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Legalized Scamming (Rental Property Stories from HELL)

Boo Blizzi

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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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Boo Blizzi

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Pure scum with no integrity at all.

You have no idea... I made a giant mistake investing in a low income area. The cashflow was enticing when I first analyzed the deals, but I didnt account for the higher maintenance costs and headaches. It makes the business unbearable.

Another story...

I have a tenant right across the street from the deadbeat I mentioned earlier. On my way into the neighborhood, I see her walking with her daughter. She stops me and tells me the reason she was $200 short on last months rent was because she broke up with her baby-daddy and he moved out.

I say, "OK well you have a late fee of $100 so this month I expect $300 extra." I go off to handle my business, and before I leave, I knock on the door. Her sister opens the door and who do I see sleeping on the couch? The baby-daddy who supposedly moved out. And not only that, he is wearing new Jordans, the kids are wearing Jordans, and there's a new flat screen TV.

I never got full payment, so I filed for eviction and she's due to be locked out tomorrow. Wish me luck... lol
 

SteveO

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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.
 

jon.a

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

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.
I inform all prospects that...

I require 3 times the rent in income. Verified.
I will do complete criminal and credit background checks. Which BTW will cost them $35 for each adult. Verified.
No convictions or evictions for the past 20 years. Verified.
Our houses are under market rent to increase the pool.

Verified.

I get a return call from about 5% of those that I speak to. Next.
 
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Boo Blizzi

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Stuff like this is what makes me hate being a section 8 landlord. It's an undeserved sense of entitlement and ownership.

Quick story...

A few months ago, I was evicting a tenant. On the lock out date (day the judge gave her to be out) I went to the unit early in the morning. Her boyfriend is sitting on the couch watching a replay of the playoffs, talking about, "If you saw the game, dont tell me what happened."

Im looking around and hardly anything is packed up. Right then, I knew it was going to be a long day. I call the tenant down and ask whats going on? She said she's waiting for the moving truck to come at 10am, so I said I'll be sitting outside waiting for my keys.

10 rolls around and no truck. At 11, I go and knock on the door. She comes to the door, looks out the window, but doesn't let me in. Im like "oh boy".

So I call the sheriff to conduct the removal and as Im waiting for them to show up, she starts passing her little children out of the first floor window to some lady that walked up with a stroller. (I think maybe her sister).

Long story short, when the sheriff came, she barricaded herself in the house by pushing the couches and boxes up against the door. Then they told me I would have to wait till 5pm to get her out. I got so disgusted, I left. I sent my contractor over to the place to change the locks and he said the front door was knocked off the hinges and the place had been vandalized.

I dont have to tell you how pissed I was.
 

MJ DeMarco

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I dont wanna hi-jack this thread, but real quick...

I don't consider it a hijack. It reminds me why I don't own rental property... or I should say, rent to strangers.
 
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RHL

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"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.
 
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MJ DeMarco

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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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RHL

The coaching was a joke guys.
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When I was growing up, a friend of mine's father owned a pluming contracting company, and dumped his fastlane money into rentals. He rented one out to a friend's family who was known to all of us. They were perpetual slowlane/sidewalkers, but generally seemed to be honest and care about everyone while they tried to scrape by.

They got a month behind on the rent. The husband was out of work, the woman begged for an extension based on 12 years of prior friendship. They agreed. Another month. Again, they came up with a small partial sum, like 40% of the rent for one month if I remember correctly. Month 3, a confrontation occurred. The woman told the landlord('s wife): As soon as we get back on our feet, we'll pay you the whole sum back with interest. I'll never forget her exact words, as relayed by the landlord: "We are people of integrity."

Three days later, they left. They stole everything they could take in the house, (light bulbs, etc.) right down to the 9-volt batteries in all the smoke detectors. They didn't trash the place (more than normal living wear and tear), but they were gone, and never heard from again. Police were unable to locate them. I think they assumed that because the other family was rich, they wouldn't miss that stuff, or the $5,000-ish in rent money.

That was the moment that I decided I would never, ever, get in the rental business, and since then, I've seen hundreds of anecdotes to confirm that. A guy in Trenton renting from my former co-worker ravaged the rental and ran up $7,000 in electric bills, and ran a prostitution ring out of the house, vanished into the night, nothing happened to him, landlord was out a crapload of money and 2 more months rent repairing the place. People who rented above us when I was in grad school had the police called on them by other neighbors (and us, once) 17 times in 12 months for domestic disturbance and probable battery, nothing happened because they paid their bills. The Landlord had to wait till the end of the year to deny their lease renewal.

The laws are all in place to rape the property owner of their source of income and entitle the renter to free housing should things go south. Up here in the north, evicting a deadbeat from your property in the winter months is basically impossible because of laws to prevent homelessness during those cold periods. I will never get into an industry where product I produce can be consumed without compensation or recourse. I will never get into a fastlane industry that ties my hands with slow-lane bullshit like having to repair my property at my expense after a vicious (and broke, so no recourse in court) renter vandalizes it. I will never be in an industry where there are massive barriers to my getting paid for a service I rendered effectively, barriers that can be raised by the consumer against me whenever their caprice dictates. I did not get free from the need to be shackled to a job to become a slave to other people now that I am in the fastlane.
 
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Boo Blizzi

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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.

hallway.jpg hole-in-wall.jpg br-1.jpg
 

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Boo Blizzi

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lololol I really hate people. She is probably going to come up with some story about how she wont have any place to live, and once you lock the doors, she is going to be crying on the curb with her new flatscreen.

LMAO... she did that last Thursday at court. I told the judge about the new stuff in the house, and she was like, "It didn't cost much, I got it from Rent-A-Center." Me and the judge just looked at her like she was crazy.

So you can go and rent a TV and an Xbox, but you cant pay the rent for the house you have it in??

The mentality of the people Im dealing with is beyond slow lane. The mother's raise the kids to cut corners and try to milk the system.
 
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RHL

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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.
 
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danoodle

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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.
 
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pro

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California is ridiculous for several reasons.
  • $800 franchise fee per year just to keep a corp up
  • Higher than average taxes - California is broke
  • As an employer, the labor law compliance is ridiculous and employees can waste your time with ficticious labor board compliants. If you fire an employee, they can claim unemployment against you -- the state thinks you are obligated to pay an employee because you took a chance hiring them.
  • Tenant law as you pointed out above
This is why I do support it splitting up into six states: http://www.newsweek.com/billionaire-proposes-splitting-california-six-states-259083

I think the key lesson is what Boo Blizi said, "I made a giant mistake investing in a low income area"
 
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Isn't there a fastlane opportunity here? It's easy to jump on the bandwagon and complain that renting sucks, too many millionaires have been made to overlook it though...renting out your condo on airbnb is a convenience for the owner of vacation properties/second homes, not a business strategy. The $5000 to evict etc may be money that would have been spent anyway had it not been occupied in the first place.

The 30 day rule seems to be the kicker here...but if you are in the business of depending on state regulations to protect you, that's not much different than depending on the rules of a pyramid structure to be your wealth cashflow. Real estate still follows other rules...make money while you sleep, you can hire property managers and still come out positive cashflow, you have leverage of other people's money, it still has real asset value, whether it is sold for profit or loss still depends on where you bought it at and why. As for cashflow/margin of safety with rental properties...you kinda need to act like the insurance company and put money back for freak things that can happen...when you buy a car you don't just budget for the payment, you budget for gas, repairs, maintenance and freak things like flat tires and carpets rolling off trucks on the highway which happened to me this morning. When you don't, that's when the horror stories manifest.

One issue with real estate is that you can put most of your net worth into just one vehicle which can go good and bad for you, but still dependent on fastlane principles. It also takes more hours of work and upkeep than you may be willing to offer (compare worth of working X hours more on the plumbing business vs 2 hours managing rents, fixing up places, long-term leverage/compounding).

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.

One thing about real estate and stock portfolios are these are ways the rich maintain their wealth...not necessarily how they make it. The initial burst of cashflow still needs to come from somewhere. Outside of leveraged cashflow, homes are otherwise risky forced savings vehicles and that mentality still evades people.
 
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jon.a

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Perception is the perceivers reality.

I heard this as a young man and realized it to be profound.

Barring dealing with a lair, this knowledge has been helpful when trying to see something from anothers point of view. This understanding can be both very powerful and very scary.

Examples...

1. I was dealing with a tenant candidate that was concerned about paying me for his background check in advance. He's perception was that some landlords take the money and pocket it as a small profit stream, which is in fact true. So, I changed my process and let him pay for his check directly. Perception made irrelevant.

2. Mrs. jon and I manage a family trust. From time to time we are presented with "things" that we just don't want to deal with. We wait a day and tell the "thing" presenter that the Trust Attorney said no. Their perception is that the Trust Attorney is a force not to be questioned. Perception hammered the subject closed.

3. Many humans believe their universe to be controlled by a supreme power. This supreme power takes many forms. When facing one of these humans I must realize their perceptions and understand that arguing isn't going to work. If their belief isn't going to permit working with them, then I must find another human. Perception acknowledged.

4. Some humans see and hear things that most of us don't. My perception is that I'm safer to leave them alone.

Lastly, what if the Matrix is true?
 
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Boo Blizzi

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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."
 

PSDSH

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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!
 

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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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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.
 

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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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"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?"
 

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I hear "legalized scamming" is pretty common in California.

If this don't infuriate you, nothing will.

Premeditated? You bet. Just another Sidewalker fishing for free rent, free money or better yet, lawsuit money.

http://finance.yahoo.com/news/airbnb-host-guest-squatting-condo-174800953.html

Airbnb_Host_A_Guest_Is-fa14595d3e317e3b6d1db2df5fded459
 
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AllenCrawley

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parkerscott

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Stuff like this is what makes me hate being a section 8 landlord. It's an undeserved sense of entitlement and ownership.

Quick story...

A few months ago, I was evicting a tenant. On the lock out date (day the judge gave her to be out) I went to the unit early in the morning. Her boyfriend is sitting on the couch watching a replay of the playoffs, talking about, "If you saw the game, dont tell me what happened."

Im looking around and hardly anything is packed up. Right then, I knew it was going to be a long day. I call the tenant down and ask whats going on? She said she's waiting for the moving truck to come at 10am, so I said I'll be sitting outside waiting for my keys.

10 rolls around and no truck. At 11, I go and knock on the door. She comes to the door, looks out the window, but doesn't let me in. Im like "oh boy".

So I call the sheriff to conduct the removal and as Im waiting for them to show up, she starts passing her little children out of the first floor window to some lady that walked up with a stroller. (I think maybe her sister).

Long story short, when the sheriff came, she barricaded herself in the house by pushing the couches and boxes up against the door. Then they told me I would have to wait till 5pm to get her out. I got so disgusted, I left. I sent my contractor over to the place to change the locks and he said the front door was knocked off the hinges and the place had been vandalized.

I dont have to tell you how pissed I was.
Pure scum with no integrity at all.
 
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parkerscott

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LMAO... she did that last Thursday at court. I told the judge about the new stuff in the house, and she was like, "It didn't cost much, I got it from Rent-A-Center." Me and the judge just looked at her like she was crazy.

So you can go and rent a TV and an Xbox, but you cant pay the rent for the house you have it in??

The mentality of the people Im dealing with is beyond slow lane. The mother's raise the kids to cut corners and try to milk the system.

Oh im well aware of the mentality of these tennants. They are the same type of people to take you to court over a plumbing issue when they are not even paying the rent. They are worse than parasites. Most parasites dont try and kill the host.
 

Boo Blizzi

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Oh im well aware of the mentality of these tennants. They are the same type of people to take you to court over a plumbing issue when they are not even paying the rent. They are worse than parasites. Most parasites dont try and kill the host.

Dude, I got tenant nightmare stories for days... please don't get me started. I dont wanna hi-jack this thread, but real quick...

I had a mother and daughter occupying a 2br. The mother was an asst. principal and the daughter was a nurse. They always paid late, but I was wacking them with $150 late fees, so I didn't complain much.

So they get behind 2 months and I take them to court. When we get there, I notice they are sitting with a lawyer. Im not stressing it because I know Im in the right.

Long story short... we get in front of the judge and the lawyer says she want to file a counter complaint and have whats called a "habitability hearing".

I got a smug look on my face like, "Whatever, you didnt pay your rent... you gotta go." But the judge said the motion granted. Im confused. I never went through that part of the land-lording game before so they had me painted in a corner.

We have the hearing and they show pictures of the ceiling in the kitchen falling down from water damage. Mind you... I never heard about this problem because they were always ducking me with the late rent. The judge tells me the $4k judgement Im seeking will be dismissed if I dont get the problem fixed by the following week.

I send the contractor over to fix the place, but they wont let him in the house. So I go down there with my keys and come to find out, they changed the locks. So the week is almost gone and they aren't returning calls or letting anyone in. I make an executive decision and me and the contractor break in the house to do the work, then take pictures.

And the kicker is, there was no plumbing problem. The ceiling was leaking because these nasty chicks were taking showers with no shower curtain and letting the water run on the floor for more than a year.
 

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