Author Topic: Calling all Landlords- Would you go for this????  (Read 5340 times)

redbirdfan

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Calling all Landlords- Would you go for this????
« on: February 11, 2015, 09:43:59 PM »
Ok.  This may be a dumb question, but I'm trying to think outside of the box.  I am a renter and I LOVE my apartment.  Every once in a while the "you're throwing your money away by renting" voices get louder in my head and I start looking at places to buy.  Given the high cost of real estate in Seattle and poorly designed homes and condos, I always prefer my apartment (no commute, no crazy down payment, no closing costs, no additional debt, no fear of special assessments).  Here's my question for the landlords out there.

I would like to propose a hybrid situation. 

1. I pay an upfront fee of $XXXX in exchange for locking in a set rental rate (the numbers are negotiable)
2. I would become responsible for all repairs (the repairs and contractor would first be approved by the landlord)
3. I would be allowed to paint the walls and change the flooring at my cost (with the pre-approval of the landlord).

Under what circumstances (if any) would you go for this type of arrangement?  I've been a drama-free tenant in my apartment for 6 years now. 
« Last Edit: February 11, 2015, 09:47:05 PM by redbirdfan »

redbirdfan

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Calling all Landlords- Would you go for this????
« Reply #1 on: February 11, 2015, 09:46:28 PM »
Also posted in the Welcome/General Discussion subsection.

This may be a dumb question, but I'm trying to think outside of the box.  I am a renter and I LOVE my apartment.  Every once in a while the "you're throwing your money away by renting" voices get louder in my head and I start looking at places to buy.  Given the high cost of real estate in Seattle and poorly designed homes and condos, I always prefer my apartment (no commute, no crazy down payment, no closing costs, no additional debt, no fear of special assessments).  Here's my question for the landlords out there.

I would like to propose a hybrid situation. 

1. I pay an upfront fee of $XXXX in exchange for locking in a set rental rate (the numbers are negotiable)
2. I would become responsible for all repairs (the repairs and contractor would first be approved by the landlord)
3. I would be allowed to paint the walls and change the flooring at my cost (with the pre-approval of the landlord).

Under what circumstances (if any) would you go for this type of arrangement?  I've been a drama-free tenant in my apartment for 6 years now.

escolegrove

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Re: Calling all Landlords- Would you go for this????
« Reply #2 on: February 12, 2015, 12:03:57 AM »
Be very careful about what you are proposing. What happens if you get a job out of the area? What happens if you suddenly want to leave? Plus in many places this agreement is illegal in the eyes of the law.

As a landlord I would never go for it there is too much liability with not a lot of upside :) Have you thought about asking to buy the apartment.

That being said, it never hurts to try. Just make sure you have all your basis covered! Any be willing to not be compensated if this suddenly change.

M from Loveland

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Re: Calling all Landlords- Would you go for this????
« Reply #3 on: February 12, 2015, 12:16:56 AM »
Agreed with escolegrove. What about buying the apartment?. It seems that you really like it, and it's very well located.

redbirdfan

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Re: Calling all Landlords- Would you go for this????
« Reply #4 on: February 12, 2015, 12:28:58 AM »
Thanks for the honest response.  There isn't a (reasonable) chance of me getting a job outside of the area (I'm only licensed in the state and would not live in any other part of Washington).  My job is pretty stable.  I figured such a proposal would be a longshot since I hadn't heard of any similar arrangements.  I don't want to own property but I would like to attempt some sort of hedge against inflation.  I would rather use my 'down payment money' as leverage to create a form of free-market rent control.  I was hoping that the stability of a hassle free tenant plus a large upfront fee and the lack of having to make any repairs or deal with a vacancy would convince a landlord to forego future rental increases.  I would continue to pay my same monthly rental amount after I paid the upfront fee (my attempt at free-market rent control).  I wouldn't have to deal with HOAs, condo boards, mowing a lawn or debt and I would gain a stable rent price and the ability to paint the walls, decorate, etc.

The only money I could lose would be the upfront fee which I don't think would be worse than the mortgage interest (i.e. the amount of monthly payments that didn't go principle) and the transactional costs that I would not recoup if I bought a property and sold it before the break even point.  I didn't realize that I was proposing anything that was potentially illegal as I would never knowingly break the law.  I can't buy the apartment because it's in a larger complex of rental apartments.  There wouldn't be a way to buy an individual unit unless the entire building was converted to condos.             

escolegrove

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Re: Calling all Landlords- Would you go for this????
« Reply #5 on: February 12, 2015, 04:08:38 AM »
Out of the box thinking is very important in real estate :) we have been very succesful doing what the average person considers crazy :)

That being said, with your newest information I really don't think it's going to be possible to do what you proposed. I saw that simply because you are renting from a large apartment comdx. They have very strict corporate policy that everyone has to follow in order to prevent accidentally breaking fair housing. What you propose is very tricky with a lot of additional lability and honestly very little landlord upside! Therefore I do to see the company wanting to make it public policy. Since they won't open it up to eveyone it usually disqualifies them from making exceptions!

biscuitwhomper

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Re: Calling all Landlords- Would you go for this????
« Reply #6 on: February 12, 2015, 05:49:13 AM »
Uh oh, not the 'throwing away your money' phrase.   This was placed in our heads by real estate agents.    Funny how we never hear them talking about 'throwing away' your money on interest, taxes, and maintenance.

Every situation is different, and given Seattle's inventory situation, renting may very well be the best option.   Run some numbers at the NYT rent/buy calculator.   I don't see much benefit in binding yourself in any additional agreements with your landlord, especially if you have a good relationship with him/her.

I do know how hard it is in Seattle.    I lived there for many years and never bought because I could not find a home.   Housing prices always seemed to outpace my buying power.    The biggest boost to my F.I. was moving a few counties away, where low cost of living allowed me to invest aggressively.    Good luck. 
« Last Edit: February 12, 2015, 05:51:53 AM by biscuitwhomper »

Guesl982374

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Re: Calling all Landlords- Would you go for this????
« Reply #7 on: February 12, 2015, 06:27:38 AM »
As a landlord, I would only go for #1, upfront fee for a long term rent lock however the numbers would need to work for me vs. the specific market. Under no circumstance would I sign up for #2 and #3. Mainly because I would fear the additional liability and potential for damage / improper installation / code violation.

redbirdfan

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Re: Calling all Landlords- Would you go for this????
« Reply #8 on: February 12, 2015, 06:40:35 AM »
That makes sense.  I was thinking the upfront fee would be large enough to be worth it for the landlord but still lower than the 20% down payment on a condo or a house.  For Nos. 2 and 3 I would use the same contractors the landlord uses to remodel, repair and prep apartments between tenants (i.e. the same people already used for the other apartments in the complex), I would just pay the associated costs.  That way the landlord would be familiar with the workers and the work-product but would not have to pay any additional fees for their use. 


BBub

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Re: Calling all Landlords- Would you go for this????
« Reply #9 on: February 12, 2015, 07:04:23 AM »
I think you should definitely have the conversation with your landlord (LL) - seems like you're a great tenant & I'd bet he/she wants to keep you around.  But don't give away all your marbles at the first meeting. Change your mindset from "will LL allow me to do this" to "I'm offering LL the best deal ever".  Your offer to sign on long term, care for the property, make improvements should be viewed as very valuable. First offer a deal that gets you everything you want, but doesn't leave you with any financial burden. 

Here's an example:

1. Offer to sign a very long term lease at a lower rate, but don't offer the upfront fee initially. Only use that as a last resort.  When I rented a house I offered my landlord a significantly reduced price for 1 yr upfront rent & she took it.  My rent was $900/mo and I offered $9k upfront for the year.  Saved about $1,800.

2. Do not offer to pay for ongoing maintenance.  You never know what could happen here.  Some ongoing "improvements" like paint, etc would be ok.  But not maintenance.  As for the improvements to the property, I would think the landlord would be happy to have you add value to his/her property as long as you're not trying to do something crazy like a Margaritaville theme or something.  Maybe just run some color swatches by LL to show him what you have in mind.  Why would you want to take on the burden of ongoing maintenance without any financial upside? 

3. Try to use your position of strength to get the landlord to meet you halfway.  I.E, use your willingness to sign a long term lease at a set rate as a bargaining chip to get the landlord to chip in for some renovations.  Lay out the projected costs of the renovations you desire, etc.  Then, if you get pushback, come in and offer to meet half way on the cost.



Guesl982374

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Re: Calling all Landlords- Would you go for this????
« Reply #10 on: February 12, 2015, 07:05:04 AM »
Given that it would be the same contracter he or she typically uses (and not a DIY project) it shouldn't be too big of an issue. Personally, the only other issue I could see would be that major work would be happening while the tenant was still occupying the space. I would rather avoid the headache of having to do construction while a tenant and all of their stuff is in the space.

But have the conversation regardless, the worst the landlord could say is no.

Secretly Saving

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Re: Calling all Landlords- Would you go for this????
« Reply #11 on: February 12, 2015, 07:13:05 AM »
We have definitely agreed to #1 with some of our tenants.  We've also agreed to certain renovations in the right circumstances.  It's worth asking!

jda1984

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Re: Calling all Landlords- Would you go for this????
« Reply #12 on: February 12, 2015, 07:18:54 AM »
TL;DR: Try to negotiate a longer term lease with upgrading paint/flooring as part of it.

I don't own a large multi-unit property, but could you negotiate a longer lease?  If you like the place and want to keep rent stable, how about a 3-5 year lease?  As a landlord I would go for that.  I've had a tenant who must think since the lease term is up she must give notice or something (it's happened twice, but when I offer to renew the lease she agrees).  As far as flooring and painting goes, I would go for painting with pre approved colors (I don't want black walls/ceilings!).  The floor coverings could be a little trickier... I probably wouldn't go for that.  However, if you brought it up with the lease negotiation they might install something you'd prefer more than what you have.  Flooring depreciates and wears out anyway, so 6+ years is probably near the end of mid-grade carpet.

rubybeth

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Re: Calling all Landlords- Would you go for this????
« Reply #13 on: February 12, 2015, 07:47:10 AM »
Not a landlord, but I can say for #3, just ask! We asked about painting, and the leasing manager said "sure, you buy the paint, and we'll have the maintenance guy do the actual painting." That sounded like a fair deal, though we never got around to picking out paint colors. If they do the install of flooring/painting but you offer to pay for supplies, I'd think that's a pretty fair bargain for improving their space. Can't hurt to ask.

stickynotes

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Re: Calling all Landlords- Would you go for this????
« Reply #14 on: February 12, 2015, 11:43:12 AM »
Basically what you're proposing is rent control with a maintenance clause. So, as a landlord, I would never go for that - you're just taking away all my potential upside if the market improves. However - if you proposed an arrangement for a certain set period of time and built in some nominal annual increases, for example three years with a 3% bump a year, you cover maintenance, I'd be all over that. Stability is good. Stagnation is bad. But take my advice with a grain of salt, I don't like tenants to stay more than 3-4 years. Some landlords prefer to never advertise again. DC just happens to have ironclad tenant protections - if they pay, they basically never have to move, so landlords here are wary of long-term arrangements. I'm sure this isn't true in all markets.

MDM

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Re: Calling all Landlords- Would you go for this????
« Reply #15 on: February 12, 2015, 12:18:07 PM »
You might want to lock this thread and repost in the "Real Estate and Landlording" board.

arebelspy

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Re: Calling all Landlords- Would you go for this????
« Reply #16 on: February 12, 2015, 12:40:43 PM »
If a long term tenant of mine wanted to pay extra to lock in a long term lease, pay for repairs that I approve, and paint a little, I'd jump all over that.

A big corporation might not. 

But I think it's a pretty good deal for your landlord if you are a good tenant that will take care of the place.
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redbirdfan

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Re: Calling all Landlords- Would you go for this????
« Reply #17 on: February 12, 2015, 12:45:30 PM »
I was hoping the upfront payment would be a decent trade-off for the lack of future rental increases (i.e. 1-2.5 years of rent upfront in addition to making my monthly rental payments).  It would be a lot of money to pay upfront, but considerably less than a 20% down payment. This sort of arrangement may be better in a SFH with a non-corporate landlord (there just aren't any around my current rental rate for the inner core neighborhoods of Seattle that allow me to walk everywhere).  There are about 400 new units going up in within a five block radius of my apartment within the next year per the department of planning and development.  I'm not sure if that will stabilize prices or increase them since the new units tend to be on the high-end.  I've decided that owning here is not for me, but wanted to see if there was more of a hybrid scenario that the average landlord would approve of.   

arebelspy

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Re: Calling all Landlords- Would you go for this????
« Reply #18 on: February 12, 2015, 12:55:17 PM »
I was hoping the upfront payment would be a decent trade-off for the lack of future rental increases (i.e. 1-2.5 years of rent upfront in addition to making my monthly rental payments). 

Yeah, that's a huge win for your landlord.

I'm considering buying a home there for you to live in.

;)
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clifp

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Re: Calling all Landlords- Would you go for this????
« Reply #19 on: February 12, 2015, 01:13:39 PM »
I was hoping the upfront payment would be a decent trade-off for the lack of future rental increases (i.e. 1-2.5 years of rent upfront in addition to making my monthly rental payments). 

Yeah, that's a huge win for your landlord.

I'm considering buying a home there for you to live in.

;)


As landlord that type of arrangement would be very appealing.  The two things that really make a big difference between landlording being a good and bad business are vacancies and tenant damage. I'd be careful about offering to do all repairs, for instance the broken waterpipes, gasline could be very expensive and the landlord may have insurance to cover. So you'd want to only offer routines maintenance.

Since he lives an apartment, you might have to buy the whole building.. :)  Maybe we should talk :D

arebelspy

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Re: Calling all Landlords- Would you go for this????
« Reply #20 on: February 12, 2015, 01:36:25 PM »
Since he lives an apartment, you might have to buy the whole building.. :)  Maybe we should talk :D

Haha.  That'd be one big HELOC!

You know I already have some existing offers out there for you.  ;)
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CheapskateWife

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Re: Calling all Landlords- Would you go for this????
« Reply #21 on: February 12, 2015, 01:43:55 PM »
As a landlord, I would be very open to this kind of idea...but again, we were a mom&pop operation and had flexibility that a larger property management company might not feel like they could risk.

Go ahead and propose it, the worst that could happen is you get shot down.

arebelspy

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Re: Calling all Landlords- Would you go for this????
« Reply #22 on: February 12, 2015, 01:51:21 PM »
MOD NOTE: Merged duplicate topics.
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ShoulderThingThatGoesUp

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Re: Calling all Landlords- Would you go for this????
« Reply #23 on: February 12, 2015, 01:58:01 PM »
MOD NOTE: Merged duplicate topics.

Thought I had been banned.

Secretly Saving

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Re: Calling all Landlords- Would you go for this????
« Reply #24 on: February 12, 2015, 02:52:55 PM »
With one of our renters we even organized a deal where they signed a 3 year lease and if they successfully completed one year of renting (no late payments, no problems) that we reduced their rent for the 2nd and 3rd years.  It was great.  They had incentives to do everything right and we had renters long term (I hate the down time between tenants).  It was cheaper for us to work out that deal than it was to have the place empty for a month (typical time here between tenants).   I'd agree to that deal with the right people again. I also liked that I didn't have to immediately reduce the rent for a longer rental as well.  If they turned out to be flaky, we didn't have to reduce the rent.