Case Study - Actual Cost of Eviction & Rehab of Unit - In Washington State
I created this post to address a question I get from many other landlords. What if I have do an eviction (and what will it cost)?
During the pandemic many landlords in WA State were prevented from evicting problematic tenants from our properties. The attached collage of photos shows the unit when we received possession via the Sheriff, through junk out of the unit and rehab. I have summarized the actual costs incurred to provide insight as to what reserves people need be prepared for.
Our lost rent amount was larger due to the specific policies of our state legislature. In this case the tenant issues were not related to COVID but rather drug addiction. This led to other nonresidents coming and going from our property as well as additional illegal activity. The police officers were wonderful but very limited in what actions they were allowed to take. Navigating the new ERPP (Eviction Resolution Pilot Program) is designed to be intentionally complicated to delay evictions at owners expense. The case workers supporting the program tried to assist where possible but are constrained in what they can do by the rules of the program. Our tenant never participated in any aspect of the program. Her sole motivation seemed to be to continue occupying the unit and further her illegal activities with her associates for as long as possible. Unfortunately this meant that the residents of the other 3 units of this building effectively had no right to quiet enjoyment / safe living environment due to the current legislation. Obviously this is just one example but I think it can provide insight into what challenges investors should be prepared for.
My hope is you take away from this post:
1.) Ensure you understand the current landlord tenant regulations and importance of tenant screening.
2.) Have sufficient cash reserves / access to capital.
3.) These situations are not insurmountable, but you need to have capital, professional support and a plan.
I hope this specific case study of challenges a landlord will sometimes have to overcome has provided some insight to you.
John
I have had to evict a couple tenants that I inherited when I bought the units and usually the cleanup and repairs were around three or $4,000 and the eviction cost s were under a thousand. 54k is a rather extreme case. for those out there that have not run into this, that might help you be less afraid.
@Allan Smith that’s awesome and amazing you are able to rehab a unit for $4k. I don’t think we ever achieved a cost per unit at that price. When you are rehabbing units do you keep it to just paint / lighting or do you also do flooring?
If you have any suggestions on ways to improve our process for turning our units, I would love to borrow from your best practices.
John
Wow...thank you for sharing.
Now that the unit is rehabbed, are you keeping the property or selling it?
- Mend Housing
- 210-418-1184
- [email protected]
@Hamp Lee III We are will be keeping this property. Our strategy is buy and hold. Between the interest rate and earning potential on the property it wouldn't make sense to sell unless there was a really attractive investment (more units, higher cash flow or large equity gain). While we are always looking for other properties, so far we haven't found anything worth moving for.
John
Thanks for the informative post. I have also had good tenants with iffy backgrounds and a couple that didn't work out, but fortunately for me so far I haven't had that worst case scenario of a nonpayer who would not engage or leave. I'm in the middle of turning the biggest unit I have (a detached house on shared lot with a couple duplexes) in SnoCo (my new favorite home away from home for investing - the best tradeoff between investing close to home and keeping out of the deepest blue areas of WA IMO) The tenants in this unit were inherited when I bought the property about 2 years ago and had been allowed to move in by the prior owner as they were friends. However this tenant had multiple large dogs, substance abuse issues preventing him from holding a job, and a habit of coming off as friendly but in reality lying and trying to intimidate everybody around them to get what they wanted which as directed toward me boiled down to letting the dogs do their business whereever they wanted to and not clean it up. The only good news is they managed to keep paying rent, and the prior owner had put pretty strong terms about the dogs in the lease. The tenant also gained a girlfriend/fiance' who had her own issues but I credit her with keeping their household from completely spiraling towards the E-word. Anyway they finally left, and surpisingly left the house empty but not surprisingly with zero cleaning and wrecked carpets and a few other damage issues. The house needs a lot of systems updates and other repairs too but thats not their fault, and I am working through all of it. In fact after I write this, its off to Everett for the day.
Keep at it and maybe I'll bump into you up there sometime.
WLA (for those outside seattle) or RHA (more seattle focused) are great resources for smaller to midsize landlords. Anybody with rentals in WA should join one or the other.
I noticed they left so much behind when they left--(seems to happen a lot).
I noticed that this was an affordable housing unit.
Taxpayers gross up the renter to afford to live in a better dwelling than they can afford.
Leaving them extra expendable income from their earnings.
Nice program, but so many seem to accumulate a lot of consumer goods and just fill the unit with them.
Not all, because I have entered units that are military clean looking and decorated tastefully.
The thing is, when they leave, they seem to leave behind all of the consumer goods they bought.
It just seems strange...leave everything out on display and live a jumble of things vs put them away, and then leave them.
And I have seen some very substandard housing situations with the same situation.
What did the haul off and cost and did you have to bug bomb the place?
Any thoughts on this (???)
Quote from:
Thanks for the informative post. I have also had good tenants with iffy backgrounds and a couple that didn't work out, but fortunately for me so far I haven't had that worst case scenario of a nonpayer who would not engage or leave. I'm in the middle of turning the biggest unit I have (a detached house on shared lot with a couple duplexes) in SnoCo (my new favorite home away from home for investing - the best tradeoff between investing close to home and keeping out of the deepest blue areas of WA IMO) The tenants in this unit were inherited when I bought the property about 2 years ago and had been allowed to move in by the prior owner as they were friends. However this tenant had multiple large dogs, substance abuse issues preventing him from holding a job, and a habit of coming off as friendly but in reality lying and trying to intimidate everybody around them to get what they wanted which as directed toward me boiled down to letting the dogs do their business whereever they wanted to and not clean it up. The only good news is they managed to keep paying rent, and the prior owner had put pretty strong terms about the dogs in the lease. The tenant also gained a girlfriend/fiance' who had her own issues but I credit her with keeping their household from completely spiraling towards the E-word. Anyway they finally left, and surpisingly left the house empty but not surprisingly with zero cleaning and wrecked carpets and a few other damage issues. The house needs a lot of systems updates and other repairs too but thats not their fault, and I am working through all of it. In fact after I write this, its off to Everett for the day.
Keep at it and maybe I'll bump into you up there sometime.
WLA (for those outside seattle) or RHA (more seattle focused) are great resources for smaller to midsize landlords. Anybody with rentals in WA should join one or the other.
@Brian Hughes Thank you for the encouragement and I am glad to hear you didn't end up with a situation like we did with our unit. While we have increased our screening criteria, I still like being able to give people a chance. Fortunately, the majority of the time things workout well. Unfortunately with the changes to the rental regulations when they do go badly, the costs add up quickly. We actually use both WLA & RHAWA. They are a wealth of information and very helpful organizations.
I am a big fan of Snohomish County and from the sounds of it you have a great investment there. Hope all your renovations go well and think you will be very happy with where market rents are when you are ready to rent.
John
Quote from @Scott Mac:
I noticed they left so much behind when they left--(seems to happen a lot).
I noticed that this was an affordable housing unit.
Taxpayers gross up the renter to afford to live in a better dwelling than they can afford.
Leaving them extra expendable income from their earnings.
Nice program, but so many seem to accumulate a lot of consumer goods and just fill the unit with them.
Not all, because I have entered units that are military clean looking and decorated tastefully.
The thing is, when they leave, they seem to leave behind all of the consumer goods they bought.
It just seems strange...leave everything out on display and live a jumble of things vs put them away, and then leave them.
And I have seen some very substandard housing situations with the same situation.
What did the haul off and cost and did you have to bug bomb the place?
Any thoughts on this (???)
@Scott Mac In this situation, the tenant had significant substance abuse issues that were the source of the problems. She had others "living" in the unit with her and I think a lot of the items left there were "acquired" via less than legitimate means. I suspect that potentially contributed to why they walked away leaving all this stuff.
The cost to completely clear out the unit (all garbage, remaining stuff & appliances) was roughly $3,000 with taxes. I was going to do the work myself to save the money but my wife was concerned about safety due to the drug use in the unit. In the end it was smarter to have professionals due the work as it was done quickly and safely. During the junk out of the unit, the company found a loaded hand gun. Once all garbage was removed I was pleasantly surprised there were no pest issues to deal with.
John
- CPA, Real Estate Broker & Investor
- Seattle & Woodinville, WA
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Thanks for sharing!
- CPA, Real Estate Broker & Investor
- Seattle & Woodinville, WA
- 1,036
- Votes |
- 757
- Posts
Great stuff! Thanks for sharing.