How to Deal With a Tenant Who Abandons Your Property

by | BiggerPockets.com

Let’s talk about how to deal with a tenant who abandons your property.

Before we get into the nitty-gritty of what you should do if your tenant abandons your property, you need to reduce your risk of that ever happening. You do that by having a really good tenant qualification process.

Practice Prevention: Screen Tenants Well

Something we do at our property management company when we evaluate tenants that you should do is check their income. Their income has to be three times the monthly rent. Call the employer to make sure that the paystub figures are accurate.

Another thing you need to do is an eviction history check. If anyone has any kind of eviction on their record, in my opinion, that should be an automatic fail. This is because the likelihood of them doing that again is pretty high.

Last but not least, you need to do a background check. Anyone with criminal activity from a felony standpoint or along those lines, in my opinion, you should not rent to. They just tend to come with a lot of problems.

If they have minor criminal activity that’s years and years old, we try and work out a deal. I suggest that you do, too.

I always like to joke around and say that money speaks every language. So if someone is willing to put down three to six months of rent in advance or a large deposit, that should minimize your risk because you’ll have that buffer of capital.

Again, give yourself the best chance before you put a tenant in that property if you want that tenant to stay and pay.

Related: The Tenant Screening Process: Credit Check & Background Check

What to Do If a Tenant Disappears

Now once you have gone through that and placed a tenant in your property, it’s all fairytales and butterflies, right? Then after two months, they tend to disappear.

Guys, it’s real estate and it’s a rollercoaster of a ride. I’m here to tell you now, if you think it’s not going to happen to you, it probably will. So you always have to base everything on the worst case scenario.

Something that I like to tell investors is underestimate your income and overestimate your expenses when you’re investing in buy and hold properties. Something will always go wrong, and you need to expect that to happen.

We’ve placed a lot of great tenants in properties—at least we thought they were great. But then they pack up and leave. They just disappear; they abandon the property, and they move out of state.

We can’t talk to them even though we call them, we text them, and we email them. They’re just M.I.A. These things happen.

We’ve also had a lot of tenants that stop paying after two or three months for no apparent reason. They just stop communicating, and we have to evict.

So what do you do? Do you hold a grudge and file for eviction? Go to court? Succumb to that negative energy?

house-hacking-mistakes

Related: Tenants Bailed: Pursue an Eviction or Let It Go?

When to Let That Tenant Go and Move On

Look, in my opinion, there is enough crap that happens in real estate as it is. You’re dealing with people, and when you’re dealing with people, you’re dealing with problems—from employees to contractors to realtors to everyone.

So I think that whenever something negative happens you should learn from the experience, let go of it, and move on as quickly as you can. You have to focus on positive energy.

My point is sometimes it can be tough to be motivated in an industry where a lot of negativity can happen. So you have to feed yourself with as much positivity as you can.

Holding a grudge against a tenant that vacated after three months, and trying to collect the rest of the rent, filing an eviction, and going through the court process is going to be extra costs and extra time. Time is money, guys. It’s just not worth what you can potentially get from it.

The likelihood of ever collecting anything is very low, so I just think that you should let it go, honestly. Get that property turned as fast as you can, re-list it for rent, and try to get another tenant in there. Learn from the mistake, let it go, and move on.

When to Go After a Missing Tenant

Now, if they cause significant damage to the property and a lot of capital has to be spent to turn that property around, then yes, file for the eviction. Go for second cause and hope you can get a judgment and collect something on that money. But still, move on.

It’s something I have done and will keep doing. I have lost $2 million over the last five years in my real estate endeavors, from tenants to employees to contractors to sour businesses. It’s just the cost of doing business.

As long as you make more money than you lose, you’ll always be ahead, right? I remember I got some great advice from a business person back home in Australia.

He said, “You can’t go wrong making a profit.”

If it’s $1 or $100,000, it doesn’t matter—as long as you’re making a profit.

What do you think? Do you agree with me or do you disagree?

Let me know in a comment below.

 

About Author

Engelo Rumora

Engelo Rumora, a.k.a.”the Real Estate Dingo,” quit school at the age of 14 and played professional soccer at the age of 18. From there, he began to invest in real estate. He now owns real estate all over the world and has bought, renovated, and sold over 500 properties. He runs runs Ohio Cashflow, a turnkey real estate investment company in the country (Inc 5000 2017 & 2018) and is currently in the process of launching a real estate brokerage called List’n Sell Realty. He is also known for giving houses away to people in need and his crazy videos on YouTube. His mission in life is to be remembered as someone that gave it his all and gave it all away.

7 Comments

  1. Christopher Smith

    Makes sense. Absolutely no substitute for through screening upfront (90% of your potential problems can be avoided here).

    For the remaining 10%, timely and uniformly enforced policies for unacceptable tenant behavior (e.g., late pymts, etc) is also a must.

    For the one or two (hopefully no more) that slip through these nets during a landlord’s career, it’s just a cost of doing business. People in this category are usually grifters who have spent a lifetime refining their skills of bilking and sponging from society.

    Typically you just let it go, people who don’t play by the rules the rest of us do are very likely well beyond the reach of any cost effective means of enforcing their obligations.

  2. John Teachout

    Someone abandoning a property and ghosting can be an issue with local/state landlord/tenant law. Most of the time, if they leave any property in the house, filing an eviction is the only “legal” method to clean out the property without potential issues down the road. Many tenants are fully aware of housing laws and can exploit these for their own advantage.
    If you can get ahold of the former tenants and they admit they’ve “moved out” then the process is simpler.

  3. Eric Carr

    I like the advice of estimate low on income and high on expenses – that will keep a lot of people covered through rougher times. Check state laws before taking larger deposits and requiring prepaid rent!

    Like your friend in Australia, a friend of mine here says, “can’t go broke making a profit”

    Best to shore up and move on quickly, I agree

  4. Jerome Kaidor

    Here in California there is a very specific procedure for getting back and abandoned unit.
    After the tenant has disappeared – while owning you rent – for N days ( I forget what N is – I think it’s 14 days ),
    you mail them a letter ( via the US mail ). They have 18 days to respond to the letter. If they’ve really abandoned the unit, they usually won’t.

    If the 18 days tick by with no answer from the tenant, you just take back the apartment.

    If they’ve left valuable stuff in the apartment, you have to go through a whole rigamarole with a public auction. IIRC the magic number is $300.

    The days do add up. It takes over a month to get your apartment back. BUT – you do NOT have to file an eviction! For me, in cases of abandonment, this procedure has always been a no-brainer.

    • Katie Rogers

      I would be careful about moving too quickly, especially if the tenant lives alone. Sometimes they are in the hospital and have every expectation of returning to their apartment. You can usually tell when you enter the apartment whether the tenant is still leaving there, or whether the personal property has actually been abandoned. If abandoned, you can usually tell whether the essentials have been removed and the garbage left behind.

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