Why I won't take double security deposits for bad tenants

Why I won't take double security deposits for bad tenants

Dawn AnastasiPro Member
Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes

I read advertisements for other landlords' rental properties.  Sometimes they say "if you have any evictions, it will be a double deposit".  I wonder, why accept more money just to take on a bad tenant? I think those landlords think that the bad tenants won't wreck the place if they have to pay all that money up front.

Guess what -- IT DOESN'T ALWAYS WORK!  Sometimes tenants don't care!

Here's a case study in that exact topic.  This is not my building and not about my tenant. This was a tenant picked by a landlord who belongs to my local landlord group.  He has a history of barely rehabbing his units and providing band-aid fixes when things break.  I don't think he does the best screening, and he accepts double deposits if the tenant has had an eviction in the past.

This tenant (I'll call her "Jane Doe") had an eviction filed in October 2013 although it was dismissed.  (In Milwaukee judges like what are called "stipulated dismissals" which means that the tenant can work out a payment arrangement with the landlord to pay the past rent, late fees, and attorney/filing fees  to stay in the unit.  They are often called "stay and pay agreements".)  She had an actual eviction in December 2012 with a judgement of about $1,600.  She had an actual eviction in October 2011 with a judgement of about $1,100.  She had a judgement against her for over $10,000 in 2008 for negligent operation of a motor vehicle.  She also had a judgement against her from the local power company in 2007 for $1,900.

So obviously, not the ideal tenant candidate but this landlord chose to rent to her anyway with a double deposit (rent was $650 so a deposit of $1,300 was collected) starting in March 2014.  

Jane Doe brought bedbugs into the building so around July 2014 the owner had to pay $1,400 to eradicate the problem.

The tenant paid rent of $650 until September 2014 then in October 2014 only paid $600. Then in November 2014 only paid $575 and in December only paid $490.

Now you'd think that this landlord would have evicted her by now.  Well, he didn't.  What happened next is that apparently not only could the tenant not pay her rent, but she couldn't pay her electric either.  So she got cut off.  She had her boyfriend tap into the electric meter somehow and they caused $1,500 worth of damage that the owner had to pay for.  So he took her entire $1,300 security deposit in December 2014 in order to pay for it.

So look at where we are at.  The owner is out $200 for the electric tampering, and $285 for lost rent, and $1,400 for dealing with bedbugs.  But he didn't evict her!  (Maybe he thought things were going to get better?)

According to the owner, he "drove out" the other tenant so the lower tenant in this duplex left sometime in late 2014.  (A "midnight move-out" as they call it.)

I got involved in dealing with this property in late January 2015.  First of all, the tenant's friends were occupying the basement of this duplex and had set up a little "rec room" down there. However, it appeared that they were smoking down there and potentially using the lower unit's electricity.  I solved that issue by having the contractor remove the outlets from the basement -- now, no one could plug anything down there and there was no reason for anyone to hang out in the basement.

I told Jane Doe she had to vacate by March 31, 2015 as we were going to "renovate the building" (which is true but I just wanted her GONE).  She decided not to pay March's rent and stayed past the deadline and didn't pay any rent for April either.  Finally, mid-April, this tenant moved out.

And now it comes to dealing with the after-math of what she left behind.

This is the basement area where her friends were hanging out:

They left not only piles of "stuff" behind, but there was evidence that they were using drugs down there.  And, they must have thought that going upstairs or outside to urinate was "too inconvenient" for them, because 8 bottles of uncapped urine was found in the back storage room.

In the actual upper unit itself, the carpeting was pretty stained up and there was ground up food in it.  Cheetos, cookies, candy bars, and even uneaten pizza was found on the floor.

There was a storage room in this unit, and at some point they must have had a dog of some kind (although I had never seen a dog there).  The storage room appears to have been where the dog was kept during the day.  There was a ripped up pillow or something else in the closet as there was tons of stuffing on the floor.

After clearing out the mess of stuffing and other junk on the floor, the contractor found "about 20" piles of old dog excrement.

The tenant must have had so much money by not paying rent, that she could afford to buy a bunch of food and leave it behind in the fridge.

That's a huge pack of chicken on the bottom shelf there.  I think it was around 5 pounds or so.  And here I thought that was it.  Finally after clearing out the boxes and bags of trash in front of the balcony door, we opened the door and were greeted with an interesting surprise -- more rotting food and dirty diapers and all sorts of other trash.

Yes, that's another huge package of uncooked chicken on the porch.

The contractor spent about the whole day getting rid of all the stuff and double bagging the food due to the smell.  I knew there had to be something up as when I walked into the unit after the tenant said she left, there were a swarm of fruit flies buzzing about.

Oh, and some interesting notes of my experience with Jane Doe:

a) When she hadn't moved out on April 1st, she asked me if I had any other units available.  Even though I had, I said NO.  C'mon, really, you didn't pay March rent, and you want to know if I have any other units available???

b) She moved out and NO other landlord ever called me for a reference about her.  That means someone else just took her on, even though she has a pending eviction filed against her and all the previous transgressions.

Guess they just took a double security deposit ...

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Rental Property Investor · Sacramento, CA · Member since 2011 · 2k+ posts · 1k+ votes
11y

@Dawn Anastasi I'll never eat another Cheeto.

Thanks for sharing. Sorry for your hurdle.

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18 Replies

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  • Investor · San Jose, CA · Member since 2014 · 167 posts · 146 votes
    11y

    @Dawn Anastasi

     Just wow. Can't believe the owner rented it with so many evictions in the recent years. It looks like they was an eviction every year. Can't believe the mess some people can live in.

    Thanks for sharing the story.

  • San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
    11y

    Okay, I'm just going to say it.  What an idiot.

  • Rental Property Investor · Sacramento, CA · Member since 2011 · 2k+ posts · 1k+ votes
    11y

    @Dawn Anastasi I'll never eat another Cheeto.

    Thanks for sharing. Sorry for your hurdle.

  • Real Estate Agent · Madison, WI · Member since 2015 · 328 posts · 88 votes
    11y

    Thank you for the graphic illustration of your point. I'm now scared.:)

  • Dawn AnastasiPro Member
    OP
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    11y
    Originally posted by @Mark Shaffar:

    Thank you for the graphic illustration of your point. I'm now scared.:)

     Great! This is part of my "scared straight" landlord program!  :)

  • Doug McLeodPro Member
    Investor · Cypress, TX · Member since 2014 · 496 posts · 205 votes
    11y

    Point taken. On the other hand, I accepted a triple deposit (some paid in installments over first 3 months of lease). One spouse/partner had just been foreclosed on by HOA for non-payment over several years (thought it was part of mortgage payment - seemed improbable, but the records were consistent with story). Had been in a ARM that started at 9% and had gone to 15% and had been paying. Rent was easy after that! Not too bright, but willing and able to pay.

    Other spouse/partner had a judgement for nonpayment a few years earlier - left due to abusive ex in the same apt complex. 

    They told me these things up front, the public records matched their story. They've been good tenants. Just renewed for a year and I am giving them back half of that triple deposit after 15 months of paying on time and taking care of the property. 

    That said, it could have gone badly (and still could) so I need to be ready to follow the lease and eviction process quickly if things go the other way.  

  • Dawn AnastasiPro Member
    OP
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    11y

    Update on this story, since everyone loves a "train wreck" (that's getting back on track).

    This is what was behind the fridge/stove:

    If you're wondering what that white thing is on the wall, it's a diaper stuck to the wall!

    A closer look at the floor:

    Yes, those are chicken bones that were in the mess under the stove/fridge.  Why use a garbage can when you can just toss your chicken bones on the floor like they did in medieval times???

    I'm managing the rehab for this unit and we're going to turn this "trash" into a "treasure"!

    Stay tuned for "after" pictures!

  • Las Vegas, NV · Member since 2014 · 284 posts · 123 votes
    11y

    I just had a tenant check out a place of mine that told me she had some "minor issues" with her credit that she wanted me to know about. She was 3x as excited about the rental as any other tenant, and wanted me to know she wanted an application asap.

    When I pulled her credit, what was returned was an orgy of suck. She had 40 creditors coming after her for unpaid bills. 3 prior evictions. Multiple convictions for driving without a license. A conviction for theft, where she lied about the circumstances related to the conviction when asked.

    My gut was initially to rent to this person, because she had a kid and for the last few years had references (including a lawyer who had rented to her) who said she'd been a good tenant.

    Ultimately, I declined to rent to her because I had much stronger applicants. However, I thought about it, because she was very nice and put together in person, and I wanted to help her out. However, this is the kind of problem you can have when you go with your gut over the facts.

  • Dawn AnastasiPro Member
    OP
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    11y
    Originally posted by @Hal Thompson:

    My gut was initially to rent to this person, because she had a kid and for the last few years had references (including a lawyer who had rented to her) who said she'd been a good tenant.

    Do you think maybe the attorney was lying about her being a good tenant just to get rid of her?

  • Las Vegas, NV · Member since 2014 · 284 posts · 123 votes
    11y
    Originally posted by @Dawn Anastasi:
    Originally posted by @Hal Thompson:

    My gut was initially to rent to this person, because she had a kid and for the last few years had references (including a lawyer who had rented to her) who said she'd been a good tenant.

    Do you think maybe the attorney was lying about her being a good tenant just to get rid of her?

     The attorney wasn't her current landlord; she had rented to her before the current landlord.

    The current landlord said she was a good tenant and that they were selling their condo, so that's why she needed a new place. Impossible to say if they just wanted her gone... not outside the realm of possibility.

    My sense was that she had done a lot to shed her past problems. That's why it was a tough call. But you can never really be sure. Past behavior is the best predictor of future behavior, and by that metric she was very risky.

  • Dawn AnastasiPro Member
    OP
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    11y

    Update on this story -- the place is getting rehabbed.  

    We put in a new kitchen floor to replace the blue sticky tiles that had added "stickiness" due to the tenant's lack of cleaning.  We replaced the kitchen cabinet as it was missing a drawer and the bottom was waterlogged at one time.  I got a great deal on a 60" kitchen cabinet for just $150 from Home Depot.  

    Also put on a new counter top as the old one looked like this:

    The black spots are where the laminate was scratched off and there were stains and other scratches on it.  The counter top was $34 and it made sense not to put an old counter top on a new cabinet.  The sink and faucet we kept as it made sense.

    New kitchen:

    In the picture you can see the base shoe from the bedrooms and living room.  We ripped up the disgusting carpet and refinished the hardwood floors with a dark stain.

    I got a large pedestal sink with faucet for free, so that went into the bathroom.

  • Involved In Real Estate · Huntington Beach, CA · Member since 2015 · 1 post · 0 votes
    11y

    Some people learn the hard way. 

  • Linda WeygantPro Member
    Investor and CPA · Arvada, CO · Member since 2015 · 2k+ posts · 3k+ votes
    11y
    Originally posted by @Hal Thompson:

    When I pulled her credit, what was returned was an orgy of suck. 

     Voted your answer due to "orgy of suck" which I have now added to my own vocabulary.  Thanks!

  • Raleigh, NC · Member since 2015 · 28 posts · 6 votes
    11y
    Originally posted by :

    Update on this story -- the place is getting rehabbed.  

    We put in a new kitchen floor to replace the blue sticky tiles that had added "stickiness" due to the tenant's lack of cleaning.  We replaced the kitchen cabinet as it was missing a drawer and the bottom was waterlogged at one time.  I got a great deal on a 60" kitchen cabinet for just $150 from Home Depot.  

    Also put on a new counter top as the old one looked like this:

    The black spots are where the laminate was scratched off and there were stains and other scratches on it.  The counter top was $34 and it made sense not to put an old counter top on a new cabinet.  The sink and faucet we kept as it made sense.

    New kitchen:

    In the picture you can see the base shoe from the bedrooms and living room.  We ripped up the disgusting carpet and refinished the hardwood floors with a dark stain.

    I got a large pedestal sink with faucet for free, so that went into the bathroom.

     Are you sure you didn't renovate my house @Dawn Anastasi? It looks almost exactly like mine! LOL.

  • Dawn AnastasiPro Member
    OP
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    11y

    Bathroom before:

    Bathroom After:

  • Miami, FL · Member since 2015 · 92 posts · 24 votes
    11y

    That is one nice-looking bathroom.

  • Investor · Milford, CT · Member since 2015 · 200 posts · 69 votes
    11y

    This is why screening and zero tolerance on late rent is so important.

    As soon as she had a shortfall the landlord should have filed for eviction. 

  • Roy N.Pro Member
    Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
    11y

    Dawn,

    Nice job rescuing this place.  

    Like you, I just do not understand why landlords put themselves through this.  I was just over last week to look at another landlords property which my carpenter renovated in 2013 - full gut, new kitchen, new bathroom, new windows, new outside door, insulation added to the envelope.  Only 2 of the three bedrooms went relatively untouched.

    When I walked through the place 19 months later, the laminate floors have burn marks; the bathroom door has holes in it; one of the bedroom doors was ripped from the door casing; the kitchen counter is ruined; the new appliances are ruined; doors on the kitchen cabinets are ripped off.  On top of it all, the place it filthy.

    My quick walkthrough estimate was 3- 5K of damage.  This fellow did not take a security deposit and, like your landlord, was chasing his tenants for rent 6-months into the tenancy.  I asked point blank why he didn't evict them 6-months in, rather than waiting 13-months ... the only response was a deer in the headlights middle-distance stare.

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