Tenants Bailed: Pursue an Eviction or Let It Go?

Tenants Bailed: Pursue an Eviction or Let It Go?

4 min read
Sterling White

Sterling White is a multifamily investor, specializing in value-add apartments in Indianapolis and other Midwestern markets. With just under a decade of experience in the real estate industry, Sterling was involved with the management of over $10MM in capital, which is deployed across a $18.9MM real estate portfolio made up of multifamily apartments. Through the company he founded, Sonder Investment Group, he owns just under 400 units.

Experience
Sterling is a seasoned real estate investor, philanthropist, speaker, host, mentor, and former world record attemptee, who was born and raised in Indianapolis. He is the author of the renowned book From Zero to 400 Units and the host of a phenomenal podcast, which hit the No. 1 spot on The Real Estate Experience Podcast‘s list of best shows in the investing category.

Living and breathing real estate since 2009, Sterling currently owns multiple businesses related to real estate, including Sterling White Enterprises, Sonder Investment Group, and other investment partnerships. Throughout the span of a decade, he has contributed to helping others become successful in the real estate industry. In addition, he has been directly involved with both buying and selling over 100 single family homes.

Sterling’s primary specialities include sales, marketing, crowdfunding, buy and hold investing, investment properties, and many more.

He was featured on the BiggerPockets Podcast episode #308 and has been contributing content to BiggerPockets since 2014, with over 200 posts on topics ranging from single family investing and apartment investing to mindset and scaling a business online. He has been featured on multiple other podcasts, too.

When he isn’t immersed in the real world, Sterling likes reading motivational books, including Maverick Mindset by Doug Hall, As a Man Thinketh by James Allen, and Sell or Be Sold by Grant Cardone.

As a thrill-seeker with an evident fear of heights, he somehow managed to jump off of a 65-foot cliff into deep water without flinching. (Okay, maybe a little bit…) Sterling is also an avid kale-eating traveller, but nothing is more important to him than family. His unusual habit is bird-watching, which he discovered he truly enjoyed during an Ornithology class from his college days.

Education
Sterling attended the University of Indianapolis.

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When tenants abandon a property should you as the landlord just keep their deposit and move on or follow through with the eviction process?

It happens no matter how good you are as a landlord. It happens no matter how great you are at tenant screening and selection. If you invest enough and hold enough units long enough, you’ll have a renter who just decides to leave—to skip out.

Honestly, this can be the best outcome at times. If they are already in default, are behind on rent, or have just been a difficult tenant, good riddance.

Can it still be expensive for you as the landlord? Yes. But it’s a lot worse if they try to drag it out.

Include Abandonment Clauses—But Be Cautious

In many leases, there is an abandonment clause. The trouble is many can be pretty ambiguous. For that reason, landlords must be careful how they interpret and use it. 

If tenants have skipped town in the middle of the night or obviously moved across the street, then you have an empty unit that you need to secure and fill as soon as possible.

But if the tenant has just fallen late on their rent and went off on vacation or to a medical facility for a week, the landlord may falsely think they abandoned the property—especially if it meets the abandonment criteria included in the lease.

Same thing could happen if a tenant began moving their things out for one reason or another. Some landlords might be tempted to rush over, change the locks, or throw all of their remaining belongings to the curb.

That is dangerous! You don’t always have the legal right to do that.

And even if local authorities go ahead and allow you to do it, the sheriff’s deputies in town may not be attuned to real estate law. You don’t want to get in trouble with the law!

You also don’t want your tenants to return, shred your unit, and pour concrete down all the pipes. Be cautious. And always make sure you are on the right side of the law.

What Should You Do When Tenants Disappear?

Upsides and Downsides of Evicting

I recently began pursuing evictions on tenants who skip out. Then, I send the balance they owe me to a collection agency. The goal is to collect on a portion of those months they didn’t pay.

You may have to get a judgement, and you may have to wait awhile. If they couldn’t pay the rent living there, getting the extra money from them while they are probably paying rent elsewhere can be challenging. It won’t always work out.

However, pursuing an eviction will serve as a good warning for other landlords. It’s like leaving an online review.

If you don’t file an eviction, delinquent tenants are going to slide into another rental and could hurt another unsuspecting landlord like yourself.

You would’ve appreciated a heads up about those renters before accepting them, right? I personally have had people attempt to rent from me while they’re in the process of an eviction with another landlord.

The bottom line is that landlording may not always be profitable, nor even cover all your costs. It depends on how many of these tenants you have, how late they were, how much it costs to evict them, and how much of your losses you can recover.

It might not be all bad though. Evictions may be good deterrents or motivators for your other tenants. Word gets around. When you have 400 units on the line, you don’t want abandoning leases to become a hot trend.

Terrible mess after party. Trash, bottles, food, cups and clothes on floor.

Related: How to Evict a Tenant: The Definitive Step-by-Step Guide

Upsides and Downsides of Not Evicting

Despite all of this, in my experience, I believe it is best to just move on. It’s what’s best for you in terms of stress, health, time, and even safety.

Who knows, by moving on you may avoid pushing a person to spiral out of control and do something to harm the community.

Moving on is often the best for profitability, too. Although if you have partners and investors to answer to, you’d have to show them you are making the best effort to collect the losses. You’d have to document it.

The correct process to choose is highly dependent on the individual situation. Let’s say a guy is struck by lightning and can’t work for two weeks. Then he voluntarily moves out without ever being late on the rent. Yes, he’s still terminating the lease early—but you might give him a pass.

But if you have someone else who is clearly spending money they owe you for rent on new rims for their car and $1,000 iPhones—and partying on top of it—that’s a different scenario.

Related: Alternative Dispute Resolution: Avoiding Eviction Court

Summary

What do you do when a renter abandons your property?

Ultimately, it’s best to avoid these situations altogether with better landlord-tenant relationships, good tenant screening, strong leases, a reputation of being firm but fair, and keeping open lines of communication in default or late-payment situations.

Know the local law precisely or have someone else handle it all. Keeping deposits in and of itself can be legally risky! So, parting ways with a delinquent tenant can be even more complicated.

That’s why, in my opinion, it may be wiser and even more profitable to let them go and move on when possible.

Have you ever had to pursue an eviction? Have you ever let a tenant walk so you could avoid all the hassle?

Let’s talk in the comments!