Legalized Scamming (Rental Property Stories from HELL)

[Boo Blizzi]

I do not own a rental property but I just feel like there's a devil's advocate argument here that's pro-Fastlane. Seems like a lot of the horror stories are for low-income tenants with individuals who are doing this as a hobby on the side, not a main business. On the fastlane side, you can earn substantial cashflows with like 35% return on capital for low-income housing, more than enough to hedge on legal expenses etc to flush them out. Still comes back to why you bought in the first place.

I see you are in NJ. I have 12 rentals there and it is one of the worse places in the country to be a low income land lord because if the tenants run off and leave a massive water bill... it gets attached to your house and you have no other choice but to pay it off.

This happened to me in 2005:

I have a rental with an enormous walkout basement. The previous owners had a bar, living room, bathroom, and a dance floor down there.

My lease states the tenant is responsible for all utilities, except sewer. I interview a tenant and she says she wants to put a washer and dryer in the basement.

I don't care because I'm thinking she's responsible for it so I rent the place out to her in April.

Around late August, I get a past due water bill notification.

It's $3600 bucks!

It's about 5pm. I dont call this chick... I hop in my truck and make a bee-line down the turnpike 2 hours away to her house.

I calm myself down and get into land lord mode. I knock on the door. No one answers, but I see all the lights on. And I hear music.

I go around back and Im blown away... this chick has a big a$$ above ground pool taking up the whole 2 car driveway. And it looks like the whole neighborhood is over having a party.

I walk in the basement and damn near faint... she has a small wading pool in the middle of the dance floor.

There's big fat ladies that have no business wearing bathing suits lounging in the pool drinking Alize and Hpnotiq out of little plastic cups.

There's all sorts of thugs posted along the walls or shooting dice in the living room.

And this chick is behind the bar serving drinks and making cash hand over fist.

My professionalism went out the window and the hood came out of me.

I was like, "Yo what the f#ck are you doing?" It got crazy quiet in the basement and everybody turned to look at us.

She was like, "What it look like I'm doing? I'm getting my grind on."

Cliff notes...

• I tell her about the water bill
• she says she aint paying shit
• I say I will evict her and take her to court
• she says "do you"
• I leave, then call her case worker the next day
• the case worker says put in a 60 day notice to evict
• I get her out in 30 days
• the place is smashed to hell, pipes are ripped out the wall, the refrigerator and stove are missing
• the final water bill is almost $4500
• I file 2 lawsuits in small claims court
• I'm still waiting on payment in 2014
• I have to LOL... because if I don't, I'll cry

 

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[SteveO]

I learned not to buy in bad neighborhoods. With as many as 950 apartment rentals going on at one time, I have tons of stories.

The best one was a rental that I had in Palm Springs. One of the residents was not paying rent. My manager filed the eviction notice but it got kicked out of court after 2 months because we had a mistake on the paperwork.

The resident attacked my manager and held him on the ground. In the meantime the resident was screaming for help. One of the other residents came out and tried to knock him off of the manager. In doing so, the guy had a mark on his face. The police arrested my manager and the person that tried to help him. The guy got a restraining order against the manager and repeatedly called the police while the manager was trying to do his job on the complex.

We filed eviction papers again. In the meantime, he moved other people in and moved out. The new people were dealing drugs out of one of the bedroom window. The police would not respond to us because of the past problems. Finally, after three total months, we convinced the police to go in. They arrested everyone in the apartment for dealing drugs. We were able to convince the police that they were squatters and we locked them out. Fun...

In general though, I don't find property management to be a problem. It makes me a lot of money. Just follow the processes and know that there will be issues from time to time. Keep your contracts crisp and your processes tight.

btw.... Stay away from section 8.

 

[Boo Blizzi]

Here are some pix I took when I did a quarterly inspection for a tenant that was only in the place for 6 months. I couldn't believe this girl destroyed this unit so fast and was living under these conditions.

Now check the F*ckery...

I report her to sect8 and terminate her lease. They conduct their own inspection and call Child Services. Child Services takes her kids, then calls the city. This backwards a$$ city gets a judge to issue an appearance ticket for me for Endangering the welfare of a minor.

The city doesn't send the notification to my address in NY, they send it to the property address in NJ. Now I have a bench warrant. I find out about all this when Im down there dealing with another tenant.

I go into court and the judge arraigns me like I committed a crime... (you got the right to an attorney, if you cannot afford one, one will be appointed to you by the courts, etc...)

Im beside myself. I tell the judge he's bugging. Im just the landlord, I have nothing to do with how she's raising her children.

He says he dont care. I say.. so what am I supposed to do? He says make the house habitable within a week so the kids can return.

I initiate the eviction process as soon as I leave the courtroom, but send a crew in to fix the damages, get an exterminator, and another crew to clean up. Costs me close to $2k.

I go back to court the next week to show the judge the work... and he tells me I cant kick the girl out till the city and child services comes to inspect and she gets the kids back.

This chick got to lay up for almost 100 days without paying any rent before I could get her out.

 

[SteveO]

Unreal shit.

 

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[pro]

It is strange how when someone harms a victim, the victim is often inflicted with more pain by the person who is supposed to enforce justice.

You can only rely on yourself. Some judges and law enforcement appear to not be too concerned about private rights and civil matters.

In places like Dubai, if you have debt and don't pay, you can be thrown in prison. Dubai is far more perfect though

 

[Boo Blizzi]

Unreal shit.

Yeah, it was like some 3rd world country shit up in there.

I asked her.. how the hell you break the wall down to the cinder blocks?

She said one of her baby father's came over while her other baby father was there and bashed her head against the wall, then F*cked the other baby father up. They pushed him out and locked the door, but he kicked the door in and broke the frame and wall.

I was like, "whoa... this cant be real life."

 

[MJ DeMarco]

Yeah, it was like some 3rd world country shit up in there.

Think you might have a book in you? TENANTS FROM HELL, Tales from the Low-Rent District, Lazy F*cks, Losers, and More! ... these stories are straight out of hell.

 

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[MJ DeMarco]

Meanwhile in the great state of California, more landlord friendly news.

http://news.yahoo.com/landlords-san-francisco-anti-eviction-law-unconstitutional-192835025.html

If you want to LEAVE the rental business, guess what? These f*ckers want to penalize your freedom to do so.

Under the recently passed ordinance, which significantly increased the amount of money landlords must pay to tenants if they want to get out of the rental market, the Levins would have to pay $117,000 to move into their duplex, Breemer said.

Under California’s Ellis Act, landlords in the state wanting to get out of the rental business can displace renters, but the law leaves it to local municipalities to set further guidelines around notification and relocation payments.

The San Francisco ordinance raises the amount landlords must pay from around $5,200 to possibly hundreds of thousands of dollars, according to the groups suing. The new payment amount is the difference between a tenant’s current rent, kept low by rent control, the market rate cost for a similar apartment for two years.

 

[MyronGainz]

location: California


Not surprised one bit.

das it mane

 

[Tick]

Real estate is just like any other investment. If you learn as much as you can, hire professionals when you need help, avoid fads, and master your trade you'll be fine. Sure you'll hit bumps, but where in life won't you?

If you jump in without learning, try and do everything yourself (cause you're so smart), chase fads, and take your investments lightly, you'll end up like this. You'll hit bumps, and they'll be big ones that are hard to recover from like this one.

This is why I don't invest in stocks. Nothing wrong with them. They just aren't my expertise yet.

A sidewalker came into our office threatening to sue this week. My wife calmly explained the law. I explained how I'd be showing my pictures of his weed in the apartment to the judge if he took this route. Then she looked him straight in the eye and said...

"If you need to get out of your lease early, that's fine and you have options. But if you want to sue us....bring it" Things got real quiet.

He has since calmed down.

Certain states and cities, just aren't conducive to real estate investment. California is one of them. Oh, and don't rent your place out without a real lease from some website that really doesn't give a crap if the tenant pulls this stuff. Unless you feel like explaining to the 60 yr old judge working evictions what Airbnb is. We win evictions several times a month in my business. But we go in prepared. We don't walk in with a screen shot from an iPhone.

 

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[Tick]

I learned not to buy in bad neighborhoods.

Boom. Know where to buy, and more importantly where not to buy

 

[Magik]

I've got a story, though it involves me as a tenant who lived with bad roommates who caused some trouble.

2012 I was renting a room for a few months short term. I wasn't as picky as I normally would have been because I had been looking for a house for a while and didn't expect it to take much longer, but I had an odd feeling about moving in. I moved into a house with a married couple and another guy renting a room. Everything seemed cool at first, nice people. The guy worked in a restaurant so he would get home late. The girl stayed home. Anyway, I start seeing one of his friends hanging around the house while he's at work. I start getting some vibes from her, and I realized that this marriage is going to go sideways, I just don't know if I'll be gone before it happens. To cut it short, she disappears one night and he goes out looking for her. By now, he already suspected she was cheating on him. I leave the next day for a few days to visit my dad and come home that Saturday to a mess. Broken dishes and glass everywhere, a few holes in the wall, shredded paper everywhere, a mess. The girl's brother was in town and said he was down in the basement, so I go down there to see what the F*ck is going on. He's pacing around, chain smoking, and looks like he's gotten into some blow.

He had confronted her and there was a blowup, she left with the new guy and, enraged, he trashed the place. Then he somehow figured out where his wife and "special friend" were, and shows up with a knife. Tries to get in the door, but they keep him out. He then rams his Cherokee into this guys truck numerous times and scratches the hood up with the knife. The cops had been by looking for him a few times, they just didn't answer the door. Bear in mind I've been gone for a few days and came home to all this. He skips town the next morning to California, leaving me with the holes in the wall and all the shit he broke, plus he owed rent to the landlord. Luckily, the owner and his wife were great people and the dude who skipped dropped by and talked to them before he left. The owner had written some songs that had charted and done well for him, so he parked the money in rental houses in the neighborhood. I paid them by the day for 10 days, helped them clean the place up and move all the crap out they left and closed on my house and moved on. Luckily, my name was not on the lease, I just rented a room. It could have been much worse for me.

The experience made moving into my own house, where I am in control and I call the shots, much more rewarding. While I was dealing with this mess, I had almost waited too long to fire my incompetent mortgage broker. He almost screwed the entire deal up, so I'm dealing with two different messes, plus managing a new retail store. The experience made me realize how important control really is and also that if you focus and just do what you have to do that day, one thing at a time, results will follow.

 

[jazb]

Not only is it a good lesson in real estate but its a good lesson in business in general. Don't serve sidewalkers.

One of the guys from Dragons Den owns 60 health clubs here in the UK. Hes had to drop prices and the sidewalkers have come and a mess of things. Always complaining to get refunds, things being stolen, trying to get friends in for free etc etc.

 

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[PSDSH]

The man in this article was my tenant and his house was one of my rental houses.

http://mckinleyvillepress.wordpress.com/2012/02/22/another-pot-bust/

Long story short: The guy arrested inside my house during the raid became a squatter who I couldn't get out for at least 9-12 months according to the DA...this was in the middle if the OWS B.S.
The house was condemned by the County, the Feds threatened to arrest me if they found even a joint on my property in the future.

I gave that property back to the bank!

 

[rcdlopez]

Shit, if you pulled some shit like this where I come from, you'd get you a$$ SHANKED! Fur real!

 

[SteveO]

Not only is it a good lesson in real estate but its a good lesson in business in general. Don't serve sidewalkers.

I have made a lot of money with apartment rentals. The more people are scared off of the business, the better for me.

 

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[RHL]

Don't serve sidewalkers.

Lots of money to be made from sidewalkers, but you have to be prepared.

1. If you serve side-walkers, you will be sued. How many times has McDonald's been sued by customers? Now, many times do you think 5-star restaurants like Le Bec Fin are sued by their clientele? Never. Getting a lawyer on payroll when you serve sidewalkers goes from being a "after we build up a bit and have some success" issue, like it is in many fastlanes, to a "do this before you make the first sale" issue. A hospital near me that I have INSIDERS knowledge concerning the operations and financials of moved out to the suburbs from the inner city. Move cost over $100M. Not only did their costs from uninsured walk-ins taper off to almost nothing, but the number of malpractice suits WITH THE SAME STAFF plummeted as well. Did the doctors magically get better? Or do non-side-walkers just realize that being in recovery 24 hours longer than they said at the outset isn't "malpractice?"

2. They will do everything humanly possible to get out of paying. If you forget to print an expiration date on your coupon, they will threaten court and pitch a hysterical fit because they can't redeem a "free" coupon from 1992. If you don't write "warning, bones" next to the t-bone on the menu, they will claim they bit it and "didn't know" and try to get their food comped. If you sell them a car and it has any problems in the first year, they will be back claiming it's your fault and wanting it for free even though the contract says otherwise. If you can't evict them for 100 days after they stop paying rent, that's their cue to stop paying right away.

3. Every kindness will be taken advantage of eventually. If you let them pay two days late on their rent once, it will never be on time again. If you have a 5-day grace period, that will become the end of the regular pay period.

4. Any rule that you cannot legally and deftly enforce will be broken.

5. Anything you can't prove never happened. If you don't have videos of them actually attacking each other in the parking lot, somehow, 10 neighbors confirming that they saw them having a drag-out fight earlier is insufficient evidence to charge them.

Again, maybe I'm just lazy and not cut out for true fastlaning, but to me, the clarion call of TMF was "Work smarter, not longer." This isn't smart. This isn't "fast." This isn't using your brain to multiply your money passively. This is a grueling-a$$, hair-graying, hellish business to be in. If people are making it as land-lords and happy with their lives, great. I literally wouldn't take @Boo Blizzi 's place for a Ferrari F40LM and a year's gas money.

This is why I no longer sell bottom-of-the-barrel used cars, even though, on paper, it's more profitable. You sell $3,000-8,000 cars, then the above is your customer base. You sell a $50,000 car, you never see one.

 

[wilddog]

My parents own apartment buildings.
They just evicted a dickhead that stopped paying rent at the beginning of winter. In Ontario you can't evict someone during the winter. So he essentially lived rent free for 5 months and then bailed out.
Pretty infuriating.

 

[SteveO]

There are laws that are in place for every business. You can't live in fear of them. Embrace and understand what it is that you are working with.

If a law is put into place that hurts an industry, see how you can benefit from it.

 

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[Boo Blizzi]

Think you might have a book in you? TENANTS FROM HELL, Tales from the Low-Rent District, Lazy F*cks, Losers, and More! ... these stories are straight out of hell.

My mother always says that, but I dont have a happy ending yet. I think the book would need to have some kind of lesson other than stay away from sect.8 scum

 

[PSDSH]

I had a very good experience with my lone section 8 tenant. My ex business partner has 14 duplex units filled with sec 8 tenants in Ft Worth and gets the rent payments direct deposited into his bank account every month...he loves it and is constantly on the lookout for his next duplex to buy. That's not to say he hasn't had a few bad experiences, but in Texas, you can have a tenant evicted in 3 weeks or less...that's key, IMO.

 

[1step]

A recent news event from my city, http://www.wlky.com/news/police-man...er-fatally-shooting-landlord/26958076#!bmhmi8

Murdered over $58.

 

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[parkerscott]

My mother always says that, but I dont have a happy ending yet. I think the book would need to have some kind of lesson other than stay away from sect.8 scum

Justice.

 

[Boo Blizzi]

Justice.

Please elaborate.

Kicking tenants out that damage your property and waiting years to hopefully recoup expenses is not justice nor a good business model.

I dont know how good of a book it would make. The stories would be entertaining for sure, but there would be no lesson to really teach.

 

[parkerscott]

Please elaborate.

Kicking tenants out that damage your property and waiting years to hopefully recoup expenses is not justice nor a good business model.

I dont know how good of a book it would make. The stories would be entertaining for sure, but there would be no lesson to really teach.

What i mean by justice is maybe there is some gray area in law or something where you could shaft them. I dont know how it would work though. Maybe something like offer them some type of gift like a car and then report them to the IRS when they dont file it on their taxes and then take them to court over the damages they didnt pay and sue for the car. I just thought of that off the top of my head in a few seconds. Obviously there are flaws everywhere, but you get my point.

 

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[danoodle]

Hmmmm, I am a small-time Kansas landlord and have had no problems with tenants (knock on wood) in my 3.5 years in the business. I deal with very cheap houses $450-$1000 per month but when compared to my competition, they are in great shape. I had a showing today and the guy said it was the nicest house he had seen out of all the ones he had looked at, which I take pride in. So I may be in a small, specialty niche, but I am a little taken aback with all the horror stories I am hearing in this thread. I will say I don't deal with section 8 at all.

Some things I do to stay in touch with my properties is always collect the rent in person for at least 3-6 months to get an idea of their lifestyle, cleanliness, and how they are treating the property. Also, screening and making them fill out an application does wonders for avoiding the deadbeats. I say in the application that I will do a background check, but don't even do that. Just saying it is enough to weed out the bad renters. You can generally tell how the person will be depending on how they act during the showing. I have had people point out very minor blemishes on the wall, among other very minor things, and I already know they will be a PITA tenant. Not worth my time...next!

When it comes down to it, it's all about expectations. Ultimately it comes down to:

Tenant - pays rent on time, doesn't trash the place
Landlord - fix major repairs, make sure the place is safe

That's it. It's not hard. It's all about communication and I make sure they know these expectations. It's for their own good as well as mine that we are on good terms. I know I am still a very "green" landlord, but I could see myself doing this line of work for quite awhile.

A couple other random tips:
-Set the rent to be a little higher than you would normally charge. For example one house that I want to rent for $650, I say it is $700 with an on-time payment discount of $50. That way you get a higher deposit, and the tenants feel like they are getting a deal by paying on time.
-I always collect the rent in my work clothes and beat up truck. I don't want them to feel any resentment towards me or feel that I am the "rich" landlord who pulls up in his suit and BMW to collect their hard earned rent. I definitely try to be friendly and show them that I am "one of them" in a sense.

 

[Tommy92l]

"Hey Makysm, unfortunately my phone is on the fritz and I can't be troubled to finish this conversation via texting. Would you mind if we discussed this in person. Say.... 3 A.M. behind the abandoned industrial park?"

 

[Tommy92l]

"My income while working averages $1,000-7,000 per day." Right. Because that's what someone making 2.55 million dollars a year does, they rent someone else's condo for a month, then try to get out of all fees on a technicality. I'd have gone straight to small claims. I bet his income is a lot closer to $10-70 per day.

That is an absolutely massive margin.

 

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[MJ DeMarco]

An update on these toolbags.

http://finance.yahoo.com/news/airbnb-squatter-says-totally-squat-155539027.html

These two little tweedle-dee needles are going to piss off the wrong person. Doesn't look they could fight themselves out of a wet paper bag.

 

[SteveO]

Great tips. I have the same experiences and share your philosophy.

I have had people point out very minor blemishes on the wall, among other very minor things, and I already know they will be a PITA tenant. Not worth my time...next!

Fair housing laws say that you must rent to the first qualified renter that meets your criteria. You could be hit real hard if you were found guilty of this. Be careful.