Tenant Causes $14k Damage to IN Rental Property

Tenant Causes $14k Damage to IN Rental Property

Lafayette, CA · Member since 2013 · 91 posts · 45 votes
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!
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Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
8y

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.

See this reply in the discussion

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  • Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    8y
    Originally posted by @Ned J.:

    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....

     Time is money, the PM is providing a service. While it may not be worth it to you, maybe the 10% cost is far less than the cost it'd take for someone else to do the same job. When I go to a restaurant (more so for fine dining) I am paying for the service to cook my food (among other stuff). I could cook a steak myself, or pay the price to have someone else do it...

    But a GOOD PM should be fielding the calls, placing the tenant, checking in the property (even though your paying it) and in theory should have competitive pricing. It can be hard for a small time landlord to find someone that'd want to be a handyman for 1 or 2 houses halfway across the country... in theory a PM company should have enough work to get better prices so that even w/ their markup it'd be "better" than what the average person could go do. Key being average person...

  • Ned J.Pro Member
    Investor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes
    8y

    Unless the PM is doing something on a regular basis to justify 10% PER MONTH....not on a "fee per service".... then its not worth it. 10% to accept a check PER MONTH, is not a valuable service..... they are being paid to MANAGE the property....and to me, that means checking on it on a regular basis....whether that be monthly, quarterly, or bi-annual

    Do you pay 10% to restaurant every month whether you go there or not?

    In some cases 10% per month is a drop in the bucket....$$ well spent.... worth every penny and more.... I'm not debating that....but if all the PM is doing is collecting the check and when you have issues when a tenant is destroying your property, is "oh well, no point in pursuing that".... you are getting screwed....

  • Lafayette, CA · Member since 2013 · 91 posts · 45 votes
    8y

    THANK YOU ALL SO MUCH FOR YOUR INSIGHTFUL RESPONSES!!!  YOU'RE AWESOME!  YOU ROCK!

    My apologies for my delayed reply.  Each of you had something very valuable to offer in your comments, suggestions, and questions!

    @Chuck Low @Ned J.@Robert Lubell @Jennifer Slaughter@Mindy Jensen @Alexander Felice @Jay Hinrichs @Anna M. @Daniel F. Harb @John Thedford @Terrell Garren @Account Closed @Dawn Anastasi @Thomas S. @Steven J. @Matt R. @Isabel Peraza @Aaron Cullen @Matt K.  

    Get ready, this post is long! 

    I want to cover the additional information and pictures you requested.

    LOCATION & PROPERTY INFO:

    The location of the property is Indianapolis, IN 46205. It was purchased in 2015 for $62,000 from a turnkey company. Zillow says it's worth the same today. The house is a single family residential (SFR) home, built in 1952, with 4 beds, 2 baths and 1,372 sq ft. I flew out to see the property before buying it. According to Trulia, it's in a "Low" crime area but borders a "Moderate" crime area.

    My husband and I own a total of 8 SFR rentals in Indianapolis – all around the same price, all purchased in 2015 through the same turnkey company, all personally seen/visited by me before purchase.

    PROPERTY MANAGEMENT:

    Since we live in the San Francisco Bay Area of California, a PM company manages the day-to-day business of the 8 rentals, and I receive monthly statements that I review regularly. I use texts, emails, and phone calls with the PM company to address issues, status updates, costs, and timelines mostly based on what I see in the monthly statements (invoices, non-payments or late-payments). They’ve also been pretty good at contacting me if something comes up during the month that I should know about. 

    Currently, 5 of the rentals are filled, and payments are on time from the tenants. 3 of the homes just underwent evictions for non-payment. In total, this is the 4th tenant they’ve placed in our rentals in the past 16 months who had to be evicted. I’m not sure if the evictions are the result of bad tenant screening or the result of these homes being near crime areas, or both. The PM company says they run credit checks, background checks, employment checks, and meet with and interview the tenants in person before signing them. I’ll have to check to see if they screen for past evictions.

    The PM company has said they do drive-by inspections. I thought they were also doing in-home inspections, but it sounds like that’s not happening. So…a change is needed here. I really like your suggestions around having the PM company or my own handyman perform regular in-home inspections via changing out filters, checking smoke detectors, etc., and get back to me with their findings. It will cost more to manage the properties this way, but I think it will be a good investment spend. I even like the 6 week inspection followed by a 3 month inspection suggestion when they first move in.

    Our current PM company is the only boots-on-the-ground we have. Please contact me if you know of someone in Indianapolis you can recommend to me as a new or additional boots-on-the-ground for me to consider (private message me with any specific names of handyman, contractors, or PM companies).

    DAMAGES RECOVERY:

    I plan to follow up with your suggestion on contacting my insurance company – I hadn’t previously considered that - great suggestion! Does anyone know if my insurance premiums will go up as a result? If so, by how much?

    The PM company is not planning to pursue further action to recover lost rent or property damages. It will be up to me to do that.

    Lost rent is $4,675 (5.5 months rent at $850 per month).  Non-payment went on way too long and was further elongated by a couple of court date moves. I have a contractor’s estimate for $14,400 to fix the place up again.. I’ve asked the PM company to get 2 more bids. The security deposit of $850 is being applied to the fixes.

    I was thinking of filing a police report on the property damages. Not sure about hiring an attorney, since costs can add way up with that approach and it’s not likely I’ll ever see a dime from it. More thoughts on this? Any recommendations about who to see or talk to about this?

    PHOTOS:

    I’ll upload photos via my next post.

  • Lafayette, CA · Member since 2013 · 91 posts · 45 votes
    8y

    PHOTOS attached.

  • Lafayette, CA · Member since 2013 · 91 posts · 45 votes
    8y

    I studied each one and made the following notes. I will be sending these notes back to the PM company today and meeting with him via phone call early this week to review them.

    DEBRIS REMOVAL AND DISPOSAL:

    --> Remove all the debris from the interior and the exterior of the house.
    • Estimated cost: $600 (that's what the invoice in the monthly statement says)

    FLOORS:

    --> Living Rooms and Bedrooms - The carpet has been removed (I don’t have any pictures of the damaged carpet), so we need to recarpet. We can recarpet over the flooring that's there now. Pick a neutral medium-toned carpet that doesn't show the soiling too much and can be steam-cleaned and shampooed with the next turnover. Put the carpet right up to the front door rather than replacing the linoleum that's there now.

  • Estimated cost: $2,500?
  • -->Kitchen Floors - Not sure / don’t have pics.

    -->Bathroom Floors - They appear to be okay.

    INTERIOR WALLS, TRIM, AND CEILINGS:

    --> Wall and ceiling damage – looks like these can be fixed with scraping of any peeling paint and patching the holes and smoothing out or retexturing the patched work.
    • Estimated cost: $500?

    (My reasoning - I've done this work myself, DIY, to large and small holes in the wall, and it's easy to do, doesn’t take that long, and the materials are cheap.)

    --> Missing Baseboard and Door Trim - Replace.

  • Estimated cost: $400?
  • --> Painting - Once the wall damage is fixed and the trim is all there, give the interior walls a nice fresh coat of paint, all one light/bright/neutral color. Paint the ceilings, trim, and doors white.
    • Estimated cost: $1,000?
    (FYI - I recently had the interior walls of a 950 sf home, it's kitchen cabinets, and a 7' high 175' linear fence painted for a combined total of $1,100 in California, and they did a great job.) 

    LIGHTS:

    -->I can see some ceiling lights need new light bulbs and new light coverings (not a whole new light fixture unless absolutely necessary).
    • Estimated cost: $100?

    CABINETS:

    --> All cabinets, in the bathroom and kitchen, can be sanded and painted black.
    • Estimated cost: $750?

    WINDOWS:

    --> I can't tell by the pictures if the windows need to be "replaced" as a result of being completely broken and no longer operable, or if the window glass is broken and a replacement pane is all that's needed.
    • Estimated cost if glass panes only are needed: $______?
    • Estimated cost if 4 window replacements are needed: $800?

    --> Broken blinds need to be replaced, 4 of them.
    • Estimated cost: $200?

    DOORS:

    --> Front Door - I can't tell by the photo if the door is broken or if the window in it needs to be replaced and the door rehung and repainted. Assuming it needs to be replaced.
    • Estimated cost: $400?

    --> Interior Doors - Looks like a 2-3 are broken and need to be replaced.
    • Estimated cost: $300?

    --> Closet Doors - Can't tell if they're damaged or not. They don't look damaged from the photos, so I'm assuming they can be rehung.
    • Estimated Cost: $200?

    BATHTUBS, SINKS, AND FIXTURES:

    --> Tubs & Surrounds and Sinks - These need a deep cleaning. "Scrubbing Bubbles" is a common cleaning solution that works on the level of dirt and grime I see in the pictures. Whatever doesn't clean by using Scrubbing Bubbles, a spray of bleach will solve. (There's no need to reseal the tubs and surrounds unless they are leaking due to cracks.)
    • Estimated cost: See interior cleaning.

    --> Tub and Sunk Fixtures - no need to replace these unless they are broken and no longer operable. Clean them. Recaulk them if needed.
    • Estimated cost for recaulking: $25?

    --> Missing medicine cabinet/mirror - replace.

    Estimated cost: $200

    FINAL INTERIOR CLEANING:

    --> Clean bathrooms (Scrubbing Bubbles and Bleach should be part of this cleaning), sweep and mop floors, vacuum carpets, clean window blinds, damp wipe all molding to remove built-up dust, clean refrigerator and stove and any other appliances. Did I miss anything?
    • Estimated cost - $300?

    EXTERIOR YARDWORK:

    --> Mow and blow to tidy it up (after cleaning out and throwing away all the debris).
    • Estimated cost: $100? 

  • ARRT, RT(R) / Rental Property Investor · Newport Beach, CA · Member since 2017 · 360 posts · 242 votes
    8y

    Hello @Mary Ann Casey,

    Again, I am deeply saddened for you, this is such a heartbreaking story. I know I am still new here, but "4 tenants in the past 16 months"!!? They ARE doing something wrong! I know no PM company is perfect, but there is ZERO excuse for going through a new (TERRIBLE!) tenant every 4 months! This company IS taking advantage of you, and I am not an attorney, but is there not legal action you could take?

    Seriously, any PM company you use, triple cross check, and talk to as many people and companies you can before using them. I am not sure of the rules regarding this, but should we not as BiggerPocket members and investors KNOW who this company is, so as to AVOID this from happening to us? This should be shouted from the rooftops. There is absolutely no excuse for this to have happened.

    Mary Ann, best wishes to you, thank you for keeping us posted.

    Daniel F. Harb, ARRT,RT(R)

  • Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    8y
    Originally posted by @Ned J.:

    Unless the PM is doing something on a regular basis to justify 10% PER MONTH....not on a "fee per service".... then its not worth it. 10% to accept a check PER MONTH, is not a valuable service..... they are being paid to MANAGE the property....and to me, that means checking on it on a regular basis....whether that be monthly, quarterly, or bi-annual

    Do you pay 10% to restaurant every month whether you go there or not?

    In some cases 10% per month is a drop in the bucket....$$ well spent.... worth every penny and more.... I'm not debating that....but if all the PM is doing is collecting the check and when you have issues when a tenant is destroying your property, is "oh well, no point in pursuing that".... you are getting screwed....

     They are forward facing and deal w/ the tenant directly. They are the buffer between you and the tenant, when something breaks they call the PM, not the landlord. Now, if something doesn't break it's not fair to assume they don't get paid because they "didn't do anything".  The scope of work should be clearly defined as to what they're doing and when.... in the contract. On the flip side, say the tenant goes crazy and calls them non stop... you're not charged extra for that. You're paying a flat rate for service no matter how much or little you use it.


    But you are absolutely right that a PM not managing the property and allowing it to get this damaged has failed in there job... 

  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    8y

    @Mary Ann Casey This is awful. This isn't just a turn over. This is almost a full rehab. Unfortunately,  your PM is probably right. You can get a judgement but if they don't have any money, you'll never get anything out of them. If they're working, which they should be otherwise your PM never should have rented from them, you can attach their wages. Out of curiosity, where in Indianapolis is the property and who is the PM? You can DM if you want.

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y

    @Daniel F. Harb  this is far more common than one would know.. 60k in Indy is right on the cusp of being hoody and not.. and since she bought 8 properties this is a perfect body of work as an example.

    And of course she could never sell them for what she paid for them.. so this investment is lost .. she can either cut and run now or try to salvage and think that changing PM will solve the problem but NO PM can be on scene 24/7 and its the luck of the draw simply stated.

    4 have worked 3 are trouble one is a disaster.. when you buy a home from someone in the mid west and I don't care where or who. the house prior to full rehab 90% of the time is going to look just like this home.. its failed landlord syndrome and the person selling it or losing it.. simply does not have the wherewithal to pay to rehab.. it...  so they walk or let the bank take it.

    Issue becomes you buy one home and your on the bottom end of the 50/50 rule in these assets that are this price range and now your soured on rentals for probably the rest of your life.

    there are pockets in INdy I really like.. but cash flow is smaller but risk of this happening is quite a bit less/ plus the areas are regentrifying IE homeowners are moving in.. there are little to no homeowners who move into those areas.

    this house as it sits as this investor has shared with us is worth in current configuration or state of disrepair about 15 to 25k max.. ... and that is how the cycle repeats in these areas.. if this investor did not have the means to fix this.. some wholesaler would get ahold of it. put their fee in sell to a turn key or rehabber who then sells to an investor out of state and the cycle again repeats.

    Again this is why I preach at these price points LOCALS are the only folks these are appropriate for investors simply take too much risk to try to make 10% return .. and if you borrowed money its even worse as you have credit risks. and precluded from using your credit on better investments.

    And I say all this simply because I know your searching and trying to understand and these are real live cases.. for everyone who has the Strength to lay this out here in a public forum like this investor did you have 10 others that would be too embarrassed to admit they have a troubled investment and they just go dark or go broke or both.

  • Member since 2016 · 13k+ posts · 12k+ votes
    8y

    This should be a warning to all landlords. My policy in screening is always to include the ability to collect. I only accept individuals as tenants that have something to lose if they do damage or stop paying rent. I insure that the tenant is vested in his employment and not simply capable of drifting from job to job. No one on welfare is ever accepted since our government has declared them to be a protected species.

    When you screen make sure that taking a tenant to small claims court will be collectable either through garnishing of wages or crippling their credit to the epoint that they can no longer function and will choose to pay to clear their record.

    Screen applicants not only for their ability to pay but also your ability to collect.

    If your PM company has had 4 evictions in 16 months they are not screening the applicants.

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y

    @Thomas S.  while great points and doable in CA... you simply do not know the tenant demographic or capacity in these areas of the US>.  90% of these folks don't even have checking accounts.. LOL

    I hear ya.. but not reality unless you move into 1200 to 1500 or better rents or move into completely other areas of the country.. Any 60k basically inner city MId west city will be exactly like this with the exact demographic and payment ability.. which there is simply no way to collect.. even if you got a garnishment they just quit their job.. LOL

    and ones with great jobs and ability to collect from WILL NOT LIVE in these areas.

    @Daniel F. Harb @Mike D'Arrigo@Matt R.  this is a Morris house post rehab  :)  maybe not quite as bad but not much better either  .... not to make light of our investor predicament here.. but hopefully she gets some idea what to do going forward.  I know I have lost millions on these exact same assets I am not saying I am smarter or immune because I was not.. its the whole reason I had to go back to work and why I am so adamate about it..

  • Investor · Northern, VA · Member since 2016 · 1k+ posts · 904 votes
    8y

    The PM (terrible PM BTW) is probably only looking for himself/herself. They are probably $hitting their pants right now, and are afraid that if you go to court they could be possibly named in the lawsuit for dereliction of duties. 

    Was there any clause in your PM agreement that they will do biannual (typical) inspections of the house?  

    Who in the right might would advise against going to the court unless they had something to gain from it? 

  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    8y

    @Mary Ann Casey Parts of the 46205 zip code are improving but for the most part, it's a rough area. With the exception of some gentrifying pockets, Center township is going to be problematic. The $62K price tells me everything I need to know. You can get in to a 3Br 1Ba in a C- are out in the suburbs but a 4Br 2Ba in a decent area is going to have a market value of around $80K in better areas. I'm not sure a different PM is going to be able to do any better. I always say, you can't make good tenants live in bad areas. This kind of stuff just goes with the territory which is why we don't do anything in these areas. 

  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    8y
    Originally posted by :@Jay Hinrichs

    @Mike D'Arrigo@Matt R.  this is a Morris house post rehab  :)  maybe not quite as bad but not much better either  ....

    Jay--why does this not surprise me? 

  • ARRT, RT(R) / Rental Property Investor · Newport Beach, CA · Member since 2017 · 360 posts · 242 votes
    8y

    Thank you, @Jay Hinrichs, for keeping me (us!) on that "Straight and Narrow". I am "almost" persuaded to buy a $40~$45~$50K property. I think "If" I find an amazing PM, "If" it is different for me, "if, if, if"...

    Thank you, Mr. Jay Hinrichs, for your wisdom and expertise.  :)

    Daniel F. Harb 

  • ARRT, RT(R) / Rental Property Investor · Newport Beach, CA · Member since 2017 · 360 posts · 242 votes
    8y

    Thank you, @Mike D'Arrigo, for your posts, warnings, and expertise. :)

    Best to you!

    ~Daniel F. Harb

  • Member since 2016 · 13k+ posts · 12k+ votes
    8y

    @Jay Hinrichs

    "do not know the tenant demographic"

    I understand and as such I only hold B class properties. I would not rent to anyone without a checking account. My screening will still eliminate many applicants that would otherwise pass screening income and credit wise for other landlords. I do not rent to anyone that would simply quit a long term employer or one that has financial liabilities they can easily walk away from.  A tenant wishing to escape me at small claims court would be forced to give up a great deal in their life that they have worked hard to achieve. Obviously they are also the type less likely to default or cause damage although I have taken a few to court to collect.

    It really boils down to risk and every landlord should understand their risks going in and accept the possible outcome. When you invest in tenants that you know you can not collect from you must do routine inspections more often and have paper ready to serve when rent is not paid by midnight.

    I believe that in this case the landlord was taken advantage of by their PM in the fact that the PM did not inform them of the risks they were taking in dealing with the areas tenant pool. A property that can sustain 14K in damages was probably too nice for the quality of tenant or the PM did not screen at all.

    Clearly C class rentals are a much different world. If I had chosen to invest in C class properties I would then be accepting of certain risks and operate accordingly. To put it bluntly I would be a slumlord and rake off the profits with as little expense as possible. Patch the walls, paint and bring in the next half decent tenant with a heart beat.  

  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    8y
    Originally posted by @Daniel F. Harb:

    Hello @Mary Ann Casey,

    Again, I am deeply saddened for you, this is such a heartbreaking story. I know I am still new here, but "4 tenants in the past 16 months"!!? They ARE doing something wrong! I know no PM company is perfect, but there is ZERO excuse for going through a new (TERRIBLE!) tenant every 4 months! This company IS taking advantage of you, and I am not an attorney, but is there not legal action you could take?

    Seriously, any PM company you use, triple cross check, and talk to as many people and companies you can before using them. I am not sure of the rules regarding this, but should we not as BiggerPocket members and investors KNOW who this company is, so as to AVOID this from happening to us? This should be shouted from the rooftops. There is absolutely no excuse for this to have happened.

    Mary Ann, best wishes to you, thank you for keeping us posted.

    Daniel F. Harb, ARRT,RT(R)

    @Daniel F. Harb Not to try to defend the PM because there have been plenty of issues with them but this is more of a problem with the asset class and location. I know this area and this is typical of what you get. As I always say, no matter how good a PM is, they can't get good tenants to live in bad areas. 

  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    8y
    Originally posted by @Daniel F. Harb:

    Thank you, @Jay Hinrichs, for keeping me (us!) on that "Straight and Narrow". I am "almost" persuaded to buy a $40~$45~$50K property. I think "If" I find an amazing PM, "If" it is different for me, "if, if, if"...

    Thank you, Mr. Jay Hinrichs, for your wisdom and expertise.  :)

    Daniel F. Harb 

     @Daniel F. Harb That's exactly the problem---"if i just do this or that it will be better" Everyone thinks that it will be different for them. 

  • ARRT, RT(R) / Rental Property Investor · Newport Beach, CA · Member since 2017 · 360 posts · 242 votes
    8y
    Thank you, Mike D'Arrigo. That is precisely what I need. The real & unvarnished truth. Mr. Jay Hinrichs gave clarity to me the other day when he said to drive to LA and look at the properties in the worst part of town. I know I wouldn't get solid tenants to live in those properties & surely it would be a nightmare and a financial lampooning. Seriously appreciate you, Mike, and the expert information by Jay Hinrichs and many other amazing RE Wizards. You are saving us many thousands and tens of thousands of dollars! Thank you! ~Daniel F. Harb
  • Investor · Crystal, MN · Member since 2013 · 486 posts · 277 votes
    8y

    @Mary Ann Casey

    Thanks for providing photos.  After looking them over, it appears to me that there is some deferred maintenance in these photos.  A couple more estimates should be sought, but I cannot believe the condition of the walls that are not broken, the lights above the bathroom vanity hole, the dirt on the doors, etc.  There's a lot of dirt of the doors, walls, peeling or missing paint trip on the door jambs.  All signs of stuff not being maintained.

    In these cases, we all want to blame the property management company, but who watches them?  There are signs of a missing process.  That PM company should have been showing you before and after condition reports, so you could verify they were taking care of the place, and you need to hold them accountable for these processes.   This is our responsibility, everyone on this thread.  We have to make sure these properties are in good condition for renting out.   

    Believe me, I hired a PM company, and found their billings to be outrageous and constant.  I fired them two months in, and went back to managing my own.  I have a team in the Twin Cities, and my best team is in Southern Minnesota.  I go there, and meet people, and learn who does the best work.  You've got to go to where your properties are, and find the right team, even if that means spending a month there.  

    Your post indicating you had three properties in various stages of eviction is troubling.  This is a systemic thing...you need to find a team that your can trust, or get out of that market, and find a better one.  

  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    8y

    It's tough to read stories like this. Hopefully insurance will respond to some of this loss.

    The entire OOS investment phenomenon is just odd.

    Gimer Law516 Reviews
  • Rental Property Investor · San Diego, CA · Member since 2008 · 89 posts · 65 votes
    8y

    Not sure how Jay finds the time in the day to share his experiences, but I appreciate all of the knowledge gained from his insights.  He helped me in a situation similar to this, but it was a lower class property in PA and a note investment program gone bad.  I had to put $20k just to get it rent ready and pay back taxes.  I just hate to see other out of state investors getting the wrong end of the stick.  Like someone in another post mentioned, "out of state investing is where CA equity goes to die." 

    If I were you and had enough money to file a judgment, then I would do it just to make the people who did this become accountable for their actions.  I would have collections tie this to their credit report until resolved.  You may never collect, but if you let them slide, then it will be the responsibility of the new landlord that decides to screen them.  It is a benefit to the whole community to keep these types of people out of our homes.  Hope insurance or something comes through for you and thanks for sharing your experience.   

  • Shawnee Mission, KS · Member since 2016 · 719 posts · 313 votes
    8y

    Looks like a classic example of bad area with a bad PM.

    I could fix your issue for a lot less then you figure, if I see it all.

    PM’s are a dime a dozen now, many are just leeches taking and not giving.

    Long distance is lots of risk, lots of BIG fish on here do it, I am sure make good returns.

    I am in a booming burb of a large city I have no need to leave it.

    I micro managing all my tenants they get top notch service.

    I also expect the love back the other way, rent in the mail box 9 am first of the month.

    With a big portfolio that would not be possible or really smart.

    As far as doing insurance claims, I would step back from that and think do you want to do a claim like this? I may not because of my ability to fix a lot cheaper than most. Once you do claim you have a black mark with the insurance. I do claims for BIG losses not sure of this meets that bar.

  • Ned J.Pro Member
    Investor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes
    8y

    I think the bottom line is that this was a risky investment to begin with..... based on the feedback about the area from the others, its a bad area to start....and the low purchase price fits that.....and then you have a PM that is just not managing these types of properties very well.

    If you re going to buy these types of properties, you had better have a bad a@@ PM that is very versed in dealing with this level of property. They better be great at screening to lesson the risk as much as possible (but as stated, the tenant pool for these is going to be bad to start so your best hope is to at least get the "best of the worst")...and be aggressive with monitoring these properties...... they don't manage themselves like a B or A neighborhood property.

    So.... you took a risk and the risk didn't pay off...it happens to the best of them.

    One note..... if you do rehab this place...... NO CARPET....or at best cheap stuff that you budget to replace every 3-4 years.....

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