase. (starts at 7:40) The goals and elements of a written Offer to Purchase.
Purpose of a Credibility Sheet. (starts at 11:30) Building trust to stand out from other investors.
Sample Offer to Purchase. (starts at 15:49) Form document that you can adapt for your deals can be found at www.clarkslaws.com/makingoffers.
This strategy is particularly useful when doing assignment and wholesale deals in New York.
For more information on this strategy (including bonus materials on what to do if your seller does not have an attorney) check out our web site at www.clarkslaws.com/makingoffers.
