Hello everyone -
So I just wrapped up my first year as an investor and landlord (great experience so far) and I'm in a situation where I need to decide whether to take one of my tenants to small claims court or just eat the losses as a learning experience.
The property I acquired is a commercial office/warehouse property with 8 units: two units are shared and there was 1 vacancy. So I inherited 6 tenants total. Two of the tenants have been consistently late in paying (my late fee revenue has been spectacular because of these two). One of those moved out in the middle of the night and the vacancy was filled within a week with a tenant that now pays 3-months in advance every quarter.
Here's where the story gets interesting: The second delinquent tenant rented the shared unit from me and split the space with his attorney whom he ran a side business with. They expanded into the vacancy and now occupied 3 units or 38% of my building. For a full year, he consistently paid rent and late fees in full around day 45 so naturally I became lenient and tried to salvage the tenancy as best I could. He and his attorney had a fall out and the attorney took over the single unit. The 45-day delinquency pushed now to 60-days and his maintenance of the units began to slip when his AC overflow backed up and damaged drywall and carpet. I wanted to avoid the drama of an eviction so I proposed a "negotiated" lease termination (he moves out and I would forgive the last months rent provided he pay the back rent for previous months). After move out I assessed damages with my contractor at around $800-$1200 so at this point the tenant owes me anywhere between $2,500 - $4,800 dollars in back rent and damages. I work full time in Healthcare IT (software Program Manager - very visible and demanding) so I'm trying to decide whether to pursue a small claims court filing or writing this off as a learning experience on how to deal with inheritied tenants. How involved and costly is a small claims filing in Texas?
Hello @Mark Lucido
This sounds like a little bit of a mess, sorry you are going through this situation. I’m not sure about Texas, but small claims court can take a lot of time out of your busy schedule. You can of course try it, but just be cautions that you do not burn through your vacation hours trying to chase this guy.
First time someone leaves owing me money I will pursue it just to learn how the process works. After I get my judgement I will likely sell it to a collections company.
Join the Largest Real Estate Investing Community
Basic membership is free, forever.