Solar-Powered Rental

Jonathan Forisha:

Welcome to Adventures in Landlording. Each episode we pack our bags and hit the trail to answer some of the many questions plaguing landlords across America.

Krista Reuther:

Okay, so we have quite a few stories today. I am kind of just itching to get this one out the gate if you allow it. Yeah. All right. So this comes from the esteemed Petuli Poop-on-Poop. Ah, yes. Is it reasonable for a landlord to ask for a non-refundable $1,000 holding deposit without providing a lease agreement to review? No.

Okay. He is in the Bay Area and is trying to figure out basically what to do next. He has found a place that he really enjoys. He likes the price of it. He’s due to move in in nine days. Oh boy. Very fast. Okay. So you’d think, oh, everything must be good. Everything must be ready to go. But of course not, because we’re talking about it right now.

Jonathan Forisha:

That’s right. That’s right. We don’t tackle the easy stuff. Never.

Krista Reuther:

Never once. So the real issue here is that the landlord refuses to provide a lease for him to review. Okay? So he’s asked multiple times. He’s received the following reasons as to why that is an unreasonable request. One, the landlord does not share the past tenants’ information and cannot give him a lease without their information on it. Two, the landlord has provided a lease that is standard, but then says this is not the lease we’d be using. In fact, there are some minor addendums and additions to the actual lease that this doesn’t include, but you don’t have to worry about them.

Okay. And so the tenant is really curious. Is this valid? Is this a scam? What’s going on? How hard is it to make a lease agreement? Why isn’t this ready to go? And should they just bite the bullet because they like the price and the actual property? Hmm.

Jonathan Forisha:

Sounds like a desperate tenant, which is not a good thing to be, because they make some potentially bad decisions. And this sounds like it may be a bad decision in the making. No, don’t do this.

Don’t do this. So they’re in the Bay Area, you know, crazy rental market. I imagine a very competitive rental market as well as an expensive one. But a non-refundable holding deposit sounds like a fancy way to say scam.

Krista Reuther:

Yeah, and it gets better because here’s a little nugget that I didn’t tell you before. On some pieces of documentation, the non-refundable holding deposit is referred to as a security deposit. Okay. On others, it’s not. Oh boy. But it’s supposed to be the same thing.

Okay. And so they do not have clarity on whether or not they’d actually get this $1,000 back. So some of the comments were saying, hey, this is illegal in California. You can’t charge a non-refundable deposit.

That’s not exactly true. So California does allow you to, in specific counties like LA County, charge a holding deposit. However, it should be very clear how much you’re being charged, the conditions under which you get it back, and any other stipulations as to what this money is going for. This person does not have any of that laid out.

Jonathan Forisha:

Yeah, because the non-refundable part that seems very scammy, because why? Like holding deposits, if somebody has a holding deposit, it’s to so that the rental is in your name until we can make it official, in a really tight rental market, that might be the case. But in most cases where there’s a holding deposit, it will then turn into your security deposit or somehow be used somewhere else or be refunded to you. To do it non-refundable and they’re not providing a lease agreement, and the move-in date is nine days away. Yeah. No.

Krista Reuther:

I would also say, I’m really not a fan of how this landlord has responded to the issue, because when the prospective tenant has reached out to say, hey, please give me a lease to review, the landlord’s response has been, it’s a standard lease. Why would you have a problem with that? There are a lot of reasons to have a problem with a lease that you haven’t seen. You should never sign any kind of contract without reading it thoroughly.

What if there’s an amendment that’s like no overnight guests, and that’s something that the tenant doesn’t like, wouldn’t want to abide by, but is now in such a bind because it’s move-in day, and they are signing it and seeing it for the first time, that they just feel like they have to abide by that. It’s not good for anybody. So no. No. I know the housing market, especially in the Bay Area, is tight. I urge you to please find somewhere else, somewhere with better documentation, more transparent communication, and also in the post, they asked if it’s really that hard to put together a lease agreement. No. No.

Especially if you’re using something like TurboTenant. With our website, you can make it in 15 minutes or less and have something to send out. We also have sample lease agreements for people to see. So it would be so much easier if this landlord had their ducks in a row, but they don’t, and you don’t want to suffer because of that as a tenant.

Jonathan Forisha:

That’s right. And even if the landlord is not making some baloney up, that they don’t want to share a previous lease agreement because it could have past tenants’ personal information on there.

That’s crazy. You can blur that out or redact it or do whatever. There’s no reason that they shouldn’t be able to show what the lease would look like, especially we’re only nine days out from its starting. It’s not as if they’re still cooking it somewhere, right? They’ve got the lease. It’s ready.

Krista Reuther:

It’s freshly baked. They are waiting for the icing, the signature. It’ll be good, but no.

Jonathan Forisha:

Okay. I have another question. Sure. Put truly poop on poop. The esteemed put truly poop on poop. Have they seen this unit? Is it real?

Krista Reuther:

It sounds like they have because one of the major drivers in this entire conversation is that they really enjoy the property and the price point. While I won’t say that finding a good price point in the Bay Area is necessarily a scam, I would say that would be a little minor red flag to pop up for me. But it sounds like it’s a legitimate spot. What makes this illegitimate and more into the scam territory is the fact that the landlord is unwilling to give any more information and is urging them to act without seeing something that they need to sign.

Even if it’s all in the up and up, do you really want to be trapped in a contract with a person like that? No. Me neither. No. Don’t do it. Yeah. I’m going to go ahead and say scam. Scam. Scam. Use our scam stamp.

Jonathan Forisha:

Unlimited state-specific lease agreements. The agreements are just a few clicks away. Sign up for TurboTenant Premium and build a trustworthy lease in 15 minutes or less. Go to landlordpod.com to get started. Okay, Krista, I bring you a story actually from our Facebook group. Oh, I love those guys.

Yeah. We have a Facebook group called Better Landlords. It is private, but we will let you in as long as you’re a landlord. So come on in. At the moment, we’ve got about 3,400 landlords in there.

That’s a lot of folks. They’re chatting it up. They’re getting good advice from each other.

It’s a good time. We had one post in there and this landlord says, Hi, everyone. We are installing solar panels on our rental house. Would you please share suggestions on how to equitably change the rental agreement? Currently tenants pay for power. We will put the power bill in our name to monitor the solar bill. What is fair to charge the tenants? We will pay $20,000 for the solar system.

Krista Reuther:

Hmm. Okay. What are your initial thoughts to that? Because I have a couple feelings, but how do I jump the gun?

Jonathan Forisha:

I like solar panels. I have them on my house and I find them fascinating because the laws are very different for every state and every utility company, how they charge solar production. Some of them let you deduct it from your overall electricity bill. Some of them don’t. Some of them have time of use pricing.

It gets really complicated. A really nice thing about putting solar panels on is some states have incentives where they’ll help cover some of the solar bill and there is a federal tax incentive as well. That is, I want to say right now it’s around 30% of the total bill. They’re saying they’re paying $20,000 for the system. 30% of that actually should be refunded to them when they file their taxes.

Nice. If I didn’t get all those numbers totally right, forgive me, but that’s how it was a few years ago. I totally understand wanting to put solar panels on your house, especially if it’s $20,000. I don’t know where this person lives, but if it’s $20,000, that’s a good sized solar system. It’s possible that will cover the whole electricity bill, depending on how much electricity they’re using, depending on if they have an electric car.

There’s a lot of other factors in there, but it should take a huge chunk out of the electricity bill. I understand why they’re asking this, but there’s about 31 comments on this right now. Most of them are very skeptical. It’s people saying, don’t do this.

Krista Reuther:

Are they saying don’t install the solar panels at all?

Jonathan Forisha:

They’re saying don’t put solar panels on your rental property. Why not? A few reasons. The biggest is that it complicates things. For the exactly why they’re asking the question, it just makes it a little complicated. If their tenant is paying the electricity bill every month, and now the electricity bill is about to go down, hopefully a lot, it sounds like the landlord will be covering the solar bill because I’m assuming they financed that. That’s going to be its own monthly cost until it’s fully paid off. I think the landlord is asking, should I charge my tenant for the solar bill since they will potentially not have an electricity bill?

Krista Reuther:

That’s the bit that I really dislike. I understand the question. When you’re looking at this as a business, you’re looking at cost and where you can move things around and try and maintain your bottom line. At the end of the day, in my opinion, the owner decided to put these panels on. Therefore, it’s their responsibility. It’s not like the tenant came to them and said, hey, dude, I would love it if you put up a solar system. I will split it with you. That was not the conversation.

It was the property owner saying, hey, I want to invest in this renewable resource. I’m going to do it. There’s a cost. Well, that’s on you, Bub. Happy, thank you. The climate thanks you. At the end of the day, that’s your decision and you should not pass that on to the tenant as part of their responsibility, in my opinion.

Jonathan Forisha:

Sure. Some of the comments in here rightfully draw the analogy between putting a new roof in or a new higher efficiency furnace. Yeah, if you get a new furnace, if your furnace is 25, let’s call it, years old, a new furnace today is going to be a lot more efficient than that old furnace you’re replacing, which means lower energy costs. Do you then pass along the cost of the new furnace to your tenant? You shouldn’t.

Krista Reuther:

Yeah, I would think not. There are some things you could do, especially with the solar system, which just tickles me, by the way. I just keep imagining the planets. But because there are tax incentives and ways for them to get money back, I feel like that also needs to factor into this conversation because you’re not just out $20,000. Yes, that’s a chunk of change. But you’re getting money back.

You are going to have this for the life of the property most likely and that will supersede how long your tenant is likely there. So again, it’s for you. It’s just like if I buy all new makeup, I don’t charge my boyfriend to look at me because I look better. I don’t pass along the cost to him. But I could. Maybe.

Jonathan Forisha:

Maybe if I was a better businessman. Yeah, there you go. Well, and that’s an interesting way of looking at it because in the realm of repairs versus improvements, this definitely isn’t a repair. It’s an improved.

Yes. It’s something that improves the property. Now, does it benefit the tenant? Yes, because they’re covering the electric bill, which is going to go down. But it is for the, it improves the value of the property because after however many years, whatever they finance this for, once the solar system is paid off, the idea is you’re your own power plant. Yes. You may hopefully never have an electric bill again. That’d be cool. Huzzah.

Krista Reuther:

Also, they could depreciate this since it is an improvement. And actually, it’s not even a KN. Like you have to depreciate improvements. If you’re not sure what that means, we have a tax course. Go check it out.

You can learn so much. But inherently, you have this big purchase that you’ve made to improve the property and you get to take it off year by year in small chunks, more or less. I’m not an economist. But there are ways for them to get repaid. So I understand the drive. I disagree with it. If anything, there are some solutions that they could.

Jonathan Forisha:

Well, hang on. Before we get to that, I want to add another wrinkle to this. Oh, love a wrinkle. The further down in the comments, our author said, wow, interesting comments. We will retire and move into this home in five years. And then they also said the electricity bill has been about $150 a month. Okay.

Krista Reuther:

Okay. So this reinforces my belief that you should not pass that along to the tenant. Five years is not a super long time. And then you will be benefiting directly. Again, you decided as the property owner to make this change.

And I’m really proud of you. Now you should pay for it. If you do want to like try and bolster your bottom line, there are different ways you could do it, whether that’s a rent increase once the current lease is up. That would probably be the best way, especially if you have a new tenant. I mean, granted, don’t boot out your old one if this is the only thing going on between y’all, but that is an easier sell because then, hey, you’ve got to cut a reduced electric bill. You’ve got solar panels. You care about the climate? Wow. Beautiful place to live. Yeah. Yeah.

Jonathan Forisha:

I mean, if I was a prospective tenant and I was told I have to cover the electricity bill, but there’s a whole bunch of solar panels on the roof. So the electricity bill is maybe nothing or maybe less than $100 a month consistently. That’s going to make it a much more attractive property. You could raise the rent a little bit to try and compensate for that.

Krista Reuther:

You could. You don’t have to. You don’t have to. You don’t have to.

Jonathan Forisha:

I mean, because once again, if we’re looking at being a landlord, being a property owner and a property investor as you’ve got the long term of the real estate property accruing interest and then you have the short term of providing the service to your tenants, well the long term investment, that’s what the solar panels are. They’re helping the value of the property and one day when this person moves into it themselves, it’s going to be really nice to have that there. And then even further down the line, when they decide to sell the property, it’s going to be nice there too because it’s added to the property value. But in the short term, the tenant doesn’t care about any of that. Yeah.

Krista Reuther:

They’re just along for the ride. They’re just in the house. You put solar panels on it. And again, I’m really proud of you. But let’s be realistic. They did not ask this is not something that you’ve done on their behalf. It’s something you’ve done for your long term investment. And that’s why I feel like it should really fall on the landlord to take care of it.

Jonathan Forisha:

Okay. So getting back to the original question, they asked for suggestions on how to change the rental agreement. And I would say you shouldn’t at all.

Krista Reuther:

Yeah. I would say don’t. If you decide, you know, when lease renewal comes up that this is something you really need to do, it’s killing your bottom line, you’re about to get into the streets yourself, then yeah, sure, change it, change the price at that point with a new contract. But I would not advise adding an addendum for this. It’s just it’s going to cause friction. I wouldn’t do it, but go forth and prosper.

Jonathan Forisha:

If the tenant does decide to stay here, however far out they are from lease renewal, they’ll be delighted that for the last few months, their power bill was so low. The one that they were previously used to being 150 a month goes down to 20 a month. Let’s call it. They’ll be so happy that a slight rent increase upon renewal will be fine. It’s going to be a lot easier to stomach. And if they don’t like it, they’ll move out. It’ll be easier to find somebody else because it’s a low electricity bill they have to pay. Sure. Win, win. Win, win. And that’s all you can hope for.

Krista Reuther:

From finding your new favorite tenant to automating rent collection, TurboTenant has the tools you need to thrive as a landlord. Get started for free today at landlordpod.com and tell them podcasts sent you. The Landlord Special. Landlord Special. No one likes it.

Everyone hates it. And we’re here to tell you how to avoid becoming part of our story. We’re going to start with this beautiful TikTok of a landlord covering up active mold with paint. Let’s take a look.

TikTok Speaker 1: Things in my college apartment that just makes sense. Mold in January. Apartment not concerned so time for a sample. A week later. Now in March it’s growing on my shoes. No matter how much I clean, still growing on window. They simply paint over it. Help.

Krista Reuther:

So what’s wrong here? Everything. Everything is wrong here. There is active mold on the windowsill and instead of cleaning it or otherwise trying to take care of the root issue, we see someone just painting over. And of course then we have a brilliant landlord attorney just jumping in to say, hey, don’t do that. Still growing on window.

TikTok Speaker 2: I’m a landlord attorney and I deal primarily with mold issues against landlords. This is not okay. You cannot paint over mold. That’s going to make things worse. If you’re a tenant, what you need to be doing is immediately informing your landlord of the mold growth in your home. Report it to your city’s Department of Public Health and or housing. And if your landlord still fails to properly remediate that mold, you need to hire an attorney. Mold can be extremely, extremely dangerous to your health.

Krista Reuther:

Mold is really dangerous. I mean, mold is not something to mess around with. And if you don’t treat it properly, it can negatively impact your tenant’s health. It can kill them. I mean, it’s not something to even joke around about, but here we are, two gestures just for you. Now, Jonathan, there is a way that paint can help with mold. We’ve talked about it at length.

Jonathan Forisha:

We have. We have other videos on mold and what to do. And one of the things that we say is that paint is actually very good for stopping mold before it starts.

Krista Reuther:

Before it starts.

Jonathan Forisha:

Before it starts. Before it starts. And that’s because it gives a nice layer that mold doesn’t like, basically. Bare drywall is way more, is way kinder, I guess, to mold spreading.

Because it spreads by spores. Once it’s in there, once it’s in the wood beneath the drywall, well, then you have serious problems. That’s when you get into potentially structural issues. Mold can be a real pest.

Krista Reuther:

Yeah, truly. Truly. And so paint on drywall before there’s any mold. Yes. Acts as a nice sealant. Hopefully it’ll make it harder for the mold to actually grow. But if you have active mold painting over it, it’s just simply not the solution at all. As a landlord, you should be very disappointed in yourself.

Jonathan Forisha:

You don’t paint over a major problem like that. I mean, if you had a gaping wound, would you just slap some paint on it and call it a day?

Krista Reuther:

I would, but I make really bad decisions. So I don’t think everyone else should.

Jonathan Forisha:

You know, it’s not where we were going with this conversation, but I will take the time to say, don’t do that, Christa. Don’t do that. And this is the same thing here. We’re, you know, looking at this, it’s a window sill.

That’s not unusual. Mold often occurs around window sills just because you’ve got wood. You’ve got interior, meeting exterior. You’ve got windows, which may or may not be sealed properly.

May or may not be installed properly. There’s a lot of reasons mold could start right there. But then to just paint over it, it’s just sealing it in. It’s basically saying, hey, mold, whatever you’re doing in there, keep doing it. Keep it up. And all of the wood that makes up the structure and foundation of this house, it’s yours. It’s your playground. Go for it.

Krista Reuther:

Tenants, feel free to breathe that right in. Just some hefty breaths. But no, the landlord attorney here offers some really good advice. She says, hey, as soon as you suspect any mold, you need to reach out to your landlord immediately. Immediately. Because this is one of those situations where they need to act quickly. They are duty bound to do so because it can negatively impact your health. If that’s not enough reason for them to do it, it’s also going to hurt their investment.

Bad on all sides. If your landlord is not acting quickly. If they are just letting it go, they’re like, mold, why do you care about that?

Just let it be. Make sure that you are keeping excellent documentation of all of your conversations. So to me, that means sending emails. Maybe you’re sending messages through Turbo Tenant, something that is time stamped and that you can prove was sent.

Jonathan Forisha:

And has read receipts, preferably. Yes.

Krista Reuther:

If you can’t do that for whatever reason, let’s say they just love having a good old talk on the horn. They want to talk to you on the phone. Send a follow-up email after those conversations to summarize what was said. Action plans, timelines, et cetera.

That way, again, you have the documentation that that conversation took place. If things still don’t get better, you need to reach out to a landlord attorney at that point. A real estate attorney, a rental attorney.

There are a thousand names for them, but you want to make sure that you find someone who can help you figure this situation out and either force your landlord to act or get you out of the lease without penalty because it is unacceptable to force someone to live in a moldy home.

Jonathan Forisha:

Here, here. Here. Now, if we had the landlord who owns this particular property here with us on the couch, what would we tell them?

Krista Reuther:

Partner, you got to make better choices.

Jonathan Forisha:

Yeah. So first of all, don’t paint. Yeah. In fact, strip the paint because you’re going to have to get to whatever is going on in a base there. So whether you do it yourself, there are some ways to do that.

Sure. But the most important thing to remember is wear a respirator, wear some kind of mask, cover your skin, mold, especially black mold. It’s nasty stuff. You don’t want to breathe it in even if it’s just a brief repair that you’re doing. You don’t want to breathe it in ever. So make sure you’re taking the right precautions if you’re doing it yourself or hire somebody who knows what they’re doing and take care of the root issue.

Yes. You’re going to have to go down to the studs. You may, in this case, you may have to take out that window. Maybe the window needs to be replaced and that would help solve this from happening in the future again. But you need to deal with the mold.

Krista Reuther:

Yes. You have to deal with the mold. You have to make sure either you or a professional is cleaning it up exactly as Jonathan said. Wear a respirator, have some kind of air filter in the mix, open the damn window if you can.

I mean, there are a lot of ways to try and keep yourself as safe as possible. But at this juncture, I would say bring in a professional, apologize so heartily to your tenant and then make sure that you don’t do this again.

Jonathan Forisha:

Yeah. And if you are going through all this, communicate with your tenant. Yes. Let them know what’s happening. Let them know that it’s a serious problem. Talk with them about what they’re comfortable with.

If there’s another room they can sequester themselves to in the meantime until the repair is done, if you have to pay for a hotel in the meantime, make sure you’re taking care of them. Absolutely. And that’s it on mold. And that’s it on mold. Mold, mold, mold, mold, mold, mold, mold, mold.

Krista Reuther:

Well, that is it for this episode of Adventures in Landlording. Make sure to subscribe on your podcast player of choice and on YouTube. If you have any feedback or you want to share your own adventure in landlording, check us out at landlordpod.com. Thanks for watching.