Tenant Causes $14k Damage to IN Rental Property

99 Replies

Thank goodness for BiggerPockets! Hoping you can help me with an issue I have on a tenant-damaged rental property. The property is in Indianapolis IN and managed by a Property Management company; I live in California. The PM screens and selects tenants, manages the property and it's tenants, performs any evictions, etc. I receive a monthly owner statement. The property manager recently evicted the tenants at this Indianapolis property for non-payment of rent. The tenants were there less than a year. I received an estimate yesterday for the damages to the place and work needed to get it ready to rent again, $14,400. Yikes! He's going to get 2 more estimates. The property manager explained to me that the place was trashed by the tenants. When he went to the property after the tenants moved out, he put the key in the front door and it caved in (the top two hinges were either taken off or busted). He also said there are 4 broken windows, all interior doors have been removed and a couple of them were nailed to the wall to cover the busted windows, and a couch was half way out another window. The new carpet that was installed last year was unsalvagable, all the blinds are damaged, there are holes in the wall that require re-sheetrocking, lights are damaged, etc. The property manager says there's really no recourse we can pursue from the tenants that would be worth our while. I questioned this, from a back-rent-payment and a damages-payment perspective, and he discouraged my taking any action. He said he thinks drugs/meth was involved, and we're not likely to ever see a dime of restitution from the tenants since they have no money. What are our rights as landlords in this case? What process do you think I should follow to get a resolution on this issue? Thank you BP community!

Hello Mary-Ann

Sorry to here about your situation. I have rental property South of Layfette in Crawfordsville.

Obviously your Property Management is not looking out for you our your investment. You might have a hard time finding a contractor in that area who is willing to serve you will. The economy is doing well enough in that finding a good reputable contractor is not easy, the good ones are all very busy! I know I have been waiting for a few small issues to be done at my rental . I don't let my Property mang. take care of small issues because they over charge. Who is your Property Management in Layfette. I can pass on to you a Property Management team that also Owns their own Contracting Business. Both issues might be solved.

So your property manage basically never checked on your investment for you, since this is unlikely to have happened overnight...and how did they screen these people? Class of neighborhood? Did you buy this place "sight unseen?

Sounds like a PM and tenant screening issue.....

I would have to agree that you will likely never see any $$...but I would pursue it to the point that it is public record. If nothing else you make it a huge red flag for the next landlord that may screen them better and if by some miracle they get their act together and try to buy a house or whatever, you may see a miracle and get some $$...not likely....but you never know. People like this count on their "victims" just letting it go.

Boy did they drop the ball from begining to end . First , take them to court sue for damages and back rent . Win and Now you have a judgement . Judgements are generally good for 10 years and can be renewed interest accrues . Now sometime in the future the tenants may hit the lottery , come into some money and then you go after collecting .  Also report the damage to police . Get a report . 

Why wasnt the PM doing inspections , how was their screening process ? 

@Mary Ann Casey , sorry to hear about your situation.  I am wondering the same thing, what was the screening process like for these tenants? I wouldn't take your PM's word on pursuing legal action unless they have an in house attorney you can talk to. I would find an IN attorney to get a straight answer about pursuing legal action.

@Mary Ann Casey , I hate stories like this. I completely agree with @Matthew Paul , go after them, get a judgment and perhaps they will turn their life around at some point and pay you back. 

Second, if meth was involved or suspected, you want to make sure your house is not contaminated. Order a meth test immediately before doing any work on the property.

Third, start looking for a new PM. Many people think this is an easy thing to find, but it isn't. Start looking now. Your Pro membership allows you to post in the Marketplace that you're looking for a PM. While the damage was caused by the tenant, the PM let them into the property. 

1. Fire your property manager, in fact, fire her twice.

2. You must file for restitution. Normally I recommend cutting losses and running, but this is too much money to pass up, you need a judgment. Your PM is suggesting otherwise because they don't want to deal.

3. You need some friends with boots-on-the-ground around there to help find you a contractor. Nothing you mentioned costs 14K, maybe 5K. Your PM should have good contacts for this

4. land lording long distance requires GREAT teammates in place that have aligned goals and similar interest in mind. It's too difficult to do this with just a transactional hire, you need partners.

while restitution is remote at best..

and for the benefit of the audience what price point was this property that you bought.. was this a lower end property  say under 50k or was this a 100 to 120k house this happened to. ?

with that much damage I would also turn over to your insurance company they may take a swing at it and go after the tenants criminally I know I had one tenat do 40k of damage in a 2 year old home I owned it was a 200k home.. and insurance covered about 30k of it and they filed a criminal case against the tenant.. not sure what happened..

but its worth checking.

PM cannot be there all the time.. unless you specifically pay them to do a monthly inspection or quarterly inspection..

@Mary Ann Casey , I am so sorry to hear of this.  I have personally never, been a fan of property management companies because this raises so many questions:  What kind of screening was being done?  Did the PM company ever inspect the property? Did you personally make time to do some inspection no-matter how brief?  $14K in damages is huge and truly a huge blow to anyone's pocket.  Understandably you cannot self-manage given you live out of state, but I hear so many horror stories about PM companies and by their response here, it seems they are passing it back to you, which is just wrong.  Speaking from a personal stand, I refrain from purchasing out of state because of the very fact that I cannot manage effectively from a distance.  I self manage too, because I also enjoy it and a part of me loves control so I would much rather have that control over my properties.  I realize it will not always be possible, if I intend to scale, but I do have a plan for that.  I will follow discussion to see what all others have to offer in terms of suggestions. 

While I agree that a PM cant be there all the time and they don't have a crystal ball to predict the future and a tenants behavior, they are getting paid to MANAGE your investment....not just get the rent check. They are paid to screen tenants and monitor the property....that means going to take a look every so often. They shouldn't be getting 10% of the rent each month just to accept the check at their office.

This issue didn't happen overnight......and red flags were probably there if anyone was paying attention...but no one was.....

Another lesson for us all....you may have a PM, but YOU still have to manage the PM and make sure they stay on top of things. No one will protect your investment better than you.

Wow. Amazing thread. So sorry, Mary Ann Casey. Best wishes, and make sure you kick some butt! I am just about to take the deep~dive into investing OOS, and these stories make me sick! Everybody here is spot~on. Make triple~sure you have a superlative PM company.  And a team that runs a tight ship! Get those "Boots on the Ground"!

Best to you.

Daniel F. Harb

That is terrible.  As a landlord, I always go do a six week inspection with a new tenant. The will usually tell what kind of tenant they will be. After that maybe ever 3-6 months is good. That also allows one to look for problems not reported by the tenant. When you hire a new PM, make SURE they do inspections. I also like to load up on SD in the event of damage but state laws may curtail the amount you can demand.

My Second Post on this issue,

I would agree with most posts on this issue , Especially with Ned's Comment "Manage your Management" I really like that comment!

If the tenants are Meth heads ,well you won't see reparations, our even if they are the average tenants! You probably signed a contract with the Management Co. that removes them from liability. The Insurance Route my be your best path for Monetary relief. It sounds like your issue has touched a nerve with Many on the BP site . All "frustrated and Mad". Of course if you try to litigate the lawyers fees might outweigh what you may actually receive in damages.

With long distance rentals, this includes my rentals from 225 miles from where I live. I have had very good experiences with Management Companies. Except for one in the Layfette/Crawfordsville Area!

Good luck

So sorry to hear that.  Remember - this too shall pass.  I would move on and not spend time and money on a judgement.  Folks like that have no assets or income to go after.  Trying will just be more emotional toll.  Just move forward with repairs and and find a good PM. 

@Ned J.   you would be shocked at how quickly tenants can trash units.

also lets look at this logically.

your a local PM you own the company you have 500 units you manage.. that will entail a secretary ( usually out source placement for a fee to the real estate community maybe a combination) you have a full time maintenance guy maybe two.. but at most you have 4 employees.

now vacancies being 5% generally in any market your dealing with 25 turn overs a month.. but lets say your market is spectacular and you only deal with 10 or 15 a month.. those are going to be time intensive they require full inspection.. section 8 which takes time to coordinate if your doing those. get bids talk to owners etc etc.. On top of your regular duties.. these being SFR;'s they are spread over a wide area so you have travel time.

So how is a manager going to turn over 10 to 20 houses a month.. bring on new business.. try to retain old business... and drive by and inspect 500 houses each month for tenant wear and tear.. and you can only see 99% of whats going on if you get inside.

and of course to get inside you have to call tenant make appointment you don't just show up.

So you can see that its darn near impossible for the PM to stay on top of each and every home. regardless of compensation..

Lastly small to medium size PMs are not getting rich by any means.. its a very tough job..

If an owner wants inspections they should hire their own handy man.. give them the tenants phone number and have them replace the filters every 4 to 6 months.. and at the same time do a quick walk through look under sinks for leaks.. many times tenants won't say anything and it causes major issues.

this is the ONLY way to stay on top of these things..  Plus low end rentals exasperate these issues the OP never did respond on what level of investment she made.. did she buy a 40k hood rat or did this happen to a 120k vinyl village home.. big difference in tenant make up Generally speaking.

I agree with what @Jay Hinrichs has said in both his posts. I to have had extensive damage on rentals. I had one $180,000 rental when turned over had most windows broken, roof shingles damaged, the tenant rebuilt his harley on the living room floor, cigarette burns on the bathtub edges, used,diapers crammed down all the vents, holes kicked in the walls and doors. 

Insurance cover all but deductible.

@Jay Hinrichs  

"So you can see that its darn near impossible for the PM to stay on top of each and every home. regardless of compensation.."

This is the primary reason that using a PM adds a much higher risk to investing in income properties. Investors thinking or believing real estate is a arm chair investment are idiots. You have a primary responsibility to manage your PM and if your approach to management is to trust again you are a idiot. It is not a PMs fault when a investor poorly manages their business. 

Trust is never a wise business policy.

In this case, every case, the damage is done, change management companies and move on having learned a valuable lesson.

I'm very surprised the PM company recommended not to go after damages when its that much. I can understand not going after a few thousand but 14k sounds like something else. And I do have to agree with someone above who said that it should be 14k for those damages. Doesn't sound like its enough to constitute that much in repairs unless its high quality finishes or something.

It doesn't sound like $14,000 worth of damages to me. Do you have pictures?

@Dawn Anastasi   to you who is in the business and has all the contacts for very good prices I suspect its not.. but for out of state have to hire GC I suspect its not either.. PM is just putting out bids and that's what they are getting back plus probably a 10 to 15% mark up for the PM..

I still think insurance is worth a shot... I know I would... they won't cover normal wear and tear.. but beyond that there could be coverage.. and I would be talking to my insurance man or women to make sure in the future your covered for tenant damages in excess of wear and tear.

I was in my case other wise I would have lost 30k plus.. as it was I only lost 10k..

Well that is not great. This stuff can happen anywhere and sometimes when rentals are a dime a dozen it seems to be more common. Maybe on the next tenant add to PM you require final approval and then you can spend a couple extra bucks on deepest background check. Maybe this could have been prevented and sounds like this was not these tenants first trashing for a couple reasons. 

Option B, get out of Dodge, cut losses now with wholesaler, if you got a good enough deal when you purchased. maybe break even or small loss/profit. 

Good luck! 

@Mary Ann Casey

Hello Mary Ann,

I had almost the exact situation at a property in Florida. I knew that I would not be able to enforce any judgement and probably just spend a lot of time and money trying to take tenant to court. I did file a claim with my insurance company who did consider the degree of damage as vandalism and it was a covered peril under my insurance. I was paid for the damages. Hope this helps. 

I only have 3 SFR and I don't use a PM, so I guess I'm confused on why people would pay 10% of the rent every month to a PM then...so they cant shell out $100- 200 a month for them to collect the check? Maybe help schedule a repair a couple of times a year? Find/screen a new tenant every couple of years?

If a PM handles an eviction or notice of late rent, there are separate charges for that in addition to the monthly?

Guess I was expecting more out of 10% EVERY month whether they do something or not..... but I haven't used a PM before.....

And yes, no doubt a tenant can destroy a house in a matter of hours, but in many cases the real damage is slow accumulation of not taking care of the unit....so periodic inspections can head off a lot....

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