Tenant destroyed property upon eviction
Investor · Sunland, CA · Member since 2015 · 14 posts · 1 vote
My tenant in Florida destroyed unit (duplex) upon notice of eviction. Broke windows, punched holes in all the walls, damaged appliances. Do any of you file legal action to collect or do you let it go? I have a property manager on this property.
@Michelle McAlister 5 evictions in two years for 12 units sounds very high. Have you considered new management?
Hopefully you made them pay a security deposit before the moved in.
Thanks Neil. I have been doing this for 3 1/2 years and 50% of the time I am frustrated. I only have 12 units and in the process of two evictions. I did three evictions in 2015. My luck is not good. All units are professionally managed.
I remember that feeling many years ago;
You need to rethink your operation agreement with managers. You need to define the rules and have the PM handle things like an employee would if you gave them simple instructions. These type of issues are very common with property managers, much more than I think most like to admit. I've been in your boat a few times, and since those early days I fired every PM I had, and started hiring licensed real estate agents directly as a sub, because it's my business, my money, and now of days my rules.
Always have absolute clear qualification requirements. If we assume your not in a ghetto, you need to be requiring their income to be 3x rent (confirmed), no criminal backgrounds, no evictions, no credit scores below 600, and never let tenant provide your agent these details with some free credit reporting bs. That alone will take care of 99.999999% of your problem. Next you need to tackle leases, I'm sure you agent wants to use the standard "FL real estate lease". Get a real lease with written in terms by an attorney you hired, this is your bible, everyone operates off of it.
Ironically agents really don't want to deal with managing properties, they just want to collect commissions, so rents are generally somewhere below market for fast commissions. Always keep and eye on rent prices vs rentometer.com, and check your repairs because they don't like dealing with remodeling or CapEx. I'd be willing to bet your agent(s) are picking up 10% just to have your portfolio, they get another 10% in total rents with lease signings and renewal fees once you do the math at the end of the year. They are likely also picking up another 10% off of late fees, or other fees that your not evening seeing. So that means they earn 30% of your total gross rents with zero skin in the game.
Here is an issue you probably already experienced; agents returning security deposits before repairs, but when the next tenant wants to move in you suddenly have to do some repairs. This is very common as the agent does not want to get into a dispute with the tenants or a complaint agents their real estate licenses, so they just send the deposit, and off load the repair on the owner a little later. Now of days, I require them to submit the exiting and entering walkthrough paperwork, this resolves the issue with exiting tenants reporting saying one thing, as the entering tenants are more picky. You can't say something is normal and then say it's damaged in the incoming walkthrough, it's just not possible. If you start this type of processing, your basically resetting the unit on each turnover, and things will start working much better, but if you just ignore the broken stuff it will undermine this process, so fix it right the first time.
Does this mean PMs are bad? No, they just want to make as much money as they can, just like you and your business. You just need to set the rules, make it so simple anyone can follow them. You set the price, terms, and agreements for everything from fees, payment terms for agents commissions, how your lease spells out how tenants have to hire a professional carpet cleaning company on exit, as well has have the HVAC unit serviced and charged, if not it all comes out of the security deposit. No smoking, with real fines, like $250 per event plus professional cleaning if found smoking, etc.
I don't pay renewal fees because that's why I pay management fees, they don't get any of my late fees or fines outlined in my leases because it's my lease. I don't know what your getting for rents, but I assume you're somewhere around $100 a unit with basic management fees; that's $1,200 per month, and $14,400 per year. A lot of real estate agents would be very happy to handle all your units as their side gig for that type of money per month, and you would be doing no more work than you are already doing, likely less once you get things setup and running. Frankly once you get over 15-20 units you should be able to get the total cost down under 5% of gross rents for management, if your rental market is like mine. Food for thought!
Thank you so much for your thoughtful and detailed response Levi. i am taking notes and need to re-think this whole business. I am sorry I purchased all the way across the country. It is working against me and would like to get everything closer to home. I will either sell the properties or change the set-up with PM or R/E agent in the future. Thank you again. Love Bigger Pockets, everybody so nice and informativE.
I'm learning my lesson finally. I actually sat down and added up all the money my PM's have made off me. Unsettling. No wonder they go into the business of managing rather than owning.
Man that sucks. Sorry to hear.
Random thoughts;
Perhaps screen personally next time PM has a prospect. Spend as much time and money needed to cover deepest background and rental history checks. Seniors/retirees could be good too and they normally don't have the extra energy to extra thrash a place. List rentals at senior centers, newsletters, bingo joints,websites etc. Folks in religions usually have a moral code and or can help cover for fellow members when things get tight. List rentals with major churches their private schools directly. If someone has nothing to lose (credit, community standing, gods wrath, etc) watch out. Certain immigrants mind their Ps and Qs too. For sure there are decent renters nearby and next time you get them. It might just take a little longer to find.
You are basically going into a nearly blind business realtionship 3000 miles away so more screening and selection efforts are likely needed. Unfortunately some areas are known for being tough on rentals. You can add tougher screening process and target marketing to match. Maybe this one was just bad luck. It might be interesting to see this tenants background and if there was something that you could have discovered personally. A good PM would do all this already but it seems like some just go the warm body route and especially if there is a extra large lease up fees.
For the most part I agree with John Anderson. I read so many issues for long distance PMs but hardly any issues when everythings local. There is some disconnect when PMs work for the remote owners and it seems par for the course.
Good luck!