BiggerPockets

Holy cow what a nightmare. I wonder if insurance will cover that, since its equivalent to having burned the place down.

I've settled some shi--y claims but this....

Here's the problem on coverage. It's not the equivalent of having the place burned down. The net dollar effect may be similar but to get coverage you have to determine what is the cause of the loss. The cause of the loss here is drug use by the tenant. It's not really vandalism because the police determined the tenant was doing jenkum. The insurance carrier can decide to move forward with coverage at their discretion but were I adjusting this loss, I would report the drug activity of the tenant as the cause of the loss.

The question now is whether or not there is an exclusion for damage caused by the manufacture of illegal drugs. This sometime happens after insurance companies got tired of paying for hazmat cleanup of meth labs and rewrote policies for this exclusion.

It all depends on the coverage. This is the hard thing about insurance for even the newbie adjusters to get. The order of things is cause, coverage then cost. First you have to determine what is the cause. Then you determine if there is coverage. Once all that's done, then you can look into the costs of repairs. I dealt with one rental property in Chicago that the tenants beat up and then someone stole the copper after they left. There were 3 causes of this, tenant wear and tear, tenant vandalism, and theft. The insured only had coverage for vandalism so I separated out the vandalism damages and was able to give him coverage on those and thus give him a payout for those repairs.

I slept on this one overnight and figured out how I would argue the case for the property owner to get coverage and to take care of any drug production coverage exclusion (if there was one). If they had vandalism coverage (most people do), I would argue this as yes there was probably drug production going on prior to the loss - we're not claiming damage for that. At the actual time of the loss the drug production ceased and the tenant used drug production materials to intentionally vandalize the property - this is what we are claiming damage for. Had the tenant intended to continue drug production rather than vandalism, they would not have left their materials behind.

Yeah...crazy Joe! We have had many arrests, gunshots, etc. Never a dull moment with the KPD!

Why do these crazy things always have to happen here? This state is getting a bad rep. :roll:

There is no amount of money that would make it worth it to me to have to deal with tenants like that.

@Joe:

I don't deal with them...my property manager does. Having said that, I won't buy D buildings anymore. I am more of a B- to B+ kind of guy now. I bought this one several years back and have had my fill already.