By: Revanche

Being a landlord: HOA violations and other nuisances

March 21, 2016

Landlord adventures in paperwork and maintenance “Business as usual”, since LB was born and we got new tenants into the property, has been quiet. Once a month the rent comes in. Once a quarter, I send the tenants the sewer bill and the property manager, let’s call them “Lou”, collects that.

Unfortunately, did I mention this?  Things don’t always go smoothly in money matters and this is no exception.

The current tenants pay on time and don’t have a lot of needs. They’ve requested a few minor repairs and those issues have been addressed pretty quickly.  But they have a problem with complying with a relatively minor HOA policy about clearing their curb on a weekly basis as required. It’s not that they object to complying, they simply didn’t comply on time for several weeks in a row.

They’re good tenants so far as I can tell, so I hated dinging them for something like that but the HOA is a huge stickler and sent a violation notice every time it happened. After three violations, the HOA proceeded to start fining for the violations, even though the tenants had been informed and were doing their best. The fines were $100 per occurrence!

It’s more than a little alarming to get a bill for $100 per week, with a grand total of $600, when the fines start. It’s a lot alarming that the latest bill is up to $1500. Lou assures me that they’re working on it which means that they’re confirming the lack of violations each week for the HOA and after several weeks of “clean” behavior, the fines will be removed.

That’s little consolation while I see the fines skyrocket. This is the part I hate about going through third parties. As much as I like that having Lou lets me stay hands off, the part of me that manages money and the household particulars chafes at not being hands on so I can fight the charges if shenanigans occur. The bills are in my name!

So that sucks. But the whole point of the manager is to deal with stuff like this.

Basic appliance repairs eat into a slim profit margin

I have a home warranty which covers the repair and replacement of appliances. We’ve called them out to take care of three plumbing problems and 2 appliance replacements. Their timely responses keep the tenant happy and a good tenant is worth keeping happy IMO. Though, what the hell is going on with the plumbing??

The $75 per call out fee is steep in contrast but DIY isn’t an option for this property. I was only breaking even in the first seven months on routine costs (mortgage, property tax, and insurance). We had to get new tenants and raise the rent to bring in enough to have a little extra left over to cover the irregular expenses.

We’d need to raise the rent another $100 to have anything like “profit”. Unlike the “pay yourself first” mantra in regular employment, the leftover money each month after subtracting regular expenses goes into savings. It’s the buffer against the inevitable repairs and maintenance, not money I take out of the business. This is conservative but other than my initial down payment stake, the goal is for the unit to break even overall first. Only after costs are covered, thus preventing any need to dip into personal funds, do I consider that leftover cash mine. The long term goal is for this property to generate some rental income and appreciate in value over time.

Read more of our experience with real estate investing!

*Part of Financially Savvy Saturdays on brokeGIRLrich, Disease Called Debt and From Cost to Coast*

22 Responses to “Being a landlord: HOA violations and other nuisances”

  1. This stresses me out just reading about it. It seems like you guys have the right approach and right outlook, but I’m not sure rental properties would ever be for me. I appreciate the honesty and the look at the long-term goals.

    • Revanche says:

      You know, for all the planning and plotting that went into this, there are still surprise stresses. I’m keeping calm about it because I have to but it’s certainly not all the raking in the profit that it’s made out to be 🙂

    • I also got stressed out reading about the $1,500 fee. I hope it was removed. Owning rental in an expensive area with a high HOA fee can really eat into your profit. I used to have home warranty for our primary residence, but we still had to pay $100 every time we called someone, so I decided not to renew it. It’s been only 2 months since the home warranty expired, so I really hope we won’t have any major repairs.

      Also, once our kitchen faucet broke. We ended up paying $450 for it, and the home warranty didn’t help at all.

  2. Rentals are an adventure, and it’s no fun when your tenants cause problems. (we had one authorize some tree surgery we knew nothing about…and the tree surgeon took out the HVAC and a bunch of siding and then didn’t pay for it) I will say I like having a property manager for the property that’s an hour away, but my husband still tries to handle any maintenance or repairs himself to save money. (and he does) We have one in town that we manage ourselves, and it’s a little more work but doable.
    Emily @ JohnJaneDoe recently posted…Walking Up the Big Darn Hill and Out of the Comfort ZoneMy Profile

  3. Sense says:

    As a good tenant myself, that is what I like to hear (keeping good tenants). I take very good care of my rentals and 100% pay on time. I don’t understand any other way to be…

    $1500 for not clearing the curb?! Whaaaa? That is total insanity. What is preventing them from doing that?! So glad they are wiping the fines if they show compliance. I wouldn’t have expected that!

    Glad you don’t have to deal with this first hand, but I know myself how hard it can be to delegate stuff that reflects on you. Have you asked the tenant directly what they think of the management company? Sounds like they are doing a good job but it wouldn’t hurt to let them know you’re checking in on them.

    (Maybe ignore me on that, I’ve gotten more aggressive lately…work required me to get brutal with a subcontractor a few months ago and ever since my guns are blazing. I sort of pity the customer service reps I’ve talked to recently (lots). But I’m not doing their job for them after they messed up!! Nuh uh. No way.)

    Anyway, re: plumbing, what did the plumber say was the issue each time? Are they repeatedly flushing stuff down that they shouldn’t? In that case they should eat the bill for any repeated offenses! I’ve got a clause in my rental agreement as such.

    • Revanche says:

      Honestly, I don’t know why they can only do half the job of clearing the curb. I suspect it’s a timing thing.

      I’m balancing my need to interfere with the professional and settle my mind. I’ll check in with them soon, I think. It does come out of their security deposit, though, if they don’t clear the charges and the tenant doesn’t pay.

  4. Karen says:

    For awhile, my tenants seemed to need frequent plumbing repairs (truthfully, probably 3x but more than I’ve needed). Oh and the garage door.

    I wish they would pay by the 1st. It’s usually the 10th. I have wanted to have fees included into the lease but..ugh. Heck, the rent hasn’t gone up since they’ve been there (6 or 7 years). But I still dread asking the company about adding it in.

    Like Sense, I’m curious to know what exactly is the problem in keeping the curb clean.

    • Revanche says:

      I’ve been a renter much longer than I’ve been an owner, and I can empathize with having a run of bad luck with repairs. I also remember being really worried about the owner raising the rent or changing the terms of our lease at the end of the year.

      So while I won’t throw money away, I’m also not going hold a few incidents against them if it’s not part of a larger pattern. They do pay on time every month so that’s a useful thing to weigh it against 🙂

  5. moom says:

    On average landlords lose money in Australia, so it’s not surprising. The idea is hoping that the value of property rises faster than inflation….

    • Revanche says:

      Given the cost of property that you’ve mentioned, IIRC, I’m surprised people would bother to be landlords if they’re losing money month to month with such a high cost of initial investment.

  6. Mrs Groovy says:

    I’m with Penny on getting stressed out reading this. Clearing the curb seems like a reasonable request. But if your HOA is anything like mine, I find many of the rules and violations to be totally arbitrary. In my neighborhood we have two old men with plenty of time on their hands, who drive around looking for and reporting violations to the management company.

    Maybe in the future you can require a larger deposit to cover this kind of thing?
    Mrs Groovy recently posted…Oh, The Joys of Blogging with a SpouseMy Profile

    • Revanche says:

      It may be a similar situation, the HOA sure is on top of sending me the next bill.

      We have a decently sized security deposit, but also I think there are regulations on how much of a deposit you can require. I’ll double check.

  7. $1,500? Ouch. I think at some point you need to have the property manager make it clear that continued violations will be at the tenants’ expense. Or would that have to be the in the lease?
    Abigail @ipickuppennies recently posted…The book is done(ish), I miss my brain & two things to winMy Profile

    • Revanche says:

      Technically all of the violations are at their expense, it’s in the lease that they’re responsible for all violations and related costs.

  8. This would totally stress me out, too. I’d have to have a Lou! I hope the HOA backs off.
    FF @ Femme Frugality recently posted…The Right Tools to Retain Talented Mothers in the WorkplaceMy Profile

  9. Ah $100/week fines? That’s a hefty bill. I think it’s great that you are focusing on the long-term with the rental. I hope to do the same when we eventually convert our home into a rental. As far as I’m concerned even breaking even is a win because eventually there will be no mortgage on the property and that means a big cash flow increase. You just have to get to that point.
    DC @ Young Adult Money recently posted…Why You Should Consider a No-Spend ChallengeMy Profile

    • Revanche says:

      It’s huge, right now. I can’t wait for the final inspections to be cleared and for the bill to be cleared.

      Best of luck when you convert to a rental! You’ll already be well ahead on the cash flow front when your renter covers your remaining mortgage.

  10. Wait, what? They’re charging YOU for your tenant’s HOA crimes and misdemeanors? So the idea would be the tenant wouldn’t pay these fines? Uhm…surely I misapprehend.

    However, knowing how HOAs work…is it possible that someone in the HOA resents renters in general and is complaining about your folks? Or that someone on the HOA board resents the presence of renters? That would be pretty typical.

    Have you thought of calling the home warranty company, asking for the contact information for the companies that have been doing the repair work, and asking those vendors if they can provide a clue to why the plumbing problems? Maybe there’s an issue that can be fixed.
    Funny about Money recently posted…VOTE! Monty Python Show or Kurt Vonnegut Novel?My Profile

    • Revanche says:

      Well, they have to charge me as the owner of the property. It’s my responsibility to pass it on to the tenant.

      It’s entirely possible someone’s got a grudge, but there’s not much we can do about those people. We’ve all got them, unfortunately :/

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