Remote owner challenge with Rentals getting consistently trashed

Kansas City, Kansas
General Landlording & Rental Properties
2yFollow

Remote owner challenge with Rentals getting consistently trashed

Raul Sai P
Homeowner · OR · Member since 2022 · 19 posts · 4 votes

Some background - Around 5-6 years ago, I was getting decent tenants for the most part and a pretty good PM company to manage the rentals in MO state. 

While I understand that it is part of the game to have a rental property trashed every once in a while, I am currently facing a situation where pretty much all of my 3-4 homes are getting severely trashed every year. I am talking of move-out repairs around $9000-$12000 in damages for each property, which obviously goes way beyond the security deposit. It costs $2000 to just remove the piles of trash before I can fix the rental. There is not a single aspect that's not trashed with intentional damages like big holes in walls, intentionally ripping out carpets, trashing new appliances, kids drawing in all rooms, broken doors, window shades, screen doors, lost garage and fireplace remotes etc. Most Tenants do not even stick around for the move-out inspection. These damages are so extensive that it's wiped out years of breakeven cost that I initially managed to get. Plus $10K is a significant loss when the house itself is in the $200K range.

My challenge is that I am a remote owner and cannot visit my rentals every month so I have limited options. The original PM company was  acquired by a bigger one a few years ago and takes care of everything from getting tenants/screening them to collecting rent, repairs etc.  This PM company does follow a good screening process: credit check (with a score of 550 or higher however if lower PM company will not decline solely based on the credit score itself), rental/mortgage history, employment/income verification of 3 times the amount of rent, and a criminal background check. The approval is made on a combination of these 4 items.

One option that I tried was to sign up for six-month inspection at additional cost from the PM company but that did not help. The PM company does send the damage bill to Tenant, notice through a lawyer and follows all the process for collections, but I am yet to see a cent back.

I am hoping to explore some options and ideas from the fellow community especially in the MO area.

- Any screening process that you follow differently to improve tenant quality?

- Any options or recommendation for a PM company (ability to find good tenants and recover some damages from tenant in the worst case)

0Reply
325 views

Most Popular Reply

Rosalind Pistilli
Investor · CO · Member since 2023 · 7 posts · 14 votes
2y

I would be looking for a different property management company as soon as possible. I would also be traveling to the area once a year to do my own walk-throughs. You've indicated you live in Kansas and the property is in Missouri, that should be a manageable trip to take once a year, walk through, inspect all of your properties and be present. To me, the property management company is taking advantage of you being absent. Scheduling a walk-through once a year will cause both the management company and the renters to be on alert. 

7Reply
See this reply in the discussion

77 Replies

Jump to latestLatest
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
    2y
    Quote from @Monique Rene Coates:
    Quote from @James Wise:
    Quote from @Carlos Ptriawan:
    Quote from @James Wise:
    Quote from @Todd Jones:

    Bad credit didn’t mean bad person or someone who makes bad choices.

    (3) Do regular checkups yourself. I had to visit my California home at least once a year and it was worth it as my PM was BM.


     Terrible take. I could not disagree with you more. A credit score is absolutely a reflection of how responsible, or irresponsible, someone is.


     when I ask my tenant I ask their job rather than their credit score , if they don't have credit score and they work hard that could be my potential tenant LOL

    but well yes this country is different as everything is credit score. Single medical bill can wipe out people credit score.

     When you're screening a tenant it's not credit score or nothing. However, if you don't think reviewing a tenant's credit report is important, you're doing your screening wrong. What's on that report gives you a great indication into how responsible, or irresponsible, the potential tenant is.


    Not necessarily! For EXAMPLE = I have absolutely $0 zero consumer debt and $0 zero credit cards, and $0 zero loans.
    In addition, all Student Loans are also PAID off! 

    Q. What do YOU think my FICO score would OR should be Sir? 🤔🤷🏻‍♀️

    Go back and re-read what I said 

    "What's on that report gives you a great indication into how responsible, or irresponsible, the potential tenant is."

    The same would apply to you. If we pulled your report and there were no unpaid debts, and a low debt to income ratio, that would be a good indication that you were a respondible person.

    While what's on the report is obviously what crafts the score, what's on the report is really what gives you the most insight into the person's level of responsibility.

    1Reply
  • Robert PaynePro Member
    Real Estate Agent · Bowling Green, KY · Member since 2023 · 36 posts · 36 votes
    2y

    The stick isn't big enough and you can't make it bigger because you won't get tenants if you raise the deposit higher. So you need a carrot. Build in $50-$100 that the tenant will get returned each month after a monthly inspection. 

    Also, shop for a PM that will offer a monthly inspection.

    0Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    2y

    one thing that I found from experience, the tenant that keep the property is good is always those who comes or work from real estate industries. Most of my tenants are contractors, some is having their own company with few trucks. Type of job is really making difference in my own experience. Sometimes I offered them for me to buy them a house so they can rent it out lol

    0Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    2y
    Quote from @James Wise:
    Quote from @Monique Rene Coates:
    Quote from @James Wise:
    Quote from @Carlos Ptriawan:
    Quote from @James Wise:
    Quote from @Todd Jones:

    Bad credit didn’t mean bad person or someone who makes bad choices.

    (3) Do regular checkups yourself. I had to visit my California home at least once a year and it was worth it as my PM was BM.


     Terrible take. I could not disagree with you more. A credit score is absolutely a reflection of how responsible, or irresponsible, someone is.


     when I ask my tenant I ask their job rather than their credit score , if they don't have credit score and they work hard that could be my potential tenant LOL

    but well yes this country is different as everything is credit score. Single medical bill can wipe out people credit score.

     When you're screening a tenant it's not credit score or nothing. However, if you don't think reviewing a tenant's credit report is important, you're doing your screening wrong. What's on that report gives you a great indication into how responsible, or irresponsible, the potential tenant is.


    Not necessarily! For EXAMPLE = I have absolutely $0 zero consumer debt and $0 zero credit cards, and $0 zero loans.
    In addition, all Student Loans are also PAID off! 

    Q. What do YOU think my FICO score would OR should be Sir? 🤔🤷🏻‍♀️

    Go back and re-read what I said 

    "What's on that report gives you a great indication into how responsible, or irresponsible, the potential tenant is."

    The same would apply to you. If we pulled your report and there were no unpaid debts, and a low debt to income ratio, that would be a good indication that you were a respondible person.

    While what's on the report is obviously what crafts the score, what's on the report is really what gives you the most insight into the person's level of responsibility.


    if things were that simple the world would be in much better shape, honestly valuing tenant based on credit card usage is creating its own discrimination problem as well but well yes the whole financial industry is using credit score to grade people lol so problem started from there , although in reality most of economic turnmoil are created by the higher score guy, philosophically speaking lol ...

    1Reply
  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 5k+ posts · 3k+ votes
    2y
    Quote from @Raul Sai P:
    Quote from @Caleb Brown:

    What area are they in? There is a some rough spots in KC. Having a great PM would help limit bad tenants but if the area stinks then there's not much you can do


     It is mostly 64015 and 64050(Kansas City and Independence)


     64015 is Blue Springs so a nice suburb. 64050 is Independence. Decent suburb. Should get solid tenants so I am curious if the PM isn't doing their job right for screening. These areas you can get solid tenants and mostly families looking there

    1Reply
  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    2y
    It may be partially your PM, but there is also another dynamic at play: two things that can create the scenario you describe.

    1.) Your units are in "just good enough" condition. This will attract tenants who don't care about living in style. in their mind "it's just a rentals" for a limited period of time and they treat it accordingly.

    2.) You are pushing rent high. Excellent tenants know their own value as an applicant and will look for a better deal. Desperate people will pay the premium you ask.

    The combination of both puts you in a downward sprial. The condition of your properties errodes. Every time you patch the drywall it looks worse. Doors, trim, cabinets look beat up.. this gets you a tenant who does not care about "nice"

    I have been down that path years ago and thats why we rent a premium product to people who are looking for something very nice. They have an interest keeping it this way. They have nice furniture and decorate. Thy put some flowers outside and a nice door mat or a "Home" sign with a pumpkin... you get the idea. They stay longer, keep it nicer and and our turnover cost is less. 

    I have a client who invests in both Milwaukee and KC and he says that KC has generally a higher standard of rental units, menaing they are on average in better shape. Might be worth it for you to book a field trip and inspect your rentals in person. 
    1Reply
  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    2y

    If you're homes are consistently getting trashed, it almost certainly has to do with bad screening. I would probably look for another PM company and ask to review their background screening before approving a tenant. You may also have properties in a really rough area, which doesn't mean they'l get trashed but does increase the likelihood. If so, it would be best to just sell and cut your losses. 

    Podcast Guest on Show #121
    1Reply
  • Ryan Fox
    Investor · NV and CA · Member since 2016 · 375 posts · 229 votes
    2y

    @Raul Sai P- Sorry this is happening to you.  I've got 24 units in the KC area and have only had 2 really bad tenants (knock on wood).  However, one of my property managers is saying they're seeing more of this - tenants wrecking every property.  Most property managers in the area are just not good I've come to find.  I'll DM you my recommendations for PMs.  

    1Reply
  • Bud Gaffney
    Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes
    2y

    I would look for the best possible PM. They are out there.

    0Reply
  • Bud Gaffney
    Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes
    2y

    You NEED to find a ROCKSTAR PM.

    0Reply
  • Frank D.
    Real Estate Investor · Toronto, Ontario · Member since 2014 · 58 posts · 21 votes
    2y
    Quote from @Rosalind Pistilli:

    I would be looking for a different property management company as soon as possible. I would also be traveling to the area once a year to do my own walk-throughs. You've indicated you live in Kansas and the property is in Missouri, that should be a manageable trip to take once a year, walk through, inspect all of your properties and be present. To me, the property management company is taking advantage of you being absent. Scheduling a walk-through once a year will cause both the management company and the renters to be on alert. 

     I agree with @Rosalind Pistilli This is a management issue they are probably putting anyone inside so they can start making commissions....Why are you not reviewing their choices???

    At any rate I would replace them and I would verify each and every tenant before giving them the green light to access your units.  2 Walk Throughs per year is also a must 

    1Reply
  • James Hamling
    Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
    2y
    Quote from @Carlos Ptriawan:
    Quote from @James Wise:
    Quote from @Monique Rene Coates:
    Quote from @James Wise:
    Quote from @Carlos Ptriawan:
    Quote from @James Wise:
    Quote from @Todd Jones:

    Bad credit didn’t mean bad person or someone who makes bad choices.

    (3) Do regular checkups yourself. I had to visit my California home at least once a year and it was worth it as my PM was BM.


     Terrible take. I could not disagree with you more. A credit score is absolutely a reflection of how responsible, or irresponsible, someone is.


     when I ask my tenant I ask their job rather than their credit score , if they don't have credit score and they work hard that could be my potential tenant LOL

    but well yes this country is different as everything is credit score. Single medical bill can wipe out people credit score.

     When you're screening a tenant it's not credit score or nothing. However, if you don't think reviewing a tenant's credit report is important, you're doing your screening wrong. What's on that report gives you a great indication into how responsible, or irresponsible, the potential tenant is.


    Not necessarily! For EXAMPLE = I have absolutely $0 zero consumer debt and $0 zero credit cards, and $0 zero loans.
    In addition, all Student Loans are also PAID off! 

    Q. What do YOU think my FICO score would OR should be Sir? 🤔🤷🏻‍♀️

    Go back and re-read what I said 

    "What's on that report gives you a great indication into how responsible, or irresponsible, the potential tenant is."

    The same would apply to you. If we pulled your report and there were no unpaid debts, and a low debt to income ratio, that would be a good indication that you were a respondible person.

    While what's on the report is obviously what crafts the score, what's on the report is really what gives you the most insight into the person's level of responsibility.


    if things were that simple the world would be in much better shape, honestly valuing tenant based on credit card usage is creating its own discrimination problem as well but well yes the whole financial industry is using credit score to grade people lol so problem started from there , although in reality most of economic turnmoil are created by the higher score guy, philosophically speaking lol ...


    FICO score is the #1 most WORTHLESS tool for indicating how good or bad a tenant applicant is, by far. 

    I have had AMAZINGLY GREAT applicants who had 560/580 scores. Why was there score so low? Virtually 0 credit use. No negative marks, no past dues, no delinquent's, nothing, because they didn't use credit. 

    AND, I have had 680+ that were TRASH. I had one just over 740 fico who had over $100k in revolving debt, and when I reviewed bank statement and income I noticed things didn't add up so i asked and applicant confirmed she was bankrupt, had been using 1 card to pay on another for months and was just about to file BK because there is no way could ever pay it off, but "don't worry, I will always pay rent, I won't pay the other bills but I'll pay rent" lol. 

    The #1 BEST review item I have ever used is "Life Vectoring". How is there life going? Is it declining, or getting better? Or are they just coasting by? 

    I will happily jump on a person with less than ideal credit, "meah" income, who's looking like that because they've been doing nursing school for last 3 years while working a cr#p job to just get by and are now nearing graduation set for significant life improvements.    

    LIFE VECTORING, what is the direction there life is going in and to what magnitude. And to know that you have to look at all the things and take them into a context together. 

    There is no way to know all the things from some number score. Fico speaks to credit use and credit use only. The WHY to credit being good or bad is what actually matters, not the score. 

    2Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    2y
    Quote from @James Hamling:
    Quote from @Carlos Ptriawan:
    Quote from @James Wise:
    Quote from @Monique Rene Coates:
    Quote from @James Wise:
    Quote from @Carlos Ptriawan:
    Quote from @James Wise:
    Quote from @Todd Jones:

    Bad credit didn’t mean bad person or someone who makes bad choices.

    (3) Do regular checkups yourself. I had to visit my California home at least once a year and it was worth it as my PM was BM.


     Terrible take. I could not disagree with you more. A credit score is absolutely a reflection of how responsible, or irresponsible, someone is.


     when I ask my tenant I ask their job rather than their credit score , if they don't have credit score and they work hard that could be my potential tenant LOL

    but well yes this country is different as everything is credit score. Single medical bill can wipe out people credit score.

     When you're screening a tenant it's not credit score or nothing. However, if you don't think reviewing a tenant's credit report is important, you're doing your screening wrong. What's on that report gives you a great indication into how responsible, or irresponsible, the potential tenant is.


    Not necessarily! For EXAMPLE = I have absolutely $0 zero consumer debt and $0 zero credit cards, and $0 zero loans.
    In addition, all Student Loans are also PAID off! 

    Q. What do YOU think my FICO score would OR should be Sir? 🤔🤷🏻‍♀️

    Go back and re-read what I said 

    "What's on that report gives you a great indication into how responsible, or irresponsible, the potential tenant is."

    The same would apply to you. If we pulled your report and there were no unpaid debts, and a low debt to income ratio, that would be a good indication that you were a respondible person.

    While what's on the report is obviously what crafts the score, what's on the report is really what gives you the most insight into the person's level of responsibility.


    if things were that simple the world would be in much better shape, honestly valuing tenant based on credit card usage is creating its own discrimination problem as well but well yes the whole financial industry is using credit score to grade people lol so problem started from there , although in reality most of economic turnmoil are created by the higher score guy, philosophically speaking lol ...


    FICO score is the #1 most WORTHLESS tool for indicating how good or bad a tenant applicant is, by far. 

    I have had AMAZINGLY GREAT applicants who had 560/580 scores. Why was there score so low? Virtually 0 credit use. No negative marks, no past dues, no delinquent's, nothing, because they didn't use credit. 

    AND, I have had 680+ that were TRASH. I had one just over 740 fico who had over $100k in revolving debt, and when I reviewed bank statement and income I noticed things didn't add up so i asked and applicant confirmed she was bankrupt, had been using 1 card to pay on another for months and was just about to file BK because there is no way could ever pay it off, but "don't worry, I will always pay rent, I won't pay the other bills but I'll pay rent" lol. 

    The #1 BEST review item I have ever used is "Life Vectoring". How is there life going? Is it declining, or getting better? Or are they just coasting by? 

    I will happily jump on a person with less than ideal credit, "meah" income, who's looking like that because they've been doing nursing school for last 3 years while working a cr#p job to just get by and are now nearing graduation set for significant life improvements.    

    LIFE VECTORING, what is the direction there life is going in and to what magnitude. And to know that you have to look at all the things and take them into a context together. 

    There is no way to know all the things from some number score. Fico speaks to credit use and credit use only. The WHY to credit being good or bad is what actually matters, not the score. 


     man you always come back with the most good and surprising answer, really feels good about the answer !

    1Reply
  • Jason Allen
    Member since 2019 · 104 posts · 72 votes
    2y
    Quote from @James Wise:
    Quote from @Henry T.:

    Sorry, but 550 credit rating is for criminals. I've always been 720 and above. I'm now 750. The one time I took a 550 I ended up with a trashed house. 10k in damages.  I've had damages from 720's but it does get worse the lower you go.


     When you're in the hood, you're not gonna get a lot of 700+ credit scores.

    When you're in the hood, a 700+ credit score is a red flag for identity theft...
    1Reply
  • Michael HaasBusiness Member
    Real Estate Agent · Sammamish, 🌧️ Seattle Investor-Agent | 🤑 Helped 400+ Clients Invest in Real Estate | 🏘️ Owns 23 WA Rentals & Airbnbs | 🏗️ Built 5 DADU's | 📈 You Can Do It Too · Member since 2016 · 725 posts · 3k+ votes
    2y

    Sorry you're experiencing this. This is why we do not typically buy out of state and do not buy in bad neighborhoods. I do think that although the location may have something to do with the issues, the sheer volume of issues you're having suggests that you should switch PM's.

    [email protected]408-439-7873
    HouseHack Seattle | Michael Haas & Team572 Reviews
    WebsiteView Page
    3Reply
  • Scott Mac
    Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
    2y
    Quote from @Raul Sai P:

    Some background - Around 5-6 years ago, I was getting decent tenants for the most part and a pretty good PM company to manage the rentals in MO state. 

    While I understand that it is part of the game to have a rental property trashed every once in a while, I am currently facing a situation where pretty much all of my 3-4 homes are getting severely trashed every year. I am talking of move-out repairs around $9000-$12000 in damages for each property, which obviously goes way beyond the security deposit. It costs $2000 to just remove the piles of trash before I can fix the rental. There is not a single aspect that's not trashed with intentional damages like big holes in walls, intentionally ripping out carpets, trashing new appliances, kids drawing in all rooms, broken doors, window shades, screen doors, lost garage and fireplace remotes etc. Most Tenants do not even stick around for the move-out inspection. These damages are so extensive that it's wiped out years of breakeven cost that I initially managed to get. Plus $10K is a significant loss when the house itself is in the $200K range.

    My challenge is that I am a remote owner and cannot visit my rentals every month so I have limited options. The original PM company was  acquired by a bigger one a few years ago and takes care of everything from getting tenants/screening them to collecting rent, repairs etc.  This PM company does follow a good screening process: credit check (with a score of 550 or higher however if lower PM company will not decline solely based on the credit score itself), rental/mortgage history, employment/income verification of 3 times the amount of rent, and a criminal background check. The approval is made on a combination of these 4 items.

    One option that I tried was to sign up for six-month inspection at additional cost from the PM company but that did not help. The PM company does send the damage bill to Tenant, notice through a lawyer and follows all the process for collections, but I am yet to see a cent back.

    I am hoping to explore some options and ideas from the fellow community especially in the MO area.

    - Any screening process that you follow differently to improve tenant quality?

    - Any options or recommendation for a PM company (ability to find good tenants and recover some damages from tenant in the worst case)

     Do you think they might be damaging the property out of spite for being treated in a cruel manner by management.

    I mean do you think the property manager is for lack of a better term, pushing their buttons, with how they are being treated?

    Or do you think that the particular tenant base that you're housing, this is their modus operandi no matter where they would live.

    Tear out the walls, et cetera...? 

    Because it seems like there could be two reasons [maybe more] That would make them expend the extra energy to damage your stuff.

    Although I do understand in some of the lower income individuals there seems to be a fun aspect to damaging things. Which might also be at work here.

    So it's probably important to ascertain why this is happening over and over. 

    Good Luck!

    0Reply
  • Kristen Petrosky
    Lender · Chicago, IL · Member since 2023 · 22 posts · 13 votes
    2y

    Ahhh this is so rough. I'm so sorry to hear this. I would suggest finding a new property manager and do some deeper research. Up your requirements to higher credit score/income. Maybe even utilize a 1031 exchange and change neighborhoods. Let me know if you'd like more info on 1031 exchanges and how they work. Good luck :( please keep us updated.

    0Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
    2y
    Quote from @Jason Allen:
    Quote from @James Wise:
    Quote from @Henry T.:

    Sorry, but 550 credit rating is for criminals. I've always been 720 and above. I'm now 750. The one time I took a 550 I ended up with a trashed house. 10k in damages.  I've had damages from 720's but it does get worse the lower you go.


     When you're in the hood, you're not gonna get a lot of 700+ credit scores.

    When you're in the hood, a 700+ credit score is a red flag for identity theft...
    lol....Savage
    0Reply
  • George Red
    Investor · Member since 2022 · 157 posts · 162 votes
    2y

    I own 5 properties in KC MO and have worked with 2 property managers. I presently self manage as I found myself pulled into numerous situations and ended up questioning why I was paying the property manager. In the end, I think I have learned a lot from self managing and I'm a better investor for it. I now don't get vague cost descriptions or tenants reaching out because property management is unresponsive. I found the biggest issue even when I reached out (after signing on with them) was responsiveness... if they're not responsive to me as their customer... they are definitely not responsive to the tenant (which is my customer).

    I would (as others have said) ensure that any fixes over $X require your approval. They are also probably just placing anyone and you're paying the cost. They make money on the placement, repairs and the turn. If you're just in a really bad area it may be time to sell but I think it may be more of a tenant placement issue.

    0Reply
  • Todd Jones
    Member since 2023 · 243 posts · 199 votes
    2y
    Quote from @James Wise:
    Quote from @Todd Jones:

    Bad credit didn’t mean bad person or someone who makes bad choices.

    Remember, a credit score is determined by several factors, not just late payments or debt-to-income ratio. Your score could be low if you are a “cash is king” person with no credit history or if you co-signed and the other individual had an accident or if you had an accident or if you get laid off from your job or a combination of these use cases.

    Problem is, you don’t know why their credit is low. A higher score simply reduces risk of missed payments. It isn’t a strong metric to determine if they will not act foolish and trash the place.

    Overall:

    (1) Visit the neighborhood. What changed? A big company supplying jobs left? New mayor or city council who just don’t care? Roads getting bad? When stuff like this happens, you get folks moving in that turn to vices to feel better and care less of their surroundings.

    (2) Switch to another PM. Seriously. I assume the quotes for repairs came from them. The company that took over your OM may up-charged the repairs even more. It sounds like they did some background checks but their results aren’t stellar.

    (3) Do regular checkups yourself. I had to visit my California home at least once a year and it was worth it as my PM was BM.


     Terrible take. I could not disagree with you more. A credit score is absolutely a reflection of how responsible, or irresponsible, someone is.


    Oh, I 100% get why you feel this way, James. 
    To clarify, I was not recommending accepting an application from a potential tenant with a low credit score.

    However, a person's credit score will not provide an absolute indication whether a person is responsible or not. Sounds moronic? Well, its complicated. Hear me out...

    - A person never misses a payment but got hit with an identity theft. The thief maxed out their credit cards. The card companies' policies and customer service is a joke and it takes time to repair. 
    - A young person with no credit history.
    - A "cash is king" person prefers not to owe anyone money. Cars. bikes. everything is cash.

    All three will either have low or no credit score. So, do we know for sure they are irresponsible folks? 
    Answer: Unknown. That "cash is king" person could be generally be the most reliable tenant with a scary good discipline. 

    Should you accept their application anyway?
    Answer: Nope. They can always pay rent on time but miss car payments. But I do not know and it is not worth the risk. Despite the story they tell me.

    So, is a person with a 820 credit score guaranteed to reliable? Nope. Why?
    They can be consistently a few days late, not bother paying items not reported to the bureaus, never reporting damage in the home, never reply back to important queries, not take care of their children, always late for work, using "credit boost" to get their score up by 10 or so points, etc. Basically unreliable. Yet, credit score is untouched despite their quirky behaviors. 
    Proof? Well, this and other posts we've seen where a tenant with a beautiful credit score did "you got to be kidding me" stuff to a home.

    Overall:
    Credit score won't absolutely determine if they are even financially reliable; however, it helps and should be use. When you combine it with other metrics of the applicant, you can use it to help determine the least stressful tenant (e.g., check out their social media to verify if they do unscrupulous stuff).

    Hope this clarifies. And yes, I watch your Youtube videos.

    0Reply
  • Todd Jones
    Member since 2023 · 243 posts · 199 votes
    2y
    Quote from @James Wise:
    Quote from @Monique Rene Coates:
    Quote from @James Wise:
    Quote from @Carlos Ptriawan:
    Quote from @James Wise:
    Quote from @Todd Jones:

    Bad credit didn’t mean bad person or someone who makes bad choices.

    (3) Do regular checkups yourself. I had to visit my California home at least once a year and it was worth it as my PM was BM.


     Terrible take. I could not disagree with you more. A credit score is absolutely a reflection of how responsible, or irresponsible, someone is.


     when I ask my tenant I ask their job rather than their credit score , if they don't have credit score and they work hard that could be my potential tenant LOL

    but well yes this country is different as everything is credit score. Single medical bill can wipe out people credit score.

     When you're screening a tenant it's not credit score or nothing. However, if you don't think reviewing a tenant's credit report is important, you're doing your screening wrong. What's on that report gives you a great indication into how responsible, or irresponsible, the potential tenant is.


    Not necessarily! For EXAMPLE = I have absolutely $0 zero consumer debt and $0 zero credit cards, and $0 zero loans.
    In addition, all Student Loans are also PAID off! 

    Q. What do YOU think my FICO score would OR should be Sir? 🤔🤷🏻‍♀️

    Go back and re-read what I said 

    "What's on that report gives you a great indication into how responsible, or irresponsible, the potential tenant is."

    The same would apply to you. If we pulled your report and there were no unpaid debts, and a low debt to income ratio, that would be a good indication that you were a respondible person.

    While what's on the report is obviously what crafts the score, what's on the report is really what gives you the most insight into the person's level of responsibility.


    I agree that credit report will provide more useful data. A credit score...not so much.

    I assume this debate is more of the concept of "reliable in what".

    A report will help show if they are financially reliable based on the bureau's requirements but it is not a strong indication they are overall reliable. 

    The bureau only captures so much of a person's responsibilities. Folks are sneaky. They may not care about cleaning, the damage they cause,  the people they hurt, or paying back individuals/businesses if it isn't reported. 

    So, I think we are all pretty much on the same page. Its just the idea of "a good credit report shows the person is reliable at being x,y,z" is the difference. 

    0Reply
  • Raul Sai P
    OP
    Homeowner · OR · Member since 2022 · 19 posts · 4 votes
    2y
    Quote from @Scott Mac:
    Quote from @Raul Sai P:

    Some background - Around 5-6 years ago, I was getting decent tenants for the most part and a pretty good PM company to manage the rentals in MO state. 

    While I understand that it is part of the game to have a rental property trashed every once in a while, I am currently facing a situation where pretty much all of my 3-4 homes are getting severely trashed every year. I am talking of move-out repairs around $9000-$12000 in damages for each property, which obviously goes way beyond the security deposit. It costs $2000 to just remove the piles of trash before I can fix the rental. There is not a single aspect that's not trashed with intentional damages like big holes in walls, intentionally ripping out carpets, trashing new appliances, kids drawing in all rooms, broken doors, window shades, screen doors, lost garage and fireplace remotes etc. Most Tenants do not even stick around for the move-out inspection. These damages are so extensive that it's wiped out years of breakeven cost that I initially managed to get. Plus $10K is a significant loss when the house itself is in the $200K range.

    My challenge is that I am a remote owner and cannot visit my rentals every month so I have limited options. The original PM company was  acquired by a bigger one a few years ago and takes care of everything from getting tenants/screening them to collecting rent, repairs etc.  This PM company does follow a good screening process: credit check (with a score of 550 or higher however if lower PM company will not decline solely based on the credit score itself), rental/mortgage history, employment/income verification of 3 times the amount of rent, and a criminal background check. The approval is made on a combination of these 4 items.

    One option that I tried was to sign up for six-month inspection at additional cost from the PM company but that did not help. The PM company does send the damage bill to Tenant, notice through a lawyer and follows all the process for collections, but I am yet to see a cent back.

    I am hoping to explore some options and ideas from the fellow community especially in the MO area.

    - Any screening process that you follow differently to improve tenant quality?

    - Any options or recommendation for a PM company (ability to find good tenants and recover some damages from tenant in the worst case)

     Do you think they might be damaging the property out of spite for being treated in a cruel manner by management.

    I mean do you think the property manager is for lack of a better term, pushing their buttons, with how they are being treated?

    Or do you think that the particular tenant base that you're housing, this is their modus operandi no matter where they would live.

    Tear out the walls, et cetera...? 

    Because it seems like there could be two reasons [maybe more] That would make them expend the extra energy to damage your stuff.

    Although I do understand in some of the lower income individuals there seems to be a fun aspect to damaging things. Which might also be at work here.

    So it's probably important to ascertain why this is happening over and over. 

    Good Luck!

    I don't think the PMC is pushing their buttons for several reasons - all of my properties have a Health license and rental inspection program check regularly so there's that. I did not want to say this, but it this seems to be their style of living. Either they are working multiple jobs and too tired to clean at home or got habituated with collecting junk/hoarding. They might find a fun aspect to damaging things, but I hope they start realizing that it would be more fun to get their security deposit back and do the right thing in life so they also prosper. 

    1Reply
  • Raul Sai P
    OP
    Homeowner · OR · Member since 2022 · 19 posts · 4 votes
    2y
    Quote from @Carlos Ptriawan:

    another reason not to do passive investment, better buy local rental and we become the only PM.

    I would love to buy local but my city laws are crazy for owners plus it is waay more expensive to buy here. And I cannot move back to KS because of limited jobs there. 

    1Reply
  • Raul Sai P
    OP
    Homeowner · OR · Member since 2022 · 19 posts · 4 votes
    2y
    Quote from @George Red:

    I own 5 properties in KC MO and have worked with 2 property managers. I presently self manage as I found myself pulled into numerous situations and ended up questioning why I was paying the property manager. In the end, I think I have learned a lot from self managing and I'm a better investor for it. I now don't get vague cost descriptions or tenants reaching out because property management is unresponsive. I found the biggest issue even when I reached out (after signing on with them) was responsiveness... if they're not responsive to me as their customer... they are definitely not responsive to the tenant (which is my customer).

    I would (as others have said) ensure that any fixes over $X require your approval. They are also probably just placing anyone and you're paying the cost. They make money on the placement, repairs and the turn. If you're just in a really bad area it may be time to sell but I think it may be more of a tenant placement issue.

    Thanks George. Good points and I am working with my PMC on the tenant placement criteria. I wish I could be more local like you, but not possible for now. 

    0Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    2y
    Quote from @Raul Sai P:
    Quote from @Carlos Ptriawan:

    another reason not to do passive investment, better buy local rental and we become the only PM.

    I would love to buy local but my city laws are crazy for owners plus it is waay more expensive to buy here. And I cannot move back to KS because of limited jobs there. 


     ya in your case your PM is clearly not good.  I have some OOS properties in multiple state and I would say the PMC is the best team player rather than the house itself.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free