3 Tales of Landlording Catastrophe—And the Invaluable Lessons They Teach Us

by | BiggerPockets.com

There is a common misconception about being a landlord, that all you have to do is buy a house and rent it out, then watch the money roll in.

Yeah, that isn’t how it really works. You CAN make a lot of money being a landlord. You can also LOSE your entire investment if you aren’t careful. If you are like most people, you probably know a landlord or two. If you are on this site, you may have tossed around the idea of being a landlord.

I have several friends who have been or are currently landlords. They have a variety of experiences, ranging from “I can’t wait to buy my next property!” (said in a very excited tone) to “I will never, EVER, do that again!” (uttered with absolute disgust dripping from their voice).

Let’s check out some stories from those people in the second group.

The Heroin Dealer Was My Best Tenant

Let’s start out with my friends Brad and Linda. Employment shipped them two states away to Arizona, but they were reluctant to sell their existing home, so they asked for and received property management referrals. Two different friends recommended the same company, and after a bit of research, they chose to use them to manage their property.

This property management company was a local, family-owned business. The first tenants they rented to were quality renters. They took care of the home and were quiet and respectful of the neighborhood. The neighbors on either side of the house had no complaints about them. When their year-long lease was up, they moved out and bought a house of their own.

The second set of renters weren’t awesome; they had dogs who caused some problems. They also moved at the end of their one-year lease. The property sat vacant for a couple of months before the next set of tenants moved in, during which time the property management company was acquired by a larger, corporate firm. (Cue foreboding music.)

“How much different can it be?” said Homeowner Brad upon learning of the change in management.

The third set of renters caused a lot of damage to the property. They had enormous dogs that they confined to one room in the house. Can you guess what the dogs did in that room? When this family moved out, the glass doors on the built-in cabinets were no longer there, the carpet in the dog room was no longer there. (But they left the carpet pad. The urine-soaked carpet pad.) Out in the yard, a sprinkler head was no longer attached, thanks to the dog removing it with his teeth. When the sprinkler was turned on, the water sprayed directly onto the siding, causing it to rot.


Related: 80 Smart Questions to Ask BEFORE Hiring Your Next Property Management Company

On top of all that, the new corporate property management firm wanted to return at least a portion of their security deposit, even though the owners had returned to the area by this time and viewed the damage with their own eyes. It took quite a bit of fighting with the management firm to keep the deposit, which did not cover the damage completely.

Meanwhile, down in the state they had moved to…

When Brad and Linda moved, they had purchased a house in their new state of Arizona, believing they had jumped into the market at the low point. Nope. They caught the downward slide about halfway to the bottom. So when they decided they no longer wanted to live there, they called an agent and were surprised at just how low property values had fallen during their residency. They couldn’t afford to bring that much money to the closing table, so they decided to rent out their AZ property when they moved back to their original house, hoping to recoup some costs while waiting for the market to recover.

In Arizona, at least at the time, out-of-state owners were required by law to hire property managers. In just over two years, they went through at least 6 months of vacancies. It turns out, they bought in an area of Phoenix that locals consider to be sketchy. It was difficult to even find a PM, let alone someone who would do a good job.

Enter the heroin dealer. On the surface, he sounded like a good renter. No, he didn’t portray himself as a dealer. Who would say that?! No, he was “renting for his pregnant girlfriend.” He didn’t intend on living at the property, but might sleep over from time to time. (Who tells the PM that up front?) But the application came in after several months of vacancy, so they approved the girlfriend and she moved in at the beginning of January.

On-time rent payments were the only communication from this tenant, until June when the AC broke. In Arizona, AC is required, and you must repair it within 48 hours of notification. So they fixed it, and back to no peeps from the tenants until July, when the police broke down the door and arrested both the tenant and the boyfriend for heroin dealing.

Brad and Linda started eviction proceedings. Then two months later, the woman tracked them down and offered cash to have the eviction removed from her record. She also had cash in hand to replace the front door the police department destroyed in the raid. Having lost so much money on both this property and the original one in their home state, they were between a rock and a hard place. They took the money and dropped the eviction proceedings, fixed the door, and sold the house.

Lesson Learned: Hire the right property manager. Like anything else, property managers come in all shapes, sizes, and levels of competency. Always do your research on the property manager—they are the gatekeepers to your investment and can make or break you. And if the PM that YOU hired suddenly changes companies or the company is acquired by another, vet the new company just as thoroughly as you did the first one.

That Year That EVERYTHING Broke!

Reese and Peter bought a small, two-bedroom house when they got married, but babies started coming and didn’t stop. The decided they had outgrown it when they found out about baby #4 and started shopping for a larger space. They also thought renting out the smaller house for some extra income would be a great idea. They quickly found a tenant, and all was fine. Until…

About three months into their new lives as landlords, the hot water heater broke. Reese and Peter aren’t very handy people and had to hire someone to come in and replace the unit. It happened at some point on a Friday, and the tenant was at work. Of course, there were extra charges for weekend time. Murphy’s Law rules landlords.

Two months later, they were again hiring someone to come and replace their furnace, which died in the middle of winter. This too was a rush job because you cannot be without heat in Colorado in the winter.

The problem is, not only are Reese and Peter not especially handy, they also didn’t have any reserves. These large, unplanned expenses had damaging effects on their finances.

Reese and Peter decided that after the year lease was up, they would not renew, believing it would be easier to sell a vacant house. They had two months of vacancy before the property closed, adding to their losses.

Lesson Learned: Being a successful landlord isn’t just owning property that you let someone else live in. You need reserves because something always breaks. Breaking even by charging the same amount as you pay for mortgage and taxes will always be a losing proposition. Serge Shukhat and Ben Leybovich did an intense study about CapEx reserves. They discovered that to adequately prepare for CapEx expenses in a B area, you need to allocate $250 per door for CapEx per month. But even this figure is assuming you are starting off with brand new equipment. Something is going to break; don’t let that break you.


The Not-Quite-Professional Tenants

The last story I will share with you today is about Shannon, who bought a three-flat in Chicago, intending to rent out two of the units and live in the third. Shannon didn’t feel a need to run a background check on her tenants because she is a “good judge of character.”

Shannon lived in the basement unit and rented out the top two. The level one renter was a great tenant—on-time payments, no complaints, quiet. That’s all I have to say about the level one tenants.

The top level tenants were the complete opposite, of course. It was a family with two small children. They couldn’t pay the entire security deposit before they moved in, but Shannon felt bad because they had two small kids, so she let them move in with the promise of half this month and half next month.

Any psychics out there want to guess what happened next?

The tenant came down to her unit about two weeks after they moved in. He told her that they couldn’t come up with the security deposit in any amount, and they also couldn’t pay any rent. At all. He offered to do work around the house like mow the lawn and shovel the driveway in return for free rent.

Now, this seems like the worst part of the story, but it gets even better worse. Remember those young children this tenant has? One of them was in diapers at the time. Diapers fill up and need to be disposed of. Normal, well adjusted, non-sociopathic people will put used diapers in the garbage. These tenants opened the window and chucked them into the backyard. Shannon didn’t know this for a few weeks. Yep. Weeks. Infants go through 6-12 diapers a day.

Related: My Top 4 Most Shocking Real Estate Horror Stories: What Are Yours?

Lesson Learned: Screen your tenants. Wait, no scratch that.


Nobody is going to tell you, “I’m going to stop paying rent after the first month.” No one is going to clue you in that they plan to punch holes in your walls, rip out your copper pipe, and flush cement down the toilet. No one is going to tell you they plan to toss used diapers out the third floor window and let them pile up in the backyard.

Screen your tenants. If they sound bad on paper, don’t rent to them. Don’t make excuses for them. Find someone who doesn’t have excuses. Find someone who has money to pay the rent every month. It is far better to have an empty unit for one month while you wait for a good tenant than to have someone right away and spend several months on eviction and rehab.


Listen to Experienced Landlords

I spend a lot of time in the BiggerPockets Forums. I like to share what I do know and learn from others who have experienced what I have not.

I’ve seen some pretty outlandish forum threads. New investors who ask questions that should be no-brainers: “A potential tenant has a 400 credit score, but says it’s his ex-wife’s fault. Should I rent to him?” or “My tenant just asked if they could run a daycare out of my house. That’s ok, right?”

I don’t fault them for asking the question—you don’t know what you don’t know. But when every single responder says, “NO!” and “Run the other way as fast as possible!” yet the original poster replies, “Well, I’m going to do it anyway,” it makes me sad for them—for the lessons they will learn from the School of Hard Knocks.

So I have just one more lesson for you to learn. Listen to the experienced landlords on this site. People are members of BiggerPockets because they love to talk about real estate. Listen to their advice.

[Editor’s Note: We are republishing this article to help out our newer readers.]

What is something you wish you would have known before you started? Did you get any advice you were happy you took?

Let’s talk in the comments section!

About Author

Mindy Jensen

Mindy Jensen has been buying and selling homes for almost 20 years. She buys houses, moves in, makes them beautiful, sells them, and starts the process all over again. She is a licensed real estate agent in Colorado, author of How to Sell Your Home, and the community manager for BiggerPockets.com, where she helps new and experienced investors learn the proper ways to invest in real estate to grow their wealth. Mindy is an alumnus of the School of Hard Knocks and will happily share her experiences with anyone who asks. When you can get her to stop talking about real estate, you can find her on her bike or adventuring in the beautiful mountains of Colorado.


  1. richard burman

    Loved this. Thanks for scaring all the newbies and fence sitters. I know more than a handful people who read these kinds of articles , formulate an opinion and stay away from real estate.
    All the lessons to be learned following the case examples in the article are overlooked.

    • Mindy Jensen

      Thanks for reading, Richard.
      Investing isn’t for everyone. If you can’t learn from other people’s mistakes, you are going to have a hard time of it.
      While investing isn’t easy, it isn’t HARD, either. It just takes some work. The more work you put into the front, the less you’ll have to do on the back end.

  2. Jarred Sleeth

    Horror stories, just in time for Halloween!

    Great post, Mindy. I recently had a horror story of my own, luckily I was able to weather the storm and learn some valuable lessons! I am one of those that says “I can’t wait to buy my next property!” Investing in real estate can be scary, but keep learning and keep pushing through the setbacks and you’re bound to come out ahead in the end. Buy and hold investors are in this for the long haul, after all…

    • Mindy Jensen

      Jarred, you tempted us with your story, but you didn’t elaborate! Spill the beans!

      I love that. “I can’t wait to buy my next property!” Me, too. I’m stuck in the ‘Nothing is a good deal right now’ rut. Hoping to find some stale properties over the winter.

      • Jarred Sleeth

        Hey Mindy, sorry! It would take an entire page to write about, but the TL;DR version is this. Had to evict non paying tenants, bumps in the road on the eviction process, got them out after 9 months to find a trashed property. It was a wild ride! We got the place turned around now, made some upgrades and got a good tenant lined up. We’re hoping to refinance the property to get a little cash back out since the upgrades and loss of rent were so substantial.

        Good luck in your search! I hate when I go too long without picking something up.

  3. Nasar Elarabi

    You mentioned 1 of mine. If they dont have money for Security deposit because they are moving in. Dont let them move in. I learned that the hard way. lol I let them move in. And guess what they could not afford rent. That lasted about 3 months before them moving out in the middle of the night,

    • Mindy Jensen

      Being a human makes you have compassion. You want to help people who are in certain situations. Throw in some kids and you feel even worse for them and their situation, which always comes with a great story… It’s tough to be tough. The thing you have to keep in mind is, would your bank let you pay half the mortgage payment now, and half later? Nope.
      Of course, it is so much easier to sit here behind a computer and give advice. Not as easy to do in practice.

    • Brendan Morin

      Nasar, I made this mistake myself – I backed myself into a corner and needed to get the unit rented ASAP. I made the mistake of letting the tenant convince me she was going to pay me the security deposit on move-in day after she saw the unit, since she supposedly had been ‘scammed’ out of her deposit before (she was renting sight-unseen – another mistake I will not make again). Guess who never received their security deposit…

      Turns out the tenant was completely – and I do mean completely – out of touch with reality, and had a pages-long list of reasons why she wasn’t going to pay either rent or her security deposit. She even threatened to sue me no less than 10 times in the first two weeks, and even demanded I cover the cost of a storage unit to house her sectional that was too big to fit through the door.

      Convincing her to agree to not sue me (however frivolous her claims) and actually pay her first month of rent (and then move out) was doubtlessly my greatest feat of negotiation that I hope I never have to top.

  4. Terrence Arth

    Hi Mindy, another great post and an eyeopener for anyone that thinks this is “easy money”!!! Your post says it all but I would add that smart, tenacious people with a plan can do it. And “with a plan” I mean develop a list of the perfect land lording situation, create the steps necessary to get there and DON’T BACK DOWN! If you want tenants that alway pay on time… demand high FICO scores with NO blemishes. Buy in the right areas. Research the locale for an acceptable population (you won’t attract good people to marginal areas) etc. Make people pay electronically (I do) as I determined that anyone that doesn’t have a checking account lives paycheck to paycheck with little to nothing in reserves. They are probably wonderful people, probably won’t have a problem paying and will usually pay on time. However that is not my model. I don’t want drama, issues or problems. My tenants pay BEFORE the 1st, electronically and I give them a discount. If they can’t or won’t, sorry, move along, nothing to see here, This is a business, not an emotional gut feel kind of enterprise. Stick to your plan and you can make money.

    • Mindy Jensen

      Terrence, I love your comments. Always smart and to the point.
      You are absolutely correct. You will not attract good people to bad areas, no matter the rent.
      Do your homework in the front end, screening, buying in nice areas, etc, and you save so much hassle on the back end. Little drama, few issues, few problems. It isn’t fool proof, but gives you such a head start.

  5. Love reading these stories because it actually makes me thankful that my tenant “horror” story really wasn’t that horrible and thankful that I live in Texas where the entire eviction + writ of possession process when they didn’t move out after the eviction notice only took about two weeks and a few hundred bucks. Fired my property mgr., found a new one that is awesome and have now had the same tenants in for almost 6 years… never a late payment or any drama whatsoever. Worst to Best case scenarios 🙂

  6. Theodore B.

    Hello mindy. Great article about the lives of landlords i can attest to a couple of them. I wanted to bring to your attention that the picture you used is the highly questionable. When i saw the picture and i looked at the title of the article it did not seem to have any correlation to the article written. In case you are not aware, the picture you used for this article is very similar to that known as black face, which has a strong racial histroy associated with pictures from that time. I would strongly request you replace the picture with a more appropriate caption that illustrates the message you are conveying in your article. Thank you

    • Leanora Gray

      I noticed the caricature as well, and found it offensive. However I try not to throw out the baby with the bath water, so I kept reading, and found the article enlightening. But in the future, please include more appropriate photographs. Thank you.

      • Aaron Sorensen

        The photo is of an African American man reacting to bad news from a horrible tenant which is exactly what the article is about.
        Shame on both of you for dismissing diversity. The photo of an actual African American man – not a ‘caricature’ or person in black face – shows an inclusive representation of diversity that we need more of.

        Great article Mindy – thanks for sharing some of the horror stories.

  7. Roy N.


    I do not know if I should be amused, or horrified, by the fact I can identify some of those tenants. We focus primarily on student tenants, which have an entire set of behaviours unto themselves and as many character building experiences.

    • Mindy Jensen

      Roy, I know these three people personally. While arm’s length makes it amusing, the stories bring back horrible memories for them. I have a horror story of my own that is still too painful to discuss at length – 3 years later…

      Character building for sure. Life-changing as well. Thanks for reading!

  8. Randy E.

    “I’ve seen some pretty outlandish forum threads. New investors who ask questions that should be no-brainers: “A potential tenant has a 400 credit score, but says it’s his ex-wife’s fault. Should I rent to him?” or “My tenant just asked if they could run a daycare out of my house. That’s ok, right?”

    I don’t fault them for asking the question — you don’t know what you don’t know. But when every single responder says, “NO!” and “Run the other way as fast as possible!” yet the original poster replies, “Well, I’m going to do it anyway,” ”

    Hilarious. And I’ve done something similar before. Sometimes, you just gotta learn the hard way. 🙂

    • Mindy Jensen

      I, too have spent some time at The School of Hard Knocks. Those lessons stick better, but as I get older, I realize that learning them through others – especially many others who are all saying the same thing – are valid lessons as well.

  9. Katie Rogers

    I understand that there are and always will be bad tenants that generate horror stories. What I do not understand is how quick everyone is to make generalizations. For example, home day is not an automatic horror story. When my kids were young, I used home day care. Every home I saw was clean and well-run. Are there some bad ones? Of course, but not everyone.

    Or pets. All of us know plenty of people who have pets in their home with no problem. Some of these people are us. Why should we assume that a tenant with pets is somehow different from anyone else including BP people?

    Or FICO scores. You might just miss that great tenant back from a long stint in a foreign country, and thus has a low FICO or no FICO because of lack of sufficient info.

    I prefer to at least listen to the “story.” You can usually tell if it has the ring of truth.

    • Tarisha Johnson

      I agree with most of what you are saying…. It is sounding as if people with pets and low FICO should basically live on the streets if everyone set the same strict rules…

      FICO can make or break you with one mistake…. no one is perfect… I would check previous rental history of those with low FICO scores ( a second chance is non-existing these days i guess)

      I will soon find out when I land my first property….

      • Deanna Opgenort

        My FICO was ZERO when I bought my first property – no loans ever, but money in the bank (private lender for the purchase). Look at WHY a score is what it is, rather than being lazy and just looking at a number (but also triple-check EVERYTHING a prospective tenant tells you if they aren’t a 700+ FICO).

  10. Terry Kerr

    Mindy Thanks for sharing. I wish these forms would have been there when we first started renting houses it would have saved so many headaches. Like one of these landlords I have a soft spot for people with children but I have learned if the parents of children are using their children to tug at your heart strings before they move in run the other way. Rehab is in the future for you if you don’t.

    Katie I share your love for dogs but as a landlord I personally have had to replace subfloors because tenants allowed their pets to use a corner of a room for their bathroom. Every time someone asks me about pets I tell them that my daughter is a clean freak. She is a stay at home mom with two little girls you could eat off the floors at her house. She has a 7 pound dog and when she leaves if he is not cages she will have a mess to clean up when she returns because he gets mad for being left. If her dog will do this anyones dog will do it.
    As a friend of my says its all about the numbers and for us the numbers have shown that replacement cost of floors and trim come when people have pets and deposits don’t cover all the damage. jmo

    • Mindy Jensen

      Thanks for reading, Terry.
      Yeah, I sure could have used a lot of this information when I first started, too. It is difficult being hard-nosed and firm on rules. But the more firm you are on the rules from the beginning, the easier it will be to get them followed…

  11. Kevin Izquierdo

    Great Article! these kinds of horror stories are always a great reality check for potential Real Estate Investors not with the intention to scare them away from the business, but to always make sure to dot your i’s and cross your t’s. I’ve read many articles where Landlords would tell their tenants that they are the property manager instead of the landlord. What’s your opinion on this subject?

    • Mindy Jensen

      Thanks for reading, Kevin.
      I’ve never done that, but I can totally see why someone would. Especially in situations where the tenant may be more difficult to deal with.
      It’s easier to have someone else to blame for the policies, rules and fees.

  12. priscilla davenport

    Im experiencing a horror story as we speak! I normally deal only with section 8 tenants (usually a good 100 % resource for me) until now. I had a tenant flee in the night just before last Xmas. Protective Services and two police cars came looking for her husband one night when my contractor and I were over assessing the damage she left. Now I know why she fled out of town with no regard for breaking her lease a month early (forfeiting her voucher).

    Repairs were needed after damage to a bathroom and kitchen because she didnt tell me of leaks. I ended up deciding to gut the dated bathrooms and replacing the kitchen floors from the subfloor up. Long story short, after 13 grand in rehab costs, 5 months of vacancy and 5 months of paying winter bills so pipes wouldnt freeze I was tapped out financially. I let a sketchy grandma in who had verifiable proof that she had foster care custody subsidy funds for her own 3 grand kids as proof of funds and SSI payments. She had no income, references and I didnt check credit well enough.

    She brought her sad faced kids and I let her move in. She moved in her son and girl friend and their 2 kids, her daughter and her 2 kids, convicted felon brother and a pitbull and terrier. I am evicting her after 4 months of slow and now no payment for this month and lease violation of extra tenants and pets. I gave her a notice to quit and am just waiting for our court date in 30 days. Oh and I dont pay tenant utilities but I found out she is 2 grand behind in her and electricity bill (she had somehow dodged bills and the old bills finally caught up with her). The utility company called me and said she has no water or electricity for about the last 3 weeks. Why did the utility company call? She had her felon sibling alter our lease putting him on the lease (utility company requires tenants to show lease before turning on utilities) so they could bypass 2 grand bill and put it in his name. I was asked did she move and said no!

    I was also told she had someone turn the electric meter back on after shut off! (dangerous I was told) SCREEN! Cautionary horrific tale here…never again folks.

    • Mindy Jensen

      Thanks for sharing you story, Priscilla. You hit on two of the stories above, screen your tenants and have a large enough reserve fund.

      I hope your eviction goes smoothly, they don’t damage anything, and you get a nice tenant in next time. Have you been inside the property yet? You could offer them a nominal amount of cash to leave the property in good condition. This is called cash for keys, and I hate it, because it seems like you are rewarding bad behavior. On the other hand, if you live in a tenant-friendly state, you could lose months of rent waiting for the eviction. Will Barnard is fighting an inherited tenant and has been trying to evict him for more than 4 years. Cash for keys doesn’t always work, but it’s worth a try. If they have already destroyed the property, it might not be worth it. Good luck, and keep us posted!

  13. priscilla davenport

    Oh and a few years ago a previous tenant not only tossed diapers on the back enclosed porch but also ALL garbage without garbage bags all winter because she didnt pay the container trash removal company in over 6 months. Can you say sludge mess? My crew had to shovel it out. I have had a lot of dumb luck in the past but boy do I have a lot to learn.

  14. priscilla davenport

    Hi Mindy, My story does have a good ending after all. After 3 months of remodeling I have a new tenant who loved the updates. She outbid three other tenants who wanted it. Her credit check and references were great. She had been paying on time (in fact paid 2 months in advance originally to outbid others) and has been paying on time for the last 4 months.

    I have 7 more months on this 15 year mortgage and cant wait to add this property to my other 3 rentals that are mortgage free. I have one remaining 9 year mortgage (financed a 10 year mortgage) on a house I bought a year ago. I am making triple payments to finish in a few years. I will tell anyone that the last 19 years as a landlord (complete with tenants from hell) has been rough but with patience, perseverance, a good maintainence guy and a sense of humor it can be done. I am so blessed that I have 1076 days until I can retire from my State govt job with a full pension. I may stay on a extra year or two to buy an extra house or two with cash. Victory is in sight!

  15. Derek G.

    If you can afford it, pay 10% for peace of mind on a GOOD property management team. I hired a good local property manager who is also my real estate agent. He has a competent staff and is always on the lookout for potential 1.5-2% opportunities for me. It’s my one-stop shop. I lucked out.
    Trust me… good PM is worth its weight in diamonds!

  16. Whitney Brubaker

    We bought a house under the contingency that we would allow the tenants to stay there through October 31, 2017 (when their lease with the original owner was up). We’re getting around to sending out renewal options. We would LOVE for the current tenants to stay there so that we don’t have vacancy, and honestly, we would love to push the minor updating of the home off as long as possible, too. How do you recommend going about getting a background check on current tenants?

    • Mindy Jensen

      Can you talk to the sellers and ask how they screened the tenants? You can always run a background check on them yourself. I don’t think it’s wise to ask them to pay for the background check, though since they’re already in the unit.
      If you can punt the updating down the road, and they are good paying tenants, I’d get them on a month to month lease of your own starting November 1.
      If they aren’t good tenants, don’t allow them to continue to live in the property.

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