PRESIDENT’S MESSAGE October 24, 2013
The October meeting was held and we had 12 people attending and I want to thank those who did attend. I could not attend as I had a very bad cold and didn’t want to pass the germs around.
The guest speaker was Michael Messier from Jackson Hewitt talking about taxes.
Michael did a great job and I hope with the new recorder everything comes out all right
The next meeting will be November 6, 2013 and the guest speaker will be Thaddeus Lorentz and he will discuss protecting your rental property.
THE DECEMBER MEETING IS THE ANNUAL MEETING WHERE WE WILL ELECT OFFICERS TO THE BOARD AND MAKE ANY CHANGES TO THE BY-LAWS.
THE MEETING ATTENDANCE HAS BEEN VERY LOW AND THE BOARD IS CONSIDERING LOWERING THE NUMBER OF GENERAL MEETINGS WE HAVE EACH YEAR. PLEASE SEND ANY INPUT TO LOWERING THE NUMBER OF MONTHLY MEETINGS TO RONALD SENECAL FOR THE BOARDS DISCUSSION.
I just want to remind members that the VFW bar is open and we usually go for a little refreshment before we go home.
The guest speaker is Michael Messier from Jackson Hewitt.
My name is Michael Messier and I have been in Rutland for about 50 years. I have been involved in accounting and have a Masters in Finance. I worked for CVPS for about 10 years and have done accounting in rental real estate as well. I use to help my Dad when I was younger as I always enjoyed math.
As far as an expense or deduction that you can use on your tax returns for attending this meeting does anyone have any idea what you can use on your returns?
Member: The gas to get here.
Michael: That’s right and there’s plenty that you do with regard to your rentals that can be deemed an expense. A good way to keep track is to keep an envelope, note pad something in the car so that if you are out and about and something comes up that may involve your rental property you can make a note of what you did, where you went, what you got, etc. and it can be used as an expense.
As far as I’m concerned taxes and income are an opinion, and that is my opinion. It has gotten simpler and easier to find out information regarding your taxes and if you go to the website irs.gov you can just about get any answer you need to help you out. Just typing in your question in the search bar area; for example…appliance deprecation or solar tax credits. Keep searching on the site for the advantages that you may be able to take.
I used to teach a class and I made the first task of the class to determine where you want to live, what you want to do with your life, what you want to have, etc. within the next ten years. Then I made them attach a value to that scenario and then I would ask them “how are you going to get the money you need to accomplish these goals?” We all have goals of where to live, what to drive, where to travel, children, grandchildren etc. With regard to your rental real estate, you have to decide what you want to get out of it. Are you leaving the property or properties to kids or grandchildren? Are you going to sell them to achieve something else you have in mind?
I’ve had 10 properties and by way of a pyramid you have to buy one to obtain another that is equal or greater than the one you sold. For example, you paid $30,000 for the first property, sold it for $70,000, estimated $10,000 for fix ups and repairs…so that gives me my $30,000. If you have the mind set to leave a rental to one of your kids, make sure they have the right mind set and they are skilled to handle it.
As an example, we built our last house that we live in and I took my son and had him work on his own bedroom, with the design, layout, framing, building, insulating, electrical etc…just so he would know what has to be done if you want to be involved in this type of work. So if he decided he wanted one of my properties he knew what he was going to be in for with regard to any repairs, etc. that may be required of the property.
Planning, what is the property, single family, multi-family and what are the advantages of these properties? Do you have the credit to afford them as well? My son had a couple of things, Netflix and 2 other small things on his credit report that we initiated when he was 18 so that he could establish himself. NetFlix is like $9 a month and then we went from there. He’s established some credit, he has three items on his report which is what you need to show and now as an almost college graduate he has a decent credit score of about 700. Now if he wants to buy one of those rental properties he’s able to go to the bank. He can then own the property and decide if he wants to flip it down the road and get that tax advantage in the process. It’s not what you take in, the revenue; it’s what you have left to use for your goals.
Your goals are for your primary residence to be paid for. Take that mortgage balance, take the time when you would like to retire and figure out how much extra you need to pay each month on your mortgage to pay it off. The same goes on your rental. For me, I have two kids graduating in May from college. After that I just as soon be done with the rental properties. I have been doing it almost 40 years considering that I used to help my father when I was just a kid. You just need to figure out when: when do I sell, when do I want to harvest what I have into them, what time in my life have I had enough and how am I going to do it.
You can convert multi family homes back to single family residences. You can live in that property for a time because $20,000 a month is tax-free which is $240,000 per year. You could sell your primary residence now, move into a rental unit so that you can optimize your after tax value, it’s not what you take in it’s what you have left.
For instance, I moved into one of 6 rentals, now it’s the primary, now that long term capital gains is reduced since you live in one of the six apartments you own. So you reduce it to a 3 family or even more as your objective is to optimize your net worth. You have to think outside the box.
Michael: How many years, other properties you have, the date of transfers etc.
Member: Are you depreciating …recapture?
Michael: Yes you do. Depending on how long you’ve been in the property. $90,000 ÷ 30 years = $3000. That is what is depreciated toward your increase in gain. Also have to consider the market value and you should be there at least 4 years. If it’s a 2 unit property, ½ the property unless you convert it to a single family.
Member: There are 2 properties, 4 units in each. I live in one as my main residence. I was told that at age 70 I should take them out of my name and give them, my children, each one property. Not buy them from me, give them to them as a gift, one to each.
Michael: With estate planners, living wills established, you can start to transfer the property in a slow process before your assets would be included and used against you if you were to be in a nursing home or some other type of elder care. The only assets that can’t be touched are cars and your home if you have a spouse, but they can tap into those other liquid assets to pay for your care. An estate planner should think about the tax consequences. Consideration should also be given if they are buying the properties from you or if they are being gifted to them. You just need to protect your assets in the process. If they buy from you, you could in return rent back from them.
With respect to an income statement:
Schedule for rentals.
2 units, need paperwork.
Section 8 is reported directly.
Advertising is an expense.
Research property values to compare your home to others out there…cost of the paper, there’s a percent to consider for your research of home values…
Cell phone bill…tenant calls you on your phone all the time, 25% goes to rental usage as an expense
Gas for meetings etc..
Spending money on anything that pertains to your rental property
Go through your money and see where you spend it regarding your tenants and rentals.
Have to consider stuff like:
Rental association fees.
Time spent with a lawyer on a matter.
Mortgage payment and interest.
Legal fees with regard to re-finances.
And so on…
There is also interest on credit cards from things you bought to use on the rental that may not be paid off.
Repairs, taxes, water and sewer etc.
Depreciation is straight line, mid quarter and mid year. They would include dishwasher, range, how much work did it need regarding electrical etc. Garbage, lawn care, plowing etc. Did you actively man your property or was the work all hired out. Don’t be passive with your properties do some of the work.
Member: I have an office with a treadmill in it where I have room for it, there’s also a TV etc…can it still be claimed as an office?
Michael: Excluding one quarter of property is primary residence. Home office is doing work within that square footage area be used as a deduction. For example, the table, lamp, space utilities etc.
I, for example, take a percentage of my cable bill as I’m always watching CNBC to see the latest information.
Member: 80% of my office is rental work only.
Michael: That’s where you can go to that IRS.gov and ask some of these questions and read some of the stuff that is on there.
In my opinion, Donald Trump probably deducts his gym etc in his house.
Your objective is to stand back and figure out your goals. After my tax returns, how do I structure my assets, my estate to optimize my value?
With regard to the Legislative Report:
Thaddeus R Lorentz:
There are a couple of angry legislatures right now. You need to talk to them if you’ve had difficulty. The sheriff’s department is broke. I’ve had to cancel and reschedule some hearings because the papers were not served.
The legislative session starts the first Tuesday after January 1. I’m meeting with Larry Cupoli, Peter Fagan, Herb Russell and I think Peg Flory to see if they can help us. I’m meeting to discuss hopefully with my colleague in Burlington as well, to amend the services. The sheriff serves the tenants 3 times and would like to get that reduced to 2 times. Add the second issue for the papers being served to the first service and eliminate one step and it would save time and money if we could do that.
Start first with the lawsuit and writ of possession and eliminate one step and shorten the waiting period on getting the tenant out of the house.
The law that passed last session said at the end of the writ of possession, 10 days after you get back the property, whatever they have left stored or other, whether it’s junk or good stuff, it’s now your property to do what you want with. The landlord doesn’t have to store their belongings for the 63 days. If they abandon the property you store it otherwise with the Writ of Possession the stuff is yours.
Hopefully, we will put something new on the legislative table. We will write something good just not sure if they will pay attention.
Member: …with regard to criminal activity in the apartments….
Thad: When James Mongeon was in office, I myself had an issue with about $6,000 in damages in an apartment. I was told it was a civil matter. With Marc Brierre, today, he will prosecute it if you present him with a case.
The city police have the wrong information on a no trespass order and I’ve mentioned it before. If someone is trespassing on a property for 30 days he then becomes a tenant as far as the police are concerned. I disagree. There is a statute with regard to hotels and motels and once someone has been there for 30 days at one of those places it is then considered a tenant issue but it does not apply as far as rental properties are concerned. It’s more like a squatting issue and there is not a deal with the landlord for them to stay there. It becomes an eviction process and I’m working on it.
Member: I was unaware of a problem on one of my properties. There was a parked car at the residence that belonged to a friend of the upstairs tenant, who in turn was not paying his rent. He was living in the car with his dogs and because it was getting cold he wanted to know if he could put up a tent in the yard.
Member: …question on the last months rent….question on a parking lot across from the apartment house where a friend parks and is not supposed to. Can I get a no trespass order on him?
Thad: You can get a no parking order and then begin a towing process. On the lasts months rent, you can charge any deposit amount that you want. However, if you collect 2 months rent at the time of signing the lease, you are covered for an extended month. At the end of their lease and they want to use their deposit for the last months payment, if they are in good standing etc and everything is in order, you are covered for the last months rent with the deposit plus you have additional months rent if something else happens and they don’t leave. You have covered yourself to include an extra month with the deposit with respect to an eviction process also. You have put yourself ahead of the game.
Member: With regard to the parking, I have a place and the next-door neighbors have party central and use my spaces. Now in Ludlow, they said if I took a sign and put it up here and here then I would have reason to either call the police or have the vehicles towed since it’s been posted. I have it specifically written in the leases the number of spaces per tenant and their exact space to use.
Member: I have signs up also…
Member: We just designate the spots and we go over it at the time the lease is signed and we explain that any visitors etc are to park out front.
Member: On the security deposit…. in the lease…I had a tenant move out with like one day notice (?).
Thad: The court is very clear. If the rent is due on the first and not paid, they move out on the 15th and didn’t tell you or you saw visibly that the place was empty, they technically owe you the rent from the first of that month prior to the date of when they left. The tenant could take you to small claims court but in theory they should have given you 30 days notice prior to the first. I think you could have won that.
Member: Legally, I say write the letter to the last known address. Even if it’s returned it shows you made an attempt. It gives you something to take to court and shows you attempted to do something.
Thad: There’s a whole statute on this. I always say write the letter whether you knew or not that they were leaving. Write it anyway, you will be covered that way. Count 11 days from the date they moved out and keep one months rent or even two whichever is the case that applies. Consider damage etc. but never credit the deposit toward the rent until after.
Member: The town of West Rutland wants to fine me $200 a day because of the tenants at my apartment building. They say the way the lawn looks, the vehicles etc is unacceptable. I’m like I would love to have that cleaned up and the mess taken care of. I finally got a court date.
Thad: Tenants have to be served 14 days before the hearing or you have to start over. If that doesn’t happen, then you have to start over again. It’s up to the Sheriff’s department to get those papers served.
I can’t stress enough the importance of getting your EMPs done. I’m hearing stories and getting phone calls from members who have been contacted by the attorney general’s office about not filing their EMPs and the fines that can be imposed by his office.
The board has done everything it can think of to keep members interested and aware of the changes in the laws to landlords but this all comes with a price tag so please pay your membership dues promptly. Please tell your fellow landlords that are not members that they are missing the boat by not keeping up with the changes in the laws.
If you know anyone who rents property you might want to ask him or her to be part of VRPOA as it will make the organization stronger and help him or her with any problems that can occur from being a landlord.
Again I repeat do your EMPs, as there are now fines that can be imposed.
The list of available apartments will no longer be offered by VRPOA. We have not had landlords remove outdated listings and have had no new listings.
In regard to tenant fuel forms, we are not responsible for tenant fuel forms and it is the landlord’s responsibility to get the forms to VRPOA not the tenants. So please don’t send tenants in with fuel forms. We will not communicate with tenants.
If you are enrolled in the 2013-2014 VRPOA fuel program, then there will be a lower case “r” at the bottom right hand corner of the address label for your VRPOA newsletter. In the event that you signed up for this year’s program and there is not a lower case “r” in the mailing label area, then notify Patrick Riordan @ (802) 775-3660 or firstname.lastname@example.org as soon as you can.
We have been continually asked for copies. I will make copies for any of the landlords and the rates are $.25 for one to ten copies, $.10 for ten copies and over. Two sided documents are considered two copies and legal size copies are $.25 for each page.
NEXT GENERAL MEETING
Date: November 6, 2013
Time: 7:00 P.M. (Doors open at 6:45).
Where: V.F.W. 15 Wales Street Rutland, VT (main room).
Program: The next meeting will be Wednesday November 6, 2013 and the guest speaker will be Thaddeus Lorentz and he will discuss protecting your rental property.
The State of Vermont is no longer going to be giving EMP (Essential Maintenance Practices) courses but you are still required to have them in conjunction with EPA certificates. Therefore, VRPOA in conjunction with Carl Anderson will start giving them. We need a minimum of 20 people and the cost will be $50.00. If you need an EMP class contact Ron Senecal at 773-9707 and get on the list.
The phone number for enrollment is 802-728-4015. The new law is in effect and it is EPA rule CRF 745 and it applies to Renovation of Residential Homes, Apartments, Child Care Facilities and schools built before 1978. This requires an 8-hour course and has a cost of $195.00. At this time we have no Instructor for EMPs so they will be put on hold until we do.
Ron Senecal, Patrick Riordan
All landlords that haven’t done their EMPs had better get on board as they will be checking all aspects of the Lead law. MAKE SURE YOU SEND IN YOUR EMPS. The attorney general has mailed 18 letters to those people who are not following through on the EMPs and there will be fines imposed. They are not getting the names from the lead department because you took the EMP class; they are getting them from income tax filings. ANYONE WHO IS PAINTING COMMERCIAL PROPERTY, SUCH AS AN APARTMENT HOUSE, PLEASE MAKE SURE YOU ARE FOLLOWING THE EMP GUIDELINES.
VRPOA has recently discovered that a local entity has been offering the EPA required lead course. They gave a class recently. So it will be awhile before another one is offered.
The association has placed all of its forms on a DVD. It is available to our members for $25.00. Contact Ron at 802-773-9707 to order a copy. If we must mail it to you, there will be a $5.00 postage & handling fee.
There are nine changed pages in the self-help eviction kit. These pages will be in a future VRPOA newsletter. It is very important that these approved documents are used or the filing will be rejected. The superior court clerks are not allowed to give legal advice so they cannot help you with your case. If you’re filing a pro se eviction case before the forms are in our newsletter, contact VRPOA for the updated pages.
Please send all news and notes for the November newsletter no later than November 15, 2013.
50/50 Winner – Victoria Howland
Ron Senecal, Thaddeus Lorentz
See comments after the guest speaker.
CLOSING THE COMMUNICATION GAP
Board of Directors Meeting – If any member would like to attend or has any questions that Pat or Ron can’t resolve, please make an appointment to talk to the board. The board of directors strongly suggests that all VRPOA members use credit checks on any potential tenants. Credit checks are the single best screening tool available for any landlord. In addition to the screening, it is recommended that all landlords update their tenant’s credit information. This will provide a credit trail for the future. No tenant wants it known that he is a bad credit risk. The board of directors is continually looking for guest speakers for the monthly meetings. If you have a topic or know someone who would like to be a guest speaker, please let us know.
E-mail attached documents should be formatted as text (.txt), WordPerfect (.wpd), or Word (.doc) documents to:
A general meeting in the past was cancelled due to the inclement weather. We try to make the decision whether to hold the meeting or not as soon as we can due to severe weather. If you’re not sure whether the meeting is going to be held go to the website www.catamountradio.com and click on School Closings and Cancellations which is located under the Main Menu to the left of the screen. When that information comes up on the screen, scroll down to the heading Business Closings & Cancellations to see if our meeting has been cancelled. We’ll try to make the decision whether to hold the meeting or not as soon as we can.
BUY .. SELL .. TRADE ..
Members only are asked to fill out the enclosed “CLASSIFIED AD” slip and mail it to VRPOA or drop it off in the “Classified Ads” box at the general meeting. Your ad will run for one month only. You must resubmit it in writing again to have it printed in the next newsletter.
House – Seeking house with property and workshop space. Buy/Rent. Call Nick Santoro – (802) 786-8099
Magic Chef– 30 in. propane range/stove from 1990s. Electronic ignition, sealed burners, self-cleaning oven. Black glass oven door and backsplash, white sides and top with wood grain accents. Good condition, clean. $200.00 firm. (802) 235-2376.
Empire Propane– direct vent wall furnace with blower, model #DV-215-7-SG. Approx. 30 inches high, 15,000 btu/hr. Heats approx. 400 s.f. room. With installation and owner’s guide. Good condition $100.00 (802) 235-2376.
Four nice units – Rutland/Pittsford border. 2+ acres off Route 7. Three 2BR and one 1BR. Very little work, nice cash flow. I moved to California – make me an offer. (760) 505-2632
Investment Property: Windsor VT. New kitchen appliances, electrical, windows, boiler, w/d hookups. State of VT certified. Zero maintenance. Selling well below market value due to move from area. Proven rental income. Second floor tenant in place. First floor ready for owner occupancy or rental. $129,000. Seller to pay closing costs. 508-939-0684.
Storage shed – 3’ x 9 x 5’ w/ gable roof – $25.00. Call 802-775-3660.
Hand Auger – New and still in the box. South Bend Rod and Reel. Everything you will need to ice fish. Call Tony Cantone – (802) 773-3014.
2000 Coachman Starflyte Motor Home – Excellent condition. 34,000 miles. 22ft, sleeps 4. Self-contained. loaded, customer storage cover with versa haul carrier and mesquito scooter (excellent shape). $22,500 (802) 773-4412
Frigidaire – White gas stove, $200.00.
Kenmore – Black Dishwasher, $50.00.
G.E. – White Refrigerator with icemaker, $250.00. Take all three appliances for $450.00. Call (802) 483-2566 or (802) 353-7292.
2 Houses in Pittsfield – 2 houses and 13 acres, $390,000. Lots of possibilities. Great rental history. (802) 234-4057.
10 BRICKS RENTAL 101
Encourage any tenant to learn the fundamentals of being a great tenant by having him or her attend a course called 10 Bricks RENTAL 101. Among the topics discussed are creating a realistic budget and understanding your lease. Materials are provided free of charge. Certificates of completion will be awarded to all successful graduates. There will be classes held every Monday from 10:00 AM to 12:00 PM at the Rutland County Housing Coalition, 46 Evelyn St – second floor, Rutland Vermont.
All landlords are welcome to attend the Continuum of Care meetings held every third Thursday of the month in the conference room at the Rutland Police Station. The main purpose of the meeting is to keep all interested parties abreast of the status of the housing in the Rutland area.
There is a rebate form available for landlords from Efficiency Vermont, which is available on their web site: www.efficiencyvermont.com.
If any paid up member wishes to examine the association’s books they are welcome to do so. Contact Patrick Riordan at (802) 775-3660 for more information.
If any of our members have tenants who fall behind on their rent, please contact Economic Services at (800) 479-6151 and ask to speak to their caseworker. If they do not have a caseworker, encourage the tenants to contact Economic Services, as they may be eligible for some rental assistance.
If the tenants are not involved with Economic Services they should be encouraged to contact the Rutland County Housing Coalition at (802) 775-9286 or BROC at (802) 775-0878 as both agencies can help eligible tenants with short-term rental assistance.
Whenever a member changes telephone numbers, please remember to alert VRPOA of the switch. If we are not notified, it creates a tremendous inconvenience for us if we need to contact you.
If you’re planning to be away for any substantial amount of time, please either change your mailing address or notify us so that we don’t send newsletters to “dead” addresses. The Post Office simply destroys the newsletter and then charges us $.50 for notifying us of what they did.
The charge per report is $16.00 per person and the application has to be filled out properly. In regard to credit reports, the criteria for running one, is that the application has to be filled out completely and legibly. The form at the bottom of the page has to be signed by both the tenant and landlord. The new forms for getting credit reports are very lengthy and have to be filled out or I can’t run credit reports for you.
On another note, if we are faxing you a credit report make sure you have a dedicated fax-line and long distance is $1.00 extra per report.
The hours to draw credit reports are from 9:00 AM until 4:00 PM Monday through Friday.
We receive many requests for additional forms. All the forms that members require are in the newsletter or the new member packet. The association is not responsible for forms that are lost, misplaced or used up. As long as you are a member in good standing, you are free to make as many copies of our forms as you wish for your own use. Members may NOT give copies of our forms to non-members. When seeking replacement forms you will be charged for them.
Each member’s expiration date is listed in the lower right hand corner on the mailing label in the format of mm/yy. It would save VRPOA time and money if our members would send in their dues before they become due.
A few notes about the fuel program:
If you have any points to make about the fuel program please take one of the following steps:
A. Call either Ron (802-773-9707) or Pat (802-775-3660) with your remarks.
B. Write a letter to the board of directors with your concerns.
C. Appear in person at a board of directors meeting. (Call Ron or Pat to be scheduled)
Do not make any comments about the fuel program immediately before the general meeting, at the general meeting or immediately after the general meeting.
The landlords are responsible for their tenants in the fuel program. VRPOA will not supply them with forms nor will we answer their questions. If the landlord cannot answer the tenant’s question then the landlord must contact VRPOA.
There have been a few problems with the tenant’s form for the fuel program. There should only be ONE name on the tenant name line and that name should be PRINTED LEGIBLY. The tenant location lines are for the physical location of the building NOT the mailing address. i.e. Cold River Road goes through at least three different towns. A building’s town of location may be different from its postal address.
We can no longer guarantee a quick entry into the fuel program. In the past it had been our policy to have the names to the dealer within a week. However, this is no longer practical.
A VRPOA board member has been attending the regular meetings of the Housing Now group, which consists of representatives of various local and state agencies involved with housing for at risk tenants. If you have any issues regarding tenants/housing feel free to get in touch with Pat (802-775-3660).
HANDYMEN & ODD JOBS
Chris Pidgeon: (802) 773-6067
Rob Stubbins, Electrical & General Contractor: (802) 775-1484
R.W. King Carpentry: (802) 775-4913
Jon Kiernan: (802) 775-2745
Precision Pros Painting: (802) 747-7914
Dan Colomb: (802) 770-2871
Tom Rennert – Novus Windshield Repair (802)-747-0220 or (800) 350-0220