I'm Not Liking My (Ex) Tenant Right Now

[bflbob]

I just visited one of my recently remodeled apartments.
It was rented to an unmarried uncouple, both college aged.

The guy seemed like a party animal, the girl seemed quiet.
Boy, was I wrong.

The guy just called a few days ago to let me know he was leaving.
She was having party after party, sometimes until 5-6am.
He had to be to work by 5am, and was pretty pissed at her.

Walkthroughs always found a pretty spotless apartment.
Both tenants kept it clean as clean could be.
They paid the rent on time, until January.
He paid his half on time. She paid ten days late, but had called to warn me.
Her student loan financing wouldn't come until then.
She paid as promised.

Then I started getting calls from other tenants.
The parties were pissing everyone off.

The "he" tenant called me to the apartment.
A (3rd floor) porch window was broken, including the frame.
There was also a hole in the wall, about 12" across, hidden by a picture.
He said both happened during one of her parties.

I sent her a final warning letter.
She had to pay on time.
She had to sign a new rental agreement.
She had to pay for repairs.
Any more parties, she was gone.

Turns out, she was gone anyway.
She left me a voice mail in the middle of the night that she was leaving.

I must got back from checking the place out.
The place was left wide open.
The windows were open.
There was a new BIG (18" x 36") hole in the wall.
There is garbage everywhere.
The sink was left full of dirty dishes.
NOTHING was cleaned.

The good news is that I have a security deposit.
She had pets, so I have a cleaning fee.
She's a moron, and left her new address on the U-Haul bill.
I have her parent's address, as her last known address.
And best of all, her roommate HATES her.
He'll give me any info he can.

And if worst comes to worst, I can go after him.

Hopefully, I'll figure how to add some pics...

 

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[TaxGuy]

Wow almost makes my brother seem like a decent tenant/roommate :nonod:

Good to see you got yourself covered and it's sad that no matter how much you do background checks, candidate interviews, credit checks, etc, there's really no judge of character until you have someone live in your unit.

 

[bflbob]

Some pics...

 

[bflbob]

Oh, yea...lessons learned.

1. Trust your instincts. When they applied, neither had credit. I asked for, was promised, but never received, a parents co-signer agreement. Should'a stuck to that.
2. Act quicker. I first became aware of this problem with parties a while ago. Someone was pissing out of a porch window this past fall. Another tenant complained, and I spoke to the gal tenant, whose party it was. I should have given her a final notice.
3. Some things just suck. I don't think that anything I did would have helped this situation much. It probably would have just happened earlier. The tenants looked pretty good (with the exception of the "water window") up until about 10-15 days ago.
4. With no credit history, maybe more security is in order. Rent on this was $650 + pets. Security was $700. It probably should have been $1,000 to cover rents plus damages.

 

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[MJ DeMarco]

Yikes, I hope you square this away ... makes me think twice about picking up some cheap REO house and renting it.

 

[MrPink]

Did they leave any pancake mix? You could bring it to the the B &P meeting!

 

[hatterasguy]

Yeah a lot of renters are pigs, sadly its not that uncommen.​

 

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[phlgirl]

Bob – I feel your pain…..nothing worse than having someone disrespect that which you have worked hard to acquire/maintain.

Yikes, I hope you square this away ... makes me think twice about picking up some cheap REO house and renting it.

Having done this a few times, if I had the chance to go back and give my prior self advice, I would recommend property management, from day one, for any investment property I was considering. Particularly if I wanted to be 'fastlane' about it.

Will there still be move-out costs? Of course. However, if the evictions are handled swiftly and a proper security deposit is collected, the loss should be minimal. For extreme circumstances (intentional damage, vandalism, theft of appliances, etc.), you go to insurance. I didn’t understand this when we started out (never had these issues in PHL) but damages are part of the reason you pay for insurance coverage. Unlike car insurance, your premium DOES NOT go up in proportion with the number of claims you have.

We are just now starting to transition our properties over to a Property Management company. Managing property is not a revenue generating activity and I wish we had done it much sooner. It can be extremely stressful (particularly as the number of properties increases) and it can seriously distract you from your real focus/skills – generating income.

In this market, there is no reason why you can’t factor in PM costs right off the bat. The margins are there. It might be tough to go back on properties you already own, if the numbers don't permit, but going forward, it will be a rule of ours.

That’s my take. People told me the same thing years ago and I didn’t listen. I had to learn on my own. Here’s hoping someone else might learn from my mistakes.

Note: Hiring a PM service does not excuse the investor from learning about Property Management. It is critical that you be involved in the decision making and meet with the PM on a regular basis, in my opinion. The key is that you don’t waste all of your time doing the ‘process’ work.

 

[bflbob]

In this market, there is no reason why you can’t factor in PM costs right off the bat. The margins are there. It might be tough to go back on properties you already own, if the numbers don't permit, but going forward, it will be a rule of ours.

You know...I always factor in 10% for Management, 8% for Vacancy, and $50/unit/month for R&M. I should be able to do this.

I have 9 units within 1/2 block, so the PM company might just be willing to do it for less.

 

[phlgirl]

Not sure what PM rates are like in NY but down here we found we could easily negotiate them down on rates. The quoted rate is typically for the 'one rental property' client.

The company we ended up going with started with a quote of 12%.... we ended up at 7%.

One of my partners did a lot of research on it and ended up writing about '7 things to look for in a PM company' on his blog.

http://jacksonvillerealestatewealth.info/WordPressBLOG/

We just found that it was becoming so overwhelming - as an owner, it often became personal as well (even if you know it never should). Quite frankly, I was beginning to fear that my husband might kill someone.

 

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[hakrjak]

Is that a 1.75L of Cuervo in the fridge? haha -- Well atleast you can make Margaritas while you clean the dump up.

- Hakrjak:smx3:

 

[GLC65]

I have dozens of those pigs I file for evictions every month.

 

[bflbob]

Not sure what PM rates are like in NY but down here we found we could easily negotiate them down on rates. The quoted rate is typically for the 'one rental property' client.

The company we ended up going with started with a quote of 12%.... we ended up at 7%.

One of my partners did a lot of research on it and ended up writing about '7 things to look for in a PM company' on his blog.

http://jacksonvillerealestatewealth.info/WordPressBLOG/

We just found that it was becoming so overwhelming - as an owner, it often became personal as well (even if you know it never should). Quite frankly, I was beginning to fear that my husband might kill someone.

Thanks for the info. Do you mind if I ask how many units they are managing for the 7%, and if they are all central to each other?

As for killing someone, I completely sympathize with him.:iagree:

 

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[TaxGuy]

With no credit history, maybe more security is in order. Rent on this was $650 + pets. Security was $700. It probably should have been $1,000 to cover rents plus damages.

I know MJ has posted about the importance of credit score and I actually talked to my buddy who owns 7 SFR's about this last weekend and he said he defines the security deposit by credit score and has 3 tiers- 1st is 650+, the deposit is 1 month rent, 2nd is 500-650 and deposit is 2 months and 3rd is <500 and it's 3 months.

He figures that if someone has bad credit then they need the cash a collateral to leverage the risk while someone with good credit will be conscious of their actions and shouldn't need any more than 1 month's rent to cover themselves otherwise the hit their credit would take with an eviction or collection notice.

Also with pets, thankfully none of our roommates have had any, don't get me wrong we love animals, but before I bought the house from my parents the cats, despite being 2 of the sweetest things in the world still left their mark and don't get me started on the destruction that one of our tenants' dog did at the 3-flat my parents rent out :nonod:

 

[phlgirl]

Do you mind if I ask how many units they are managing for the 7%, and if they are all central to each other?

Just over 40 SFHs - they are spread out amongst approx. 3 different neighborhoods. The closest being right next door and farthest being 10 miles?

We also have a friend who has about 10 SFHs - he decided to go with the same company. He explained that his intention is to continue building the portfolio and I'm pretty they started him out at 8%.

I would think having them all within a half block would be very attractive to a PM co.

 

[bflbob]

I emailed my attorney, to get his opinion on how (or if) to chase this tenant.

Ya' gotta love his reply...

think:
1-you are going to throw good money after bad;
2-this is something you would sue in small claims court-and court may require an attorney to appear on behalf of llc. this will cost yet more $;
3-you would need to do work (and not personally-but hire it out) or get written estimates and sue for that amount. this estimate will cost money;
4-if person that did damage has no money you are in a pickle. the other tenant will reference she/he did no damage and is not responsible;
5-you can send bill to parents. you will get $ when pigs fly;
6-you can send the pictures to new landlord-but why? to what end? better to call--no finger prints.

 

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[AroundTheWorld]

I emailed my attorney, to get his opinion on how (or if) to chase this tenant.

Ya' gotta love his reply...

think:
1-you are going to throw good money after bad;
2-this is something you would sue in small claims court-and court may require an attorney to appear on behalf of llc. this will cost yet more $;
3-you would need to do work (and not personally-but hire it out) or get written estimates and sue for that amount. this estimate will cost money;
4-if person that did damage has no money you are in a pickle. the other tenant will reference she/he did no damage and is not responsible;
5-you can send bill to parents. you will get $ when pigs fly;
6-you can send the pictures to new landlord-but why? to what end? better to call--no finger prints.

I do love this reply - - - and I tend to agree with it. I can see the benefit to having something in place to handle small claims if you have 100+ units but generally speaking, you have to look at both sides of the coin and ask... "is it really worth it for any potential payback I might get?"

Our time is valuable. The tenant will likely not have the $. Maybe you will win - but maybe you won't. In the mean time, you WILL incur atty fees and you WILL be spending your time on it - which takes your time away from other more pro active endeavors.

I was recently in a similar situation. Actually, I"ve had more than one situation like this in the last couple of months. One tenant moved out with absolutely no notice. Pipes froze. Toilet busted. In another case, the tenants left us with broken windows and cat urine carpets.

We talked about small claims. We came to the conclusion that it just wasn't worth our time. Better to learn from it and take the preemptive approach in the future..... larger security deposit, etc.

I recently discussed the situation w/ my mastermind group. YVes did have an idea to consider.... if you have a personal assistant - - - they could work on it.

 

[NoMoneyDown]

I emailed my attorney, to get his opinion on how (or if) to chase this tenant.

Ya' gotta love his reply...

think:
1-you are going to throw good money after bad;
2-this is something you would sue in small claims court-and court may require an attorney to appear on behalf of llc. this will cost yet more $;
3-you would need to do work (and not personally-but hire it out) or get written estimates and sue for that amount. this estimate will cost money;
4-if person that did damage has no money you are in a pickle. the other tenant will reference she/he did no damage and is not responsible;
5-you can send bill to parents. you will get $ when pigs fly;
6-you can send the pictures to new landlord-but why? to what end? better to call--no finger prints.

Ain't that the truth.

Although, one time I had a tenant bail on me. She was chronically late and I was kind of glad she left. I managed to find out her new address via a bill from a utility company she failed to pay. I sent her a stern/threatening type of letter, and lo-and-behold she sent a money order for a part of the amount I requested!

 

[hatterasguy]

I emailed my attorney, to get his opinion on how (or if) to chase this tenant.

Ya' gotta love his reply...

think:
1-you are going to throw good money after bad;
2-this is something you would sue in small claims court-and court may require an attorney to appear on behalf of llc. this will cost yet more $;
3-you would need to do work (and not personally-but hire it out) or get written estimates and sue for that amount. this estimate will cost money;
4-if person that did damage has no money you are in a pickle. the other tenant will reference she/he did no damage and is not responsible;
5-you can send bill to parents. you will get $ when pigs fly;
6-you can send the pictures to new landlord-but why? to what end? better to call--no finger prints.

Why don't you ask him if her parents co signed on the lease if that would change anything? I'm thinking for you in the future this may be an option. Sueing the girl for a couple grand to fix this place is a waste of time, most likely her car and phone are not even in her name. But mom and dad most likely have some assets, and a small claims judgement would be quite enforcable.

Also when the parents are on the hook, they would probably care if there little princess was ripping holes in the walls.

Just my 2 cents.

 

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[bflbob]

Why don't you ask him if her parents co signed on the lease if that would change anything? I'm thinking for you in the future this may be an option. Sueing the girl for a couple grand to fix this place is a waste of time, most likely her car and phone are not even in her name. But mom and dad most likely have some assets, and a small claims judgement would be quite enforcable.

Also when the parents are on the hook, they would probably care if there little princess was ripping holes in the walls.

Just my 2 cents.

I'm sure it would have made a difference.

I had requested that one of the sets of parents co-sign, and they agreed, by then went to Germany for a vacation before I got the signature.

Then the tenants moved in, took great care of the place, and paid on time, so I dropped it.

Another lesson learned.

 

[bflbob]

You'll like this.

I just received a call from the tenant.

She couldn't get in, since I'd locked it with the deadbolt and she didn't have a key for that.

She wanted to get in to clean the place up, and to get the rest of her stuff (a table, and those nasty dishes).

I asked about the big hole. She said "What hole?"

"The big hole by the door to your bedroom."

"Don't know anything about it."

"Your roommate told the other tenants in the building about it a day or two before Sunday."

"I wasn't in on Sunday."

"That's when you moved."

"No is wasn't. I just swung by then for a couple things."

Of course, I'm looking at her U-Haul receipt the entire time. Made out in her name. Rental "out" time -- 2/1/2009 12:06 pm.

I'm meeting her tonight, so we'll see what happens.

 

[andviv]

another concern with the state you are located... it is known for being pro-renters... poor people abused by those mean, despicable landlords, so that also weights in the decision-making process.

 

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[bflbob]

Just over 40 SFHs - they are spread out amongst approx. 3 different neighborhoods. The closest being right next door and farthest being 10 miles?

We also have a friend who has about 10 SFHs - he decided to go with the same company. He explained that his intention is to continue building the portfolio and I'm pretty they started him out at 8%.

I would think having them all within a half block would be very attractive to a PM co.

I spoke to a local PM company.

They are asking 6% of rents (with a minimum). I'll be closer to 7% due to minimums.

I can't say I like all the terms of the contract.

I sent to SteveO and my attorney to see how they feel.

My biggest concern is they want me to insure and indemnify them, when I think it should be the other way around. I'm not sure if that's the norm or not.

I'm going to update my 4-unit thread with some new info on that too.