tenants from hell

Generally, I think that real estate investment and rental are probably the best way to invest, especially during this global recession.

However, I’ll tell you a story from personal experience which may make you pause before buying an investment property and particularly before renting it out to someone you’ve never met.

I bought my investment property a little over a year ago and did a lot of remodeling before putting it on the rental market, using the same real estate agency to find renters that helped me purchase this townhouse. To be quite honest, I didn’t have much of a choice in selecting my first tenants because within a month of being on the market I received only two applications. One of them was completely unacceptable because of number of unpaid debts. The other one was marginally acceptable due to a low credit score because of a recent bankruptcy but I decided to take the chance with it because I didn’t really want to take the risk of waiting for something better to come along.

The problem was that neither my agent nor I ever had a chance to meet and interview these tenants until the day of signing the lease. These people were tenants from hell: they broke doors, punched holes in the walls, soiled brand new carpets, etc. Almost every month I received a warning notice from the HOA that I was in violation of one of their rules because of the tenants. What made it even worse in terms of the stress level was their confrontational, hostile attitude, constant lies and half-truths, which made it almost impossible to deal with them in a reasonable, business-like manner.

When their lease was up for renewal I gave them a 60-day notice of terminating the lease. They asked me to extend it for a month and I reluctantly agreed since at that point I hadn’t found new tenants yet. Shortly after that, I did find a very nice family who wanted to rent the property and I signed a lease with them, making it effective after the extension period. This time I wasn’t going through an agent and did all the leg work myself, which I think has worked out a lot better.

The end of the extension agreement was approaching but the tenants weren’t moving out: they were in the process of purchasing a foreclosed property and their closing was delayed due to some problems with the title. I was not willing to wait for them to move on their own schedule and send them a 5-day notice to vacate the premises, filing immediately for unlawful detainer. Being new in this business, I didn’t know (and the lawyer I consulted didn’t tell me) that I was actually supposed to wait for 5 days before filing the case. So, in the end the case was dismissed on this technicality. The old tenants did finally move out a few weeks later. Although I’m still planning to take them to small claims, I don’t hold my breath as far as being able to collect anything from them since the small claims doesn’t have the authority to enforce the judgment.