HELP! My tenant caused $16,000 of damage!

Rental Property Investor · Temecula, CA · Member since 2019 · 128 posts · 54 votes

Seeking solid advice. I bought a SFR 1.5 years ago and did a full rehab that cost me $22k. My first Section 8 tenant moved into it, stopped paying rent 6 months ago and has total trashed it. I finally got them out and my contractor who did the original rehab 1.5 years ago just gave me a $16,000 bid to fix all the damage! I thought that Section 8 was supposed to guarantee rent? Do I sue the tenant/Housing Authority and get a judgement, can I garnish wages? I need a solid way forward. Really appreciate any help.

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Nathan GesnerBusiness Member

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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

Most people on Biggerpockets love Section 8 because they wrongly believe it guarantees rent. It only guarantees the government portion of rent, it only guarantees it as long as the tenant abides by the agreement, and it does nothing to guarantee the tenant maintains the rental. I've had about 40 Section 8 leases and probably half of them left owing money. Some of them left owing over $5,000.

When your tenant stops paying, you should start the eviction process. Why did you let it go six months?

The fact is, the tenant is living off the government and doesn't have any money for you to collect. You could get a judgment in court and send them to collections, but their credit is probably already trashed and your collection won't make any difference.

Improve your screening and be careful who you rent to. Create procedures to nip problems in the bud as quickly as the law allows, not six months later. Consider hiring a professional property manager to protect you in one of the most heavily regulated markets in the world.

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Heather Hatcher
Real Estate Agent · Honolulu, HI · Member since 2022 · 22 posts · 83 votes
4y
Oh no, I'm so sorry to hear this!! If tenant was section 8, no point in suing. I think you may have to bit the bullet on this one, unless there was a lack of communication about a situation.
I would dig deeper into what happened. Section 8 does inspections. Did you get notified they were doing an inspection and that your unit was not in good condition? Section 8 will cancel rent if owners do not make the proper changes. Payments could also be terminated due to the tenant doing something criminal, or if they had an increase in income...etc. Some times section 8 is backed up as well. But since your unit is in bad condition, that may be the issue.
Next time, call and get more information as soon as you don't get payments.
4 Reply
Matt M.
Specialist · Easton, PA · Member since 2018 · 1k+ posts · 2k+ votes
4y
Housing authority does not guarantee that people won’t trash the house. You’re kinda S.O.L.
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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
4y
Most people on Biggerpockets love Section 8 because they wrongly believe it guarantees rent. It only guarantees the government portion of rent, it only guarantees it as long as the tenant abides by the agreement, and it does nothing to guarantee the tenant maintains the rental. I've had about 40 Section 8 leases and probably half of them left owing money. Some of them left owing over $5,000.
When your tenant stops paying, you should start the eviction process. Why did you let it go six months?
The fact is, the tenant is living off the government and doesn't have any money for you to collect. You could get a judgment in court and send them to collections, but their credit is probably already trashed and your collection won't make any difference.
Improve your screening and be careful who you rent to. Create procedures to nip problems in the bud as quickly as the law allows, not six months later. Consider hiring a professional property manager to protect you in one of the most heavily regulated markets in the world.
The DIY Landlord Book4.7248 Reviews
Website View Page
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Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
4y
Dang, sorry you're facing this.

I have had an excellent experience with Sec8, but I screen thoroughly like we should for everybody.

How much did they smoke and how many animals did they have? My first 2 questions pretty much for any potential applicant.
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Matt Everling
OP
Rental Property Investor · Temecula, CA · Member since 2019 · 128 posts · 54 votes
4y
Thank you @Heather Hatcher, @Matt M., @Nathan Gesner and @Steve Vaughan for your help. I do have a local PM that screened the tenant, and I was never notified by the Montgomery Housing Authority that 1) They did an annual inspection and 2) That there was an issue. I learned there was some visible termite damage to the property. I sent my permit guy over for and inspection and he called me directly telling me the tenant had trashed the house and caused major water damage to my brand new flooring, drywall and baseboards.
This is my first rental property. I spent $22k rehabbing it. I've only had this property for 1.5 years and don't have another $16K lying around. Probably just end up selling it. Please tell me it gets better.
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Matthew Paul
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
4y
Welcome to being a landlord . Unfortunatly you got the expensive lesson in the beginning . Raise your requirements and remember a pulse doesnt qualify .
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Michael Deering
Rental Property Investor · Lehigh Valley, PA · Member since 2017 · 200 posts · 191 votes
4y
22K rehab straight to Section 8 (cringe)

I'm sorry you went through this but I've never heard of a landlord getting redress from a bad Section 8 experience.

Back in the day my parents had a Section 8- it ended with the appliance thrown through the living room window, the bathroom fixtures smashes to pieces, drywall damage to very wall, carpets ripped up, trash and spoiled food thrown about. The ladies social worker cried when she walked through and had her sons help us with the clean up.

In the future I recommend applying assessing the risk to the reward. Section 8 is high risk without a high pay off. Rent is always guaranteed with good tenants.

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Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
4y
Talk to their section 8 person and report it. Even if you can't get the money, they may lose their housing and not do it again to another person.
2 Reply
Tony Kim
Rental Property Investor · Los Angeles · Member since 2018 · 844 posts · 1k+ votes
4y
Quote from @Matt Everling:

Seeking solid advice. I bought a SFR 1.5 years ago and did a full rehab that cost me $22k. My first Section 8 tenant moved into it, stopped paying rent 6 months ago and has total trashed it. I finally got them out and my contractor who did the original rehab 1.5 years ago just gave me a $16,000 bid to fix all the damage! I thought that Section 8 was supposed to guarantee rent? Do I sue the tenant/Housing Authority and get a judgement, can I garnish wages? I need a solid way forward. Really appreciate any help.

Argh, sorry to hear that! I've had very good experiences with Section 8 for my properties in Los Angeles. But my experience with Section 8 in my OOS properties were not so good. I can't help but come to the conclusion that I can't trust a PM that is responsible for hundreds of properties to give the care and attention needed to selecting the right tenant. The business model just doesn't allow it. You probably don't want to hear this, but my best tenants locally are all Section8 because I spend a lot of time selecting the right tenant by engaging in conversations with them and putting them through rigorous screenings. On the other hand, my Section 8 tenants in Ohio were nightmares...tenants often late on rent, throwing wild parties...one time one of my tenants got into an argument with a neighbor which escalated into a shooting (no one got hit, thank God). Units would also go into abatement but the PM would not know till months have passed, etc. And of course, it was against the law to instruct my PM to not accept Section 8. This, along with several other factors led me to the conclusion that OOS was just not for me.

If the Montgomery Housing Authority did an inspection on your property that didn't pass, the PM should have notified you immediately. But of course, most PMs are either too incompetent or too busy to do this....and this was exactly my experience with my PM. JFC, if a HUD payment did not come in, shouldn't that have clued you in to the fact that the unit went into abatement? Luckily, in LA, if a unit fails an inspection, you will be notified the very next day via your online portal and the payments will continue because you will be provided sufficient time to make corrections. Apparently, that's not always the case for HUD programs administered in other parts of the country.

Like most of the other posters have stated, there really isn't much you can do except bite the bullet and move forward.
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Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
4y
Quote from @Tony Kim:

I tried a decent local PM for half my portfolio and just can't get past their (lack of) screening and consistent we can't do that (we aren't licensed so can't change that light fixture) reality.

75% of landlording is tenant selection. Own that or invest in something else.
3 Reply
Carlos Gonzalez
Investor · Phoenix, AZ · Member since 2015 · 346 posts · 170 votes
4y
@Matt Everling
Do more diligence on your tenants. Visit their previous residences where they were staying before, etc, references.
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