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Rental properties require effort

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As the prices for homes continue to drop as foreclosures and abandoned properties continue to pop up in virtually every neighborhood, there may be a few people considering whether these homes could make for good investments either as properties to fix and sell or to buy and repair for a rental property.

While this can work in some situations, particularly if the person fixing or renting is handy and can handle home-improvement projects without having to pay someone else to do them, attorneys who have done this or considered doing this suggest that others proceed with caution.

John Floreancig Floreancig

John Floreancig, executive director of the Indianapolis Legal Aid Society, decided to rent his old home after he bought a new one. He happened to know a couple who was looking to rent, so he lucked out when it came to finding new tenants. However, even though he said his tenants were great, there is no such thing as perfect tenants.

For instance, the kitchen floors required a particular kind of cleaning solution, but the tenants used the wrong kind and ruined the grout. While living there, they also broke the refrigerator, which Floreancig had to replace because appliances were included in the lease. He also said they didn’t always call him right away if there was a leak or other issue that, had he noticed it in his own home, he would have fixed right away.

He said he enjoyed the experience overall and was able to make some money because he was able to do most of the small jobs himself, such as handling minor plumbing issues. He said attorneys or anyone considering becoming a landlord should think of it as another business.

“I was always thinking about it, wondering if something would go wrong,” he said.

He added if he got a call from the tenants on a Saturday morning, he would have to check on it, even if he had other plans.

He also said all landlords need to be aware of the various laws as they relate to landlords and tenants, something ILAS handles for clients.

To start, landlords need to screen their tenants. Floreancig suggested landlords ask the tenant’s permission to get a credit report.

“If someone won’t give you the information you need for a credit report, that’s a red flag,” he said.

Another potential red flag is if they’ve moved more often than would seem reasonable to the landlord, particularly if they don’t seem to live in the same place for more than a few months at a time.

He said landlords should ask tenants about pets and be clear as to whether pets are allowed.

Next, landlords need to have a good lease to protect them but something that is also fair to the tenant, he said. The HUD lease for Section 8 housing is typically a good start, he noted. It also is important for basic things to be covered – how much is the rent, what is the exact due date for rent and what is the grace period, what is the penalty for late or unpaid rent, what happens when the lease expires – can the landlord raise the rent between leases, what happens if the tenant needs to break the lease, and does rent include utilities, Floreancig said.

It’s also a good idea to include conditions regarding what’s expected of them to repair and maintain, he said, and if the landlord wants the tenants to provide the appliances.

Some of these issues will come into play for landlord/tenant cases, said attorney Chris Webber, a retired attorney who sometimes works two days a week for ILAS, and who has represented tenants.

Webber and his wife considered buying and flipping properties a few years ago to make income, but when they noticed the market had started to go bad, they decided to hold off on that idea.

While some neighborhoods have good deals on homes – he said they quickly noticed that even if they could fix up a home and do most of it on their own or for a good rate, there was no guarantee they’d be able to sell the home.

Regarding the time he was considering the idea, he said, “If you wanted to find something with a low enough entrance price, flipping became a reasonable possibility.”

But now, he said, “you are generally finding areas where it’s not the only home on the block. I think there’s always a risk you may create a rose but the rest of the garden isn’t doing real well. If that’s the case, it’s hard to get someone to see that as a good opportunity. So we decided to back away, and we both decided to retire and decided not to take on anything extra.”

Another thing to consider, whether renting or flipping a home, is insurance, said Sheila Jenkins, director of the Community Development Law Center.

While she wouldn’t go into detail regarding a home she had been renting out for many years, she did say that she was unaware that her insurance on the property lapsed after the home had been vacant for 30 days.

She strongly suggested anyone who has a rental property to learn what the insurance covers and to consider getting insurance that will cover the home even if it is vacant.

For anyone thinking about being a landlord, they also needed to be aware of the property-tax issues for a home that is not a primary residence, she said, and how much more difficult it is to get a loan to repair a rental property compared to one’s primary residence.

She had tenants until fairly recently, and she said she enjoyed it. Because the house was already paid off, she said she could offer a nice home at a low rate to her tenants who may not have been able to afford a similar place otherwise.

Overall, being a landlord can be a good experience, Jenkins and Floreancig agreed. But it’s not something to be taken lightly.

“Lawyers can go to small claims court if something goes wrong, but that’s a day off work and you have to think, ‘Is it practical? Is it worth pursuing them in court?’ You have to weigh all the factors. And if they’re not working, you can’t squeeze blood from a turnip,” Floreancig said.

But if things go well, “Now it can be hugely profitable,” he said, “but it’s not a passive investment like an IRA. You have to ask yourself, ‘How adventurous do you want to be with your life?’”•

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  1. I have been on this program while on parole from 2011-2013. No person should be forced mentally to share private details of their personal life with total strangers. Also giving permission for a mental therapist to report to your parole agent that your not participating in group therapy because you don't have the financial mean to be in the group therapy. I was personally singled out and sent back three times for not having money and also sent back within the six month when you aren't to be sent according to state law. I will work to het this INSOMM's removed from this state. I also had twelve or thirteen parole agents with a fifteen month period. Thanks for your time.

  2. Our nation produces very few jurists of the caliber of Justice DOUGLAS and his peers these days. Here is that great civil libertarian, who recognized government as both a blessing and, when corrupted by ideological interests, a curse: "Once the investigator has only the conscience of government as a guide, the conscience can become ‘ravenous,’ as Cromwell, bent on destroying Thomas More, said in Bolt, A Man For All Seasons (1960), p. 120. The First Amendment mirrors many episodes where men, harried and harassed by government, sought refuge in their conscience, as these lines of Thomas More show: ‘MORE: And when we stand before God, and you are sent to Paradise for doing according to your conscience, *575 and I am damned for not doing according to mine, will you come with me, for fellowship? ‘CRANMER: So those of us whose names are there are damned, Sir Thomas? ‘MORE: I don't know, Your Grace. I have no window to look into another man's conscience. I condemn no one. ‘CRANMER: Then the matter is capable of question? ‘MORE: Certainly. ‘CRANMER: But that you owe obedience to your King is not capable of question. So weigh a doubt against a certainty—and sign. ‘MORE: Some men think the Earth is round, others think it flat; it is a matter capable of question. But if it is flat, will the King's command make it round? And if it is round, will the King's command flatten it? No, I will not sign.’ Id., pp. 132—133. DOUGLAS THEN WROTE: Where government is the Big Brother,11 privacy gives way to surveillance. **909 But our commitment is otherwise. *576 By the First Amendment we have staked our security on freedom to promote a multiplicity of ideas, to associate at will with kindred spirits, and to defy governmental intrusion into these precincts" Gibson v. Florida Legislative Investigation Comm., 372 U.S. 539, 574-76, 83 S. Ct. 889, 908-09, 9 L. Ed. 2d 929 (1963) Mr. Justice DOUGLAS, concurring. I write: Happy Memorial Day to all -- God please bless our fallen who lived and died to preserve constitutional governance in our wonderful series of Republics. And God open the eyes of those government officials who denounce the constitutions of these Republics by arbitrary actions arising out capricious motives.

  3. From back in the day before secularism got a stranglehold on Hoosier jurists comes this great excerpt via Indiana federal court judge Allan Sharp, dedicated to those many Indiana government attorneys (with whom I have dealt) who count the law as a mere tool, an optional tool that is not to be used when political correctness compels a more acceptable result than merely following the path that the law directs: ALLEN SHARP, District Judge. I. In a scene following a visit by Henry VIII to the home of Sir Thomas More, playwriter Robert Bolt puts the following words into the mouths of his characters: Margaret: Father, that man's bad. MORE: There is no law against that. ROPER: There is! God's law! MORE: Then God can arrest him. ROPER: Sophistication upon sophistication! MORE: No, sheer simplicity. The law, Roper, the law. I know what's legal not what's right. And I'll stick to what's legal. ROPER: Then you set man's law above God's! MORE: No, far below; but let me draw your attention to a fact I'm not God. The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate. I'm no voyager. But in the thickets of law, oh, there I'm a forester. I doubt if there's a man alive who could follow me there, thank God... ALICE: (Exasperated, pointing after Rich) While you talk, he's gone! MORE: And go he should, if he was the Devil himself, until he broke the law! ROPER: So now you'd give the Devil benefit of law! MORE: Yes. What would you do? Cut a great road through the law to get after the Devil? ROPER: I'd cut down every law in England to do that! MORE: (Roused and excited) Oh? (Advances on Roper) And when the last law was down, and the Devil turned round on you where would you hide, Roper, the laws being flat? (He leaves *1257 him) This country's planted thick with laws from coast to coast man's laws, not God's and if you cut them down and you're just the man to do it d'you really think you would stand upright in the winds that would blow then? (Quietly) Yes, I'd give the Devil benefit of law, for my own safety's sake. ROPER: I have long suspected this; this is the golden calf; the law's your god. MORE: (Wearily) Oh, Roper, you're a fool, God's my god... (Rather bitterly) But I find him rather too (Very bitterly) subtle... I don't know where he is nor what he wants. ROPER: My God wants service, to the end and unremitting; nothing else! MORE: (Dryly) Are you sure that's God! He sounds like Moloch. But indeed it may be God And whoever hunts for me, Roper, God or Devil, will find me hiding in the thickets of the law! And I'll hide my daughter with me! Not hoist her up the mainmast of your seagoing principles! They put about too nimbly! (Exit More. They all look after him). Pgs. 65-67, A MAN FOR ALL SEASONS A Play in Two Acts, Robert Bolt, Random House, New York, 1960. Linley E. Pearson, Atty. Gen. of Indiana, Indianapolis, for defendants. Childs v. Duckworth, 509 F. Supp. 1254, 1256 (N.D. Ind. 1981) aff'd, 705 F.2d 915 (7th Cir. 1983)

  4. "Meanwhile small- and mid-size firms are getting squeezed and likely will not survive unless they become a boutique firm." I've been a business attorney in small, and now mid-size firm for over 30 years, and for over 30 years legal consultants have been preaching this exact same mantra of impending doom for small and mid-sized firms -- verbatim. This claim apparently helps them gin up merger opportunities from smaller firms who become convinced that they need to become larger overnight. The claim that large corporations are interested in cost-saving and efficiency has likewise been preached for decades, and is likewise bunk. If large corporations had any real interest in saving money they wouldn't use large law firms whose rates are substantially higher than those of high-quality mid-sized firms.

  5. The family is the foundation of all human government. That is the Grand Design. Modern governments throw off this Design and make bureaucratic war against the family, as does Hollywood and cultural elitists such as third wave feminists. Since WWII we have been on a ship of fools that way, with both the elite and government and their social engineering hacks relentlessly attacking the very foundation of social order. And their success? See it in the streets of Fergusson, on the food stamp doles (mostly broken families)and in the above article. Reject the Grand Design for true social function, enter the Glorious State to manage social dysfunction. Our Brave New World will be a prison camp, and we will welcome it as the only way to manage given the anarchy without it.

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