Hey all! I'm not sure if I've come to a crossroads or a dead end in my real estate investing journey. My wife and I have been building our portfolio over the past few years via house hacking and we're at 17 units currently. Last year we hit the $30k in net profit from out rentals (only had 13 units at the time). We were happy to see how we would continue to grow. But it's pretty much been downhill since then. 1 tenant stopped paying (hasn't paid in almost a year), then another(3 months), and now another (recently). In a state like NJ, I pretty much can't get a court date for eviction until next year most likely due to backlog. I'm not naïve to think evictions aren't part of the game, but when your standard business practice of "simply" evicting tenants who don't pay has been stripped away, your left a little helpless. I definitely don't want to sell, the properties have great equity that I can use to scale, but at the same time I don't think I can go through another tenant not paying without the opportunity for effective and efficient recourse. Keep in mind I have NO PROBLEM with cash for keys but it hasn't been effective thus far. Would love your input and feedback!

Wow, that is incredible! I agree with what numerous people have said prior, the best thing we can all do as landlords is screen, screen, screen. I am currently dealing with two tenants in Maryland, both were consistently 30-60 days late in rent payments. Back in the spring, I gave them 10-day notice prior to filing in court for the eviction process, as we must post on their door 10 days before filing that we intent to file for eviction and the form also lists places where the tenants can get assistance. One tenant did apply for assistance, and both tenants quickly made payments. A couple months later, we are at the same place, so back in August, I gave them notice and after 10 days, neither had made any arrangements for payment. The tenant that asked for assistance finally got their assistance and I dismissed the case against them. The second one started arguing that they paid July and August rent. I tried to explain that the payment made in July covered their back balance from June. Their August payment (paid on August 30, BTW) covered July. Somehow, they couldn't understand how that works. Then they tried to argue that their security deposit was their last months rent. Anyway, court date shows up and they do not show up. Judge rules in my favor. Now I have to wait another week before I can file a Petition for Warrant of Restitution. Another judge reviews the case, then orders the Sheriff to proceed with the eviction. Monday, the Sheriff posted the notice and we scheduled the eviction for next week. The tenant blows a gasket, asked the court for a new hearing, they were denied and the eviction is moving forward. To add insult to injury, the tenant tells the Sheriff's Deputy that no matter what, come Monday, he ain't leaving. Stay tuned, film at 11. In both cases, I rented to these people as a favor to another, and did not follow my usual screening procedures. Never again!

@Austin Smith I am a bit confused. I understand the eviction part, but my confusion is, eviction is just the posession part of things, when you hit the super-sloth mode on that, why didn't you shift gears and focus on the financial side, and financial remedies? namely, civil suite. I doubt those courts are equally log jammed, or are they? While yeah, technically, it does nothing for possession of the property, I can tell you just the act of getting those papers served of being sued, the explanation of process, such as all the costs that will be added to it, seeking a judgement, how from there one can garnish things like income, or via motion for discovery, assets, yeah, it get's a persons attention. During covid moratorium, it was the only action we had left, and holy-cow did it work like a charm. We used restraint of course, anyone with a legit problem we worked with them, payment plans, rent deferments, all it took was being a decent person and being honest. But those who were scamming, yeah, to court it was going. Batted 1000. And best part, 98% never made it to court room, they paid up and surrendered properties agreeably. The issue was they thought they could get away scot-free, zero recourse, and when found out that wasn't true, and once we had a judgment it would be "financial herpes" and follow them forever, like magic everything changed. This isn't the end, it's an evolution, your paying your dues as long as you keep learning and growing from everything.

Tenants don't pay - My landlord journey may come to an end?

Jim K.

Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes

4y

@Austin Smith

Whatever the law in New Jersey is, whatever backlog there may be, there are local provisions and procedures for eviction. You're going to have to learn them inside and out. That's the ugly part of the business most of us don't talk about. There's no excuse for letting a tenant mooch off you for a year without taking real action except a bad lease, a bad understanding of eviction laws, maybe a bad lawyer. When your tenants stop paying, you have to start procedures. You are NOT powerless against social parasites who refuse to abide by the contracts they sign. Learn the laws of your area and follow them carefully.

I live and operate in Pittsburgh. Things aren't that different here.

17 Reply

Joe VilleneuvePro Member

Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes

4y

Your solution is what you said you "definitely don't want to do". Why? You don't lose your equity if sell,...you just move it to a Market/State where it is more favorable to be a landlord.

REI is a business. Like any and every other business, if your clients (tenants in this case) don't pay their bills, you stop selling your product/service to them. If the product/service that is your business isn't making you money, you either get out of that business, change your market and/or product/service, or go bankrupt.

You have the same three choices here. Thus far, your choice has been the 4th one...none of the above.

14 Reply

Joe Norman

Property Manager · Baltimore, MD · Member since 2014 · 1k+ posts · 1k+ votes

4y

It sounds like you need to hire a professional to handle the eviction process for you. Here in Baltimore there are a few companies that specialize in handling the process for landlords. Good luck!

3 Reply

Kim Meredith HamptonBusiness Member

Real Estate Broker · St Petersburg · Member since 2014 · 2k+ posts · 2k+ votes

4y

@Austin Smith Does your state and/or municipality offer rental assistance? This could help a lot with your issue and and at least make you whole or get you to next year when you could possibly start evicting again

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Nathan GesnerBusiness Member

Moderator

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

4y

Quote from @Austin Smith:

This is common with new real estate investors. Investing is pretty easy . . . until it's not.

Your first problem is that you allowed the tenant to go so long without paying before deciding to start the eviction process. If you're going to thrive in this business, you need solid policies and procedures to prevent problems from getting too big to handle. I start the eviction process 10 days after rent is due, not 12 months.

Hire an attorney that is very experienced in evictions. Pay whatever it takes to evict these tenants. Watch how he does it, read the law, take notes, and be prepared to handle it on your own next time. Refine your processes so that the eviction process starts the very first day the law allows.

You shouldn't give up on real estate. You need to give up making amateur mistakes. Anybody can put money into a house and look good as long as there are no bumps in the road. Being able to tackle the bumps is what makes you a pro.

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24 Reply

Austin Smith

OP

Real Estate Agent · Newark · Member since 2014 · 55 posts · 31 votes

4y

Sorry, let me reiterate, the eviction process has already begun for all of them, it's just that I haven't received a court date.

Quote from @Nathan Gesner:

Quote from @Austin Smith:

This is common with new real estate investors. Investing is pretty easy . . . until it's not.

Your first problem is that you allowed the tenant to go so long without paying before deciding to start the eviction process. If you're going to thrive in this business, you need solid policies and procedures to prevent problems from getting too big to handle. I start the eviction process 10 days after rent is due, not 12 months.

Hire an attorney that is very experienced in evictions. Pay whatever it takes to evict these tenants. Watch how he does it, read the law, take notes, and be prepared to handle it on your own next time. Refine your processes so that the eviction process starts the very first day the law allows.

You shouldn't give up on real estate. You need to give up making amateur mistakes. Anybody can put money into a house and look good as long as there are no bumps in the road. Being able to tackle the bumps is what makes you a pro.

3 Reply

Austin Smith

OP

Real Estate Agent · Newark · Member since 2014 · 55 posts · 31 votes

4y

Understood. The eviction was filed months ago, it's just that I haven't gotten a court date.

Quote from @Jim K.:

@Austin Smith

Whatever the law in New Jersey is, whatever backlog there may be, there are local provisions and procedures for eviction. You're going to have to learn them inside and out. That's the ugly part of the business most of us don't talk about. There's no excuse for letting a tenant mooch off you for a year without taking real action except a bad lease, a bad understanding of eviction laws, maybe a bad lawyer. When your tenants stop paying, you have to start procedures. You are NOT powerless against social parasites who refuse to abide by the contracts they sign. Learn the laws of your area and follow them carefully.

I live and operate in Pittsburgh. Things aren't that different here.

2 Reply

Austin Smith

OP

Real Estate Agent · Newark · Member since 2014 · 55 posts · 31 votes

4y

Quote from @Joe Villeneuve:

Your solution is what you said you "definitely don't want to do". Why? You don't lose your equity if sell,...you just move it to a Market/State where it is more favorable to be a landlord.

REI is a business. Like any and every other business, if your clients (tenants in this case) don't pay their bills, you stop selling your product/service to them. If the product/service that is your business isn't making you money, you either get out of that business, change your market and/or product/service, or go bankrupt.

You have the same three choices here. Thus far, your choice has been the 4th one...none of the above.

I appreciate the feedback!

0 Reply

Austin Smith

OP

Real Estate Agent · Newark · Member since 2014 · 55 posts · 31 votes

4y

Quote from @Kim Meredith Hampton:

@Austin Smith Does your state and/or municipality offer rental assistance? This could help a lot with your issue and and at least make you whole or get you to next year when you could possibly start evicting again

The state originally agreed to provide rental assistance. Because I accepted, that also throws out the eviction case. I've received one check so far and I'm in the same situation as I was before. Luckily my attorney and I still filed up "holdover tenant" which keeps our position in this forever growing backlog.

1 Reply

Russell BrazilBusiness Member

Moderator

Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes

4y

Evict. It may take a long time, but it will get done.

When it's done, tighten up your screening criteria. Credit score is the best predictor of whether someone will pay their rent. My minimum is 620, ans typically all of my tenants are above 650.

Default rates by score below.

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11 Reply

Nathan GesnerBusiness Member

Moderator

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

4y

Prior to the "pandemic" that hit two years ago, I used to hear people in California complain that it took a year to evict. I did some research and in less than five minutes found an eviction attorney that promised evictions in less than 45 days. His entire business specialized in evictions, so he knew the business.

You need to find someone like that in NJ.

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17 Reply

Joshuam R.

Rental Property Investor · FL · Member since 2016 · 271 posts · 92 votes

4y

Quote from @Joe Villeneuve:

Your solution is what you said you "definitely don't want to do". Why? You don't lose your equity if sell,...you just move it to a Market/State where it is more favorable to be a landlord.

REI is a business. Like any and every other business, if your clients (tenants in this case) don't pay their bills, you stop selling your product/service to them. If the product/service that is your business isn't making you money, you either get out of that business, change your market and/or product/service, or go bankrupt.

You have the same three choices here. Thus far, your choice has been the 4th one...none of the above.

Gold... Uncle Joe, killing it again. Hey Joe, curious, you started Pod cast yet? Always felt your filtering process is worth a legacy in others lives.

2 Reply

Joe VilleneuvePro Member

Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes

4y

Quote from @Joshuam R.:

Quote from @Joe Villeneuve:

Your solution is what you said you "definitely don't want to do". Why? You don't lose your equity if sell,...you just move it to a Market/State where it is more favorable to be a landlord.

REI is a business. Like any and every other business, if your clients (tenants in this case) don't pay their bills, you stop selling your product/service to them. If the product/service that is your business isn't making you money, you either get out of that business, change your market and/or product/service, or go bankrupt.

You have the same three choices here. Thus far, your choice has been the 4th one...none of the above.

Gold... Uncle Joe, killing it again. Hey Joe, curious, you started Pod cast yet? Always felt your filtering process is worth a legacy in others lives.

I prefer one on one's, I've been approached a number of times. One of these times though...?

4 Reply

Greg R.

Investor · Dallas, TX · Member since 2016 · 887 posts · 1k+ votes

4y

@Austin Smith so none of the 3 tenants will accept cash to move out? Curious how you phrased it? Not all tenants care, but if explained to them clearly that an eviction will haunt them for many years and hinder their ability to get a rental in the future, many will think twice.

However, if their only other option is homelessness, I'm sure they would be rather have an eviction on their record.

And I agree with @Joe Villeneuve. If you have equity sell and reset.

If you're set on investing in NJ you might want to consider STRs if LTRs management is not not viable due to state laws/ bureaucracy.

1 Reply

Greg R.

Investor · Dallas, TX · Member since 2016 · 887 posts · 1k+ votes

4y

Quote from @Greg R.:

@Austin Smith so none of the 3 tenants will accept cash to move out? Curious how you phrased it? Not all tenants care, but if explained to them clearly that an eviction will haunt them for many years and hinder their ability to get a rental in the future, many will think twice.

However, if their only other option is homelessness, I'm sure they would rather have an eviction on their record.

And I agree with @Joe Villeneuve. If you have equity sell and reset.

If you're set on investing in NJ you might want to consider STRs if LTRs management is not not viable due to state laws/ bureaucracy.

0 Reply

Austin Smith

OP

Real Estate Agent · Newark · Member since 2014 · 55 posts · 31 votes

4y

Thanks everyone for their feedback!

0 Reply

Alexander Szikla

Real Estate Agent · New York City · Member since 2020 · 819 posts · 641 votes

4y

Have you tried a cash for keys deal? Give them a carrot (cash by X date) and a stick (eviction by X date).

0 Reply

Jordan MoorheadBusiness Member

Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes

4y

@Austin Smith do your occupied and paying units pay enough to float the portfolio and can you hold on for a bit?

It might not be a bad time to sell a few headache properties and move into more landlord friendly states also. Maybe you could make your equity work harder for you too?

I understand this is frustrating but it can lead you in a better direction long term.

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0 Reply

Austin Smith

OP

Real Estate Agent · Newark · Member since 2014 · 55 posts · 31 votes

4y

Quote from @Jordan Moorhead:

@Austin Smith do your occupied and paying units pay enough to float the portfolio and can you hold on for a bit?

It might not be a bad time to sell a few headache properties and move into more landlord friendly states also. Maybe you could make your equity work harder for you too?

I understand this is frustrating but it can lead you in a better direction long term.

So I have one headache of a property that I would consider selling. I would have to sell to an investor instead of retail with the delinquent tenant.

I'm going to work on cash for keys a little bit more.

My one tenant who is the bane of my existence was an inherited tenant. I should have gotten rid of her a long time ago but she was actually paying every month until she tripped financially and that was the end.

1 Reply

Greg M.

Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes

4y

This is a cruel business that kicks the weak and uneducated out of it quickly. For those that are strong and smart enough, it can make you a lot of money.

You can't get a court date this year due to the backlog. Nothing you can do about that. The backlog will go away and things will return to normal. Your state will continue to screw you, take away your rights, give tenants more rights, and make your life more difficult. That's business in NJ and many other states. Work with it.

The question you need to ask yourself is what do you change going forward? 3 of 17 non-payers is bad. Have you sat down and figured out why this happened? Was it bad luck that all 3 got in situations outside their control? Was it poor screening on your part? Will raising your minimum credit score or income help prevent this? Bigger security deposit? With 3/17 non-payers, I'm going to assume you're in the C/D market. Maybe that is too much risk for you? Maybe you should add in some B/A units to offset risk?

4 Reply

Ryan KellyBusiness Member

Real Estate Broker · Austin, TX · Member since 2018 · 1k+ posts · 1k+ votes

4y

@Austin Smith time to call in the professionals. You don't want this headache to not have a finish line. It may not be easy in a landlord-friendly state, but a good real estate attorney can get the ball rolling.

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1 Reply

Bud Gaffney

Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes

4y

@Austin Smith Cash. For. Keys.

1 Reply

Bud Gaffney

Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes

4y

@Austin Smith also congrats on building such a great portfolio!

0 Reply

Austin Smith

OP

Real Estate Agent · Newark · Member since 2014 · 55 posts · 31 votes

4y

Thanks for everyone's input. Currently out of the 3 tenants.

1 finally paid and is back current
We're working on cash for keys for my other tenant
My worst tenant I'm prepared to be married to for a while until my court date. She was an inherited tenant and I know 100% what I did wrong.

0 Reply

Victor Kao

Investor · Ewing, NJ · Member since 2015 · 15 posts · 4 votes

4y

Quote from @Austin Smith:

Thanks for everyone's input. Currently out of the 3 tenants.

1 finally paid and is back current
We're working on cash for keys for my other tenant
My worst tenant I'm prepared to be married to for a while until my court date. She was an inherited tenant and I know 100% what I did wrong.

I'm also in NJ and understand personally how much havoc that the eviction moratorium can wreak on the landlords in the state. When it was lifted at the beginning of the year a lawyer said the backlog was at 15 months for Middlesex County. I ended up chasing down the rental assistance avenue which ended up paying at month 10. However, they then transitioned to Temporary Rental Assistance which requires the tenant to work or go through their job placement program. The tenant refused and of course terminated his assistance. Now the only recourse is eviction and I hear backlog is still at 6+ months. He refused cash for keys multiple times and is very good at pushing the limits of tenant rights. Un/fortunately he purposely damaged property and now I can evict him for that reason which hopefully puts the case higher up in the backlog.

2 Reply

Tenants don't pay - My landlord journey may come to an end?

Tenants don't pay - My landlord journey may come to an end?

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