Tenant caused damage and rehab
Folks - I previously shared my experience regarding the complete mismanagement by Reedy and company of my rental in Memphis, TN. I have now changed the PM and the problem tenant who caused a lot of damages has vacated. I would like to sell off the property. While the tenant was there I had listed my property for sale when previous PM was managing and 4 offers fell through. Now that the move out inspection has been done the new PM is estimating $11k worth of repairs. I would like to sell this property asap. Should I invest in these repairs and what are some of the right questions to ask? Additionally do I have any recourse against the tenant? She had outstanding balance on the ledger by previous PM. So I expect the security deposit will go towards that but I think she has caused more damage than what the security deposit will cover. The previous PM told me there was no point going behind these kinds of tenants to pursue relief. Kindly advise what my course of action should be.
#2 Managing Your Property Contributor
Most of the time you will never get your money back. What is the market like where you are at? If the market is still good and you are happy with the price you'd get without doing the $11K in repairs, then sell it as is. Other option is to do some of the repairs that are quick and will help it sell faster.
Quote from @Theresa Harris:
Most of the time you will never get your money back. What is the market like where you are at? If the market is still good and you are happy with the price you'd get without doing the $11K in repairs, then sell it as is. Other option is to do some of the repairs that are quick and will help it sell faster.
I had three offers fall through. So I suspect I will have to do some repairs. Market seems good but I can't actually say until I sell.
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#3 All Forums Contributor
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Will the $11,000 in repairs get you $11,000 more in $$ when you sell? This is simple math to me.
I'd guess the answer is no.
Additionally do I have any recourse against the tenant?
You will find no satisfaction going after people with nothing to lose. I suspect you are tired of dealing with the whole situation. Sell 'as is' and move on with life.
Quote from @Bruce Woodruff:With the issue that 3 offers fell through I suspect I have to make repairs to sell.
Will the $11,000 in repairs get you $11,000 more in $$ when you sell? This is simple math to me.
I'd guess the answer is no.
Quote from @Terrell Garren:Three offers had fallen through earlier. Should I sell as is or rehab and sell?
Additionally do I have any recourse against the tenant?
You will find no satisfaction going after people with nothing to lose. I suspect you are tired of dealing with the whole situation. Sell 'as is' and move on with life.
If what needs repaired would affect home getting financed I would do repairs. Such as no functional bathrooms, flooring missing, kitchen not present, etc. Some mortgage CO will not finance a home with certain issues. Somehow our first rental made it through financing only because when they did inspection I took old cabinets and countertop with sink in it off the trash pile, set it in kitchen where plumbing was, and that was my kitchen. Some lenders more picky than others so unless want to limit yourself to possibly only cash buyers I would look at it that way. Fix what needed cheaply and put on market. Or put on market but be prepared to fix something fast if needed to get financing done.
@Abdul Azeez Have you considered filing a civil suit against the resident? The problem may be the ability to collect. With proper documentation and photos, you should easily win the case. Collecting is the unknown.
@Abdul Azeez if you sell to a cash investor then you could opt to do no repairs, dm me the info on the property
@Abdul Azeez If you can afford the $11K to fix it, fix before you sell. You’ll get the $11K back most of the time.
If you can’t afford the $11K, sell it immediately.
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why did the offers fall through?
Based on what I know, I would keep the deposit and make only the repairs that will help the property sell. Leave the rest unfinished and sell as a fixer-upper.
You most likely won't get your money back from the tenant.
In regards to rehabbing or selling the answer is really simple. Depending on what you want (money or ease?) I would recommend listing the property as is and seeing if you can get a suitable price for it. If you don't get a successful sale in 60ish days either find a better agent or consider doing the rehab and selling for more. You can't undo the work/investment once it's done, so you might as well try to sell as is. See if you can get an all cash, no inspection offer. A good realtor who specializes in this should be able to secure you one in a reasonable time. I would not wait. TBH lots of people are starting to panic about what to do with their money, given the current global economic conditions.