Author Archive: Tracey March
Tracey March has been working for allpropertymanagement.com since it began in 2004. She was a partner in a general practice law firm, where she practiced real estate law and landlord-tenant law, for six years. She was also a real estate broker for three years. Tracey now researches and writes about property management and real estate investment. Find her on Google Plus.
As of the end of September I co-own a five-unit multifamily property with my husband. We decided rental property investment is going to be our part-time gig.
We’ve decided to self-manage for these reasons:
- It’s close–about a half-mile from our house.
- We both work less than full-time, so theoretically we have the time to put in. We do have a kid, but she’s almost fourteen. After 2:45 p.m. we’re busy with homework, activities, and dinner, but during the day she’s at school.
- I used to be a lawyer, and did a little landlord-tenant law including drafting lease agreements, notices to vacate, evictions, and other stuff.
- I also used to be a real estate broker, which means I have met a minimum property management education requirement.
- I’ve been writing about the property management industry and property management issues for almost ten years.
So, we figured we’re well-equipped to be awesome landlords. Now that we’ve owned the rental for six weeks, I’m going to downgrade the “awesome” to “decent” to account for reality. Here are the issues we’ve had so far:
1. Two days before the inspection and prior to closing, I wrote a post on meth lab rentals, got a little paranoid, ordered a meth test kit, and then was too busy working on a deadline to show up at the inspection to do the actual testing. Then I couldn’t figure out an easy way to arrange for the test without insulting my new tenants. Can you imagine if your new landlord wanted to come by to test your counters for methamphetamine residue?
2. Two days after we closed, my husband and I went on a two-week trip to Tuscany. The day we should have been preparing for the trip I had to set up an LLC, get a bank account, get a PO box for rent checks, get a federal ID number, check in with our accountant, draft an LLC operating agreement. I also wrote letters to our tenants introducing ourselves and telling them where and how to pay rent, checked out online rental payment options (and subsequently abandoned the effort, opting to ask tenants first if they’d use such a service), and created Tenant Information Sheets for each of them to fill out and submit with their rent.
3. The trip to Tuscany was awesome.
Transferring electricity, garbage, and other accounts from a significantly different time zone was not awesome. Also not awesome was the email from one of our tenants who was understandably concerned about sending a check to new PO box, written out to a company she didn’t know (and of course she couldn’t find information on because it was newly-formed!). She wanted to meet us in person because she was concerned about rental fraud. Sort of funny, given my recent post on how to avoid Craigslist rental scams–maybe she read it! What was even less awesome was having to email her back that I couldn’t come by and meet her because I was in a foreign country–the classic excuse of many rental scammers.
4. A couple of weeks ago, one of our tenants called my husband (whom I now refer to as “Mr. Roper”) to let him know she had no electricity on her second floor. He called the electrician, who fixed it for $40. Nice. Then the electrician told my husband that our smoke detectors weren’t in compliance with code. It turns out the electrician was wrong. The smoke detectors are in compliance with code, but they don’t meet current recommendations. Not wanting to mess around with fire and tenant safety, Mr. Roper went out right away, bought four ten-year smoke detectors and installed them in the apartment. That night I wrote 24-hour notices to the other tenants that we would be entering their units to install new and additional smoke detectors the next day and congratulated myself for being so on the ball. Then we got busy and didn’t deliver the notices. I had to recycle them as the dates were wrong. That was fourteen days ago. Nothing else has been done.
5. For November rent, two checks hadn’t been received in our PO box by the afternoon of the 4th. That was ten days ago. We haven’t checked since. Maybe today.
6. The prior landlord, who has been great, suggested that I mail recycling guidelines to the tenants because some liberties are being taken with the recycling containers. I haven’t done that yet. He’s also worried that we haven’t put the spigot covers on yet.
Now, I know what needs to be done to be a good landlord. I’ve been a tenant before, I’ve been a landlord before, I’ve been writing about property management for almost a decade, and I’ve been a landlord-tenant lawyer. However, sitting down and actually doing the work is a lot different from knowing exactly what needs to be done, as the past six weeks have taught me. Things like your kid getting sick, unexpected work deadlines, outpatient surgeries on parents, family trips to cyclocross races, and multiple dentist visits (requiring Ambien) have cropped up. But the problem is, the stuff still needs to get done. So, here’s what need to do differently, point by point.
- The Meth Issue: I have no reason to believe any of our tenants is doing meth. None of the signs are there. I need to get over that. I think this a bit like when med students think they have the disease they’re studying that week.
- The Last Minute Closing Before our Trip Issue: This was a time management issue and organization deficiency on my part. If a property management company had been involved we wouldn’t have had to worry about setting up the PO box or contacting our new tenants, but I would still have had to form the business and set up the bank account. Besides, it’s kind of lame to complain that we didn’t have enough time to pack for our awesome Tuscan vacation. Classic first-world problem.
- The Transferring Accounts and Vigilant Tenant Issue: Another time management and organization deficiency. As to the tenant issue, I think we should have asked the prior landlord to write a letter to the tenants explaining the upcoming transition when we closed. If we buy another rental, that will be on our list. A property management company would most definitely have been able to help us with the vigilant tenant issue, and quite possibly the accounts transfer issue.
- The Smoke Detector and Notice Issue: I just need to do it, so I just emailed Mr. Roper asking when he can install the smoke detectors so I know the dates to put in the notice. A property management company could just take care of things and make that problem disappear, but we’re not caving in yet.
- Rent Checks. The solution to this one is to set up online rental payments, which I have added to my to-do list. In the short term, this is another “I just need to do it” issue, and I’m going into town to check the PO box in about twenty minutes. [UPDATE: They're all paid up--which is great because if I have trouble drafting 24-hour notices to enter, I can't imagine I'll have much enthusiasm for tracking down rent payments and threatening eviction].
- Recycling and Spigot Issues: I’m not going to drive out to the Recycling Center to get forms, but thanks to the Tenant Information Sheets I created and got back last month, I have my tenants’ email addresses, so I’ll find the information online and forward it to them. The spigot is a maintenance issue and, therefore, not my gig. But I did just nag Mr. Roper about it. A property management company might come in handy here.
Well. Since we’re not going to hire a property management company (yet), I need to get started on my list.
Besides criticizing me for my time management deficiencies, do you have any other advice?
By Tracey March
Breaking Bad, the hit television series, is in its final season. While many of us are lamenting that the show will soon be over, I for one am grateful that my everyday life is not a Breaking Bad world of meth labs and drug dealers.
However, it’s best not to be naive. Meth labs are often set up in rental homes, so landlords and property managers are at risk of having their rental properties turned into methamphetamine production facilities. This is a big deal because the chemicals that are used to make meth are highly flammable and explosive. And meth residue is extremely toxic and considered hazardous waste. Once it’s discovered, the property owner is responsible for cleanup, which can cost tens of thousands of dollars, and most insurance policies won’t cover it. In addition, meth residue can permeate an entire building, which means remediating all affected units, losing rental income, and temporarily relocating residents.
Given the physical dangers and financial consequences of renters setting up meth labs in your rental home, we thought some meth Q&As were in order:
1. What are the health-related symptoms of meth residue?
The health impacts of meth residue exposure are serious, and include headaches, fatigue, nausea, dizziness, and chest pain. The central nervous system and blood production system can start to shut down because brain, liver, and kidney damage can occur. If that wasn’t enough, there’s also an increased cancer risk, and exposure for a pregnant woman could trigger fetal birth defects and developmental problems in her baby.
2. What are some indications that there is a meth lab in your rental property?
Cooking meth requires ingredients, so look for signs of things that are necessary to make meth. If you watch Breaking Bad, you might recognize some of them. When you see the list, you understand why it’s so toxic:
- Product packing for over-the-counter ephedrine or pseudoephedrine, which means look for cold, diet, or allergy pill boxes.
- Empty containers of anti-freeze, white gas, ether, or starting fluids.
- Drain openers, freon, lye, paint thinner, acetone, or alcohol.
- Camp stove fuel containers or other compressed gas cylinder.
- Ammonia or propane tanks, anhydrous ammonia (in coolers).
- Dust masks or filters.
- Sheets or filters that are stained red or have a white, powdery residue.
- Jars or bottles with rubber tubing attached.
To make one pound of methamphetamine, six pounds of hazardous, toxic waste is produced. Besides ending up in the walls, floors, HVAC system, carpet and other places, some of the waste is often dumped on the ground, so also look outside for dead grass or plants, and stained soil.
3. What should you do if you find an abandoned or even active meth lab?
Don’t confront anyone. Get out, wash your hands and face immediately, change your clothes, and call the police. If you have trouble breathing, go to an emergency room.
4. How can you prevent having your rental property turned into a meth lab?
- Screening your tenants is critical. People who cook meth tend to end up in rentals that are self-managed and don’t have a standardized tenant screening procedure. So either make sure you have a solid tenant screening system in place, or hire a property management company that does. Make sure you call previous landlords (and confirm that the phone number you have is to the actual landlord, and not someone pretending). Confirm that your applicant was a good tenant in the past. Check employment references, verify income, and do more followup if your tenant pays for everything in cash. Drug dealers often don’t have legal jobs and deal in cash only.
- Include in your lease agreement that there will be regular inspections (with the proper 24- or 48-hour notice, as required by your state’s law). Often just saying there will be regular inspections will deter someone who is engaged in illegal activities.
- Let the neighbors know you’re the property owner, and that if they notice anything suspicious you’d appreciate a phone call to either yourself or your property manager.
5. If you find yourself living a Breaking Bad nightmare, are you required to disclose that your rental property was previously contaminated by methamphetamine?
The answer depends on which state you live in. Scripps Howard news service examined state meth disclosure laws in 2012 and found that seventeen states require property owners to tell renters about prior meth contamination, although several of those states waive that requirement if the meth residue has been officially cleaned up.
One more warning for rental property owners: if you’re planning on expanding your rental property inventory, make sure you’re confident that any properties you purchase weren’t used as meth labs in the past, because as soon as you own it, you become liable for the cleanup. During due diligence, if you have any suspicions, consider checking with the local police department, and have the property tested during the inspection. If you find suspicious residue, you can even test it yourself with a ten-pack meth residue test kit from Amazon.com for about $30. If you get a positive result, that $30 would be money well spent.
Have you had any Breaking Bad experiences with your rental property?
As always, the information provided here is just that–it is for informational purposes only and is not legal advice. If you have any particular questions or issues, please consult an attorney.
By Tracey March
 For those who don’t follow it, Breaking Bad is about a high school science teacher (played by Brian Cranston) turned methamphetamine cooker and dealer to provide additional income for his growing family when his cancer treatments start eating up his savings.