Stuck/Squatting Tenants

Stuck/Squatting Tenants

Nags Head, NC · Member since 2014 · 37 posts · 11 votes

I have a scenario where the tenants experienced financial difficultly in July and were unable, they claim, to pay Aug rent, due on the 1st.  They also noted via email there intention to move via a 30 day notice.  However, as we approach the beginning of Sept, they recently noted that they have not yet found a new place, and I feel that likely the situation will exist where they are "stuck" in my property while they continue to search for a new place to live.  

They noted use of their current security deposit (1 month rent) to cover Aug, however, once Sept is here, I will have nothing if they decide not to pay in full for Sept (they continuously note they plan to pay prorated for the days they will be there in Sept).  Very dicey scenario, and I feel they will end up not finding a place which suits their need while remaining at my place with no incentive to vacate (rental market in my area sees a high demand in tenants thus competition among tenants is high).  If my tenants are experiencing any financial woe (husband too is a seasonal employee and his job ends Oct 1), this will also add difficultly to their finding a new place. 

The property is in NC and I believe a SD may not be substituted for a rent payment.  Thus, given the 10 day window from time of late rent/ejectment notice (sent Aug 8), I am now within the window to start a summary ejectment.  

However, my concern is the time.  The ejectment process can take up to/over 30 days to complete if the tenants ride it to full term.  Additionally, though a PITA, they are immaculate in the tidiness/cleanliness of the property so it shows quite well now.  Concern is that if I start a summary ejectment, they may mess up the place downgrading its presentation.  Though, if I do nothing, I am at their mercy for when they actually leave.

Thoughts?

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Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
12y

You should have started the eviction process near the beginning of August.  You should certainly start it ASAP.  Yes, they may wreck your place.  Its the risk you take in this business.  They're already stealing from you by living there without paying rent. They have already verified you're a weak landlord because you let them stay for August with no rent and no consequences.  Security deposit should NEVER be allowed to be used for anything except repairs after they've left.  Not rent.  

Start the eviction process today.

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  • Real Estate Investor · Rockford, IL · Member since 2012 · 18 posts · 3 votes
    12y

    Personally I wouldn't accept their security deposit as rent. I would make them pay rent from August and if you want to keep them in there make sure they pay September rent as well. Otherwise hold them to their 30 day notice. Curious to see what others have say!

  • Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    12y

    You should have started the eviction process near the beginning of August.  You should certainly start it ASAP.  Yes, they may wreck your place.  Its the risk you take in this business.  They're already stealing from you by living there without paying rent. They have already verified you're a weak landlord because you let them stay for August with no rent and no consequences.  Security deposit should NEVER be allowed to be used for anything except repairs after they've left.  Not rent.  

    Start the eviction process today.

  • Professional · Milwaukie, OR · Member since 2014 · 20 posts · 4 votes
    12y

    It's always a tough call between doing the right thing and wanting to be helpful.  Having said that, the right thing to do here is manage your investment.  These tenants will give any reason but the right one to hold off payment as long as possible and in the end, living for free.  By taking action now, you will lesses any questions if this ever happens in the future with other tenants and you will regain your investment value add that much quicker.  

  • Investor · Kingwood, TX · Member since 2014 · 30 posts · 3 votes
    12y

    Listen to @Jon Holdman the sooner the tenants realize that you are serious about collecting rent the less trouble you will have.  I'm going through a difficult tenant right now that has a boyfriend staying in the house and refused to notify or release his information to us.  She was in the house 8 days before I started receiving calls from the neighbors.  I immediately called her and have been on her since that time.  She refuses to give me his information, but I'm in the process of a settlement to get her out of the house.  I can't imagine how much of a pain it would be if I had waited.  It's a great lesson for me to go through.

  • Nags Head, NC · Member since 2014 · 37 posts · 11 votes
    12y

    Thanks for the advice all.  I have informed them of the decision to either pay outstanding rent by tomorrow or I will begin ejectment proceedings Thurs.  Not sure which option they will take or reaction, but we shall see.  They seem like the type of people who would not want a summary ejectment on their record as they are professional people with solid background.  However, the wife is also clearly an alpha with a controlling mindset.  Thus, I believe she feels "entitled" to the current situation.  

  • Hanford, CA · Member since 2013 · 5k+ posts · 1k+ votes
    12y

    @Bill Bell 

    I would also tell them what an eviction means on their record and how it will affect their professional lives.

  • Nags Head, NC · Member since 2014 · 37 posts · 11 votes
    12y

    Indeed, I noted that consideration as well in the payment ultimatum.  

    That is one thing about running a rental operation, many tenants treat the agreement as a "personal" rather than "business" relationship.  Of course, as a landlord, attempts to maintain the business angle often fall on deaf ears.  It is like "babysitting" sometimes, which can be quite frustrating.  

    All I care about as "landlord" (is there a better 21st century term for this position?) is that the property is in complete working order and the rent is paid on time.  However when tenants come to me with issues with neighbors, problems with income, etc... I am like.... talk to your family member, do not bring it to me.  Just seems odd that people bring these stories to their landlord when I do not want to hear it.  Landlord != lifecoach

  • Investor · Middletown, NJ · Member since 2008 · 2k+ posts · 1k+ votes
    12y

    The longer you wait, the more you lose. And tenants will almost never care about your problems - i.e., paying the mortgage, taxes, insurance, maintenance, etc. What would their reaction be if you lost your job or had a financial setback and asked them for a loan? Just keep that in mind and you'll have no trouble filing an eviction. 

  • Nags Head, NC · Member since 2014 · 37 posts · 11 votes
    12y

    Regarding "trashing the place" in response to anger over an eviction, are other avenues such as criminal vandalism warranted within the scope of rental property use?  For example if a tenant pours sand down each drain trap, or spray paints the walls, etc... would these activities warrant criminal vandalism or civil lawsuit grounds for the cost of repairs/lost rental income?  Unlikely, they would go that route, but who knows if a person is presented with an eviction notice they feel is not proper in their mind.

  • Nags Head, NC · Member since 2014 · 37 posts · 11 votes
    12y

    They decided to pay...and not face summary ejectment, at least at this time.  Of course, we will see what happens in Sept.  Though from advice here, I am treating this and all future leases "by the book" and will set in motion eviction simply as a part of doing business.  

    thanks for the advice!

  • Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    12y

    I agree with the other posters...get the rent or get them out!  If you don't run your investments like a business you will end up with ZERO!

  • Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    12y

    @Bill Bell a tenant wrecking your place is just part of the business. If you have only a few properties you will probably be lucky and never experience one of these expensive but rare events. Or you may get unlucky and have some major problem. If you build up to a property of dozens or a hundred units, it will be happening all the time. As will evictions, new roofs, new boilers, etc. Build up your reserves. Don't fall for the "cash flow = rent - PITI" myth and you will get through these hiccups fine.

  • Rental Property Investor · Douglas County, MO · Member since 2014 · 1k+ posts · 1k+ votes
    12y
    Originally posted by @Bill Bell:

    Regarding "trashing the place" in response to anger over an eviction, are other avenues such as criminal vandalism warranted within the scope of rental property use?  For example if a tenant pours sand down each drain trap, or spray paints the walls, etc... would these activities warrant criminal vandalism or civil lawsuit grounds for the cost of repairs/lost rental income?  Unlikely, they would go that route, but who knows if a person is presented with an eviction notice they feel is not proper in their mind.

     How would you prove that they did it? Unless caught on film or in the act by someone other than you, you'll have a very hard time with that.

  • Residential Real Estate Broker · Chicago Suburbs, IL · Member since 2013 · 1k+ posts · 594 votes
    12y

    Lots of good advice here from @Jon Holdman and others. It is so true they expect us to help them, give them a break, etc....like we have money trees growing in the backyard.  We are strangers to them! If they want help, they should be going to friends and family!

  • Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    12y

    If the property is damaged while the tenant has possession, its their responsibility.  No real need to prove they're the ones who poured cement down the drains.  If the drains were clear when you handed it over, charge them for the repairs when you do their move out.  If the costs exceed their deposit, send them a bill.  If you want to make it stick, take them to court and get a judgment.  Judgment or not, you can hand it over to a collection agency to pursue them. You might even collect.  But... probably not.  I can't tell you the times people have said I'm being Debbie Downer with the "50% rule" (50% of gross rents go to expenses, capital and vacancy.)  But stuff really does happen.  If you account for it when your buying and building your business model you will be fine.  If you assume you'll never have these big, unpredictable expenses you'll be in trouble if they to happen.

    In general I think investing is like gambling.  The difference is that most gambling games have fixed odds of specific events.  There's a one in 36 chance that two dice will come up snake eyes.  There's a one in about 40,000 chance that one hand of video poker will result in a royal flush.  Its much harder to define the chances of a tenant wrecking a place.  Is it one occupancy out of 10 that results in big damage?  One in 100?  1000?  I don't know.  I do, however, know that's it not "never".   With careful screening that number should be small.  Unfortunately, the consequences can be large, so the impact on your bottom line is a meaningful number.

    Other big expenses, such as a roof, are more predictable.  Roofs last about 20 years.  So, every 20 years you will replace a roof.  If a roof for your property costs $5000, you need to budget $5000/(20*12) = $20.83 a month for the roof.  If you own 20 properties, you're probably going to be spending $5000 on roofs ever year.   If you buy a property that has a 15 year old roof, you better accumulate that $5K over the next five years, not the next 20.

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