Tenant Causes $14k Damage to IN Rental Property

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Tenant Causes $14k Damage to IN Rental Property

Mary Ann Casey
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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Alexander FelicePro Member
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.

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  • Diane G.
    CA · Member since 2016 · 1k+ posts · 1k+ votes
    8y

    @Account Closed - care to give us one (one only) address for your portfolio of 8? 

    1Reply
  • Mary Ann Casey
    OP
    Lafayette, CA · Member since 2013 · 91 posts · 45 votes
    8y

    Wow, I didn't expect this much help and advice on this topic from so many people! Thank you soooo much!

    @Jay Hinrichs @Steven Gesis @Daniel F. Harb @Tom Gimer @Ryan Mullin @Dominic R. @Diane G. @Ned J. @Matt K. @Mike D'Arrigo @Thomas S. @David Moore @Aron D. @Billy Smith

    @JD Martin @Account Closed

    2Reply
  • Matt K.
    Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    8y

    Talk to your insurance for sure, depending on your policy you might even be able to recover the lost rents too. Might get bonus points and the insurance will go after the renters in court to recover the costs... leaving you to focus on getting it re rented.

    4Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y

    Mary Ann talk to FS homes  the Mullins  are their name... husband and wife team I have known them for years good people honest and will give you the straight story.. @Ryan Mullin

    After that do as @Matt K.  suggests and turn this over to your insurance company as many have said and as I have had personally happen to me.. you will subrigate your claim to them they will handle the police and all that you DONT need to blow more money on legal.. and I got lost rent as well.

    good luck with it..

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

    @Mary Ann Casey, I don't have rentals with this company yet, but I have been researching "Ethosity" property management company owned by Mr. Sterling Davis. I've been speaking with him and his wife Melissa for the past month.

    Seems excellent and when I buy a property in Indy, I'm going with Ethosity. They seem full of integrity & honest.

    Best to you and your husband. 

    Daniel F. Harb

    2Reply
  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    8y

    Definitely turn it in to insurance. People overestimate how much their rates will change after a claim. I've had 2 homeowner claims on my house and several on my car insurance, including a huge one when my daughter hit another driver, and my insurance has not been massively affected over the years. What you think of as a big claim is chicken feed to an insurer. The biggest risk to an insurer is liability, especially for injuries. Everything else is hardly material to them.

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  • Brian M.
    Phoenix, AZ · Member since 2016 · 61 posts · 105 votes
    8y

    @Mary Ann Casey

    Hi Mary Ann - Can you give us a bit more info. about how you acquired these properties?  Did you go through a turn-key provider?  If so, which one? 

    1Reply
  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    8y

    @Account Closed pointed out, this zip code has one of the wealthiest neighborhoods in the city but this property is not in one of those areas. I can't stress enough how important it is to know the area and stay away from these low end assets. I have yet to see them pay off for the hands off, out of state investor.

    3Reply
  • Steven Gesis
    Investor · Miami, FL · Member since 2015 · 1k+ posts · 390 votes
    8y
    Originally posted by @Mary Ann Casey:

    Wow, I didn't expect this much help and advice on this topic from so many people! Thank you soooo much!

    @Jay Hinrichs @Steven Gesis @Daniel F. Harb @Tom Gimer @Ryan Mullin @Dominic R. @Diane G. @Ned J. @Matt K. @Mike D'Arrigo @Thomas S. @David Moore @Aron D. @Billy Smith

    @JD Martin @Account Closed

     1) Cannot help you

    2) How much is your deductible? Have you had previous claims? Do you expect to do this under the vandalism rider?  Might be quicker and easier to just pay out of pocket, get it back to market and producing income again to recoup some of the losses

    3) Cannot help you with attorney - but yes, you should do all of those things - over the years we have had enough of these cases and sent them to collections that now it is another monthly income stream

    4) Yes, it will not hurt, then you will have it depending on the avenue you elect to pursue to stabilize it

    2Reply
  • JingJing He
    Hayward, CA · Member since 2017 · 91 posts · 40 votes
    8y
    In the future, ask to have them forward all tenant applications credit reports and such to you. If you have been in eviction process and have been for a while, you know your trash is getting trash to some degree. So sorry about the mess. However, at least finish with the eviction to get this on their record. Not sure if you can file a police report as vandalism.
    1Reply
  • JingJing He
    Hayward, CA · Member since 2017 · 91 posts · 40 votes
    8y
    And I have done insurance claims and you don’t get too much increases for just this one incident. When I reported stollen copper pipes(property in a not so great neighborhood with lots of foreclosures during market crash) and this actually happened twice with in a year, I filed insurance both times and got reimburse for the replacement. I actually didn’t see much increase on my insurance, maybe $50? It was so small i didn’t think much about it. If it’s a repeated occurrence they may choose not to insure.
    1Reply
  • Steven Gesis
    Investor · Miami, FL · Member since 2015 · 1k+ posts · 390 votes
    8y
    Originally posted by @Mike D'Arrigo:

    @Account Closed pointed out, this zip code has one of the wealthiest neighborhoods in the city but this property is not in one of those areas. I can't stress enough how important it is to know the area and stay away from these low end assets. I have yet to see them pay off for the hands off, out of state investor.

    Mike- yes, yes and yes!!!!

    A good simple guide to follow: 

    A Simple Guide for Buying Out of State Turnkey Investment Property
    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y
    Originally posted by @Steven Gesis:
    Originally posted by @Mary Ann Casey:

    Wow, I didn't expect this much help and advice on this topic from so many people! Thank you soooo much!

    @Jay Hinrichs @Steven Gesis @Daniel F. Harb @Tom Gimer @Ryan Mullin @Dominic R. @Diane G. @Ned J. @Matt K. @Mike D'Arrigo @Thomas S. @David Moore @Aron D. @Billy Smith

    @JD Martin @Account Closed @Maugno M. 

    It has been difficult to read/hear some of your input. The truth bites, but I'm so grateful to all of you for being candid with your expertise and experience. I have taken detailed notes on everyone's input and suggestions, and I plan to put them to good use.

    My husband and I have made a decision: We own this property free and clear (no mortgage on it), and we are going to keep it, fix it up again, and get it rented out. Hopefully, we'll do a better job at managing the risks going forward.

    That said, here are our questions:

    1. Can anyone please recommend a good Property Management company in Indianapolis?
    We would be very interested in a PM company that has a successful track record of managing lower class neighborhood rentals. 

    2. Your vote - Should we file a claim with our insurance company, or should we pay for all the damages ourselves?
    We can pay for the fixes ourselves, but we would welcome payment help for the damages beyond wear and tear (it's why we bought insurance). We're worried that, if we file an insurance claim, we may get a black-mark with insurers and they'll increase our premiums, or find an excuse to cancel the policy, or make it difficult to find another insurer, etc.

    3. Any recommendations for a good attorney in Indianapolis who deals with issues like these?
    We may go after rent losses as well as losses related to property damage.

    4. Should we file a police report?

    @JD Martin

     1) Cannot help you

    2) How much is your deductible? Have you had previous claims? Do you expect to do this under the vandalism rider?  Might be quicker and easier to just pay out of pocket, get it back to market and producing income again to recoup some of the losses

    3) Cannot help you with attorney - but yes, you should do all of those things - over the years we have had enough of these cases and sent them to collections that now it is another monthly income stream

    4) Yes, it will not hurt, then you will have it depending on the avenue you elect to pursue to stabilize it

     Steven while in theory for someone of your caliber IE managing hundreds if not 1000 plus doors I get the take the B@@@stds to court.. but a one of person in CA... seems like that would be a waste of their time and energy and the likely hood of collecting is pretty slim..

    I think If I was her I would tune up my insurance that is where I would be spending my energy.. who knows how long the house has been vacant and unless ( as you know) you have a vacant home RYDER if that house now catchs fire and burns to the ground its uninsured and it will be a total loss.. ( I know it happened to me  I speak of personal first hand experience ).. Insurance is something most people just don't put the time and effort into understanding and getting appropriate protection in these areas..  Then further more.. to get appropriate insurance the rates are going to be a tad higher.. so the proforma's most put out there have bear bones insurance coverage that needs in IMHO to be beefed up.. especially someone like this that owns it free and clear.

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  • Account Closed
    Realtor · Detroit, MI · Member since 2015 · 211 posts · 104 votes
    8y
    Mary Ann Casey Unfortunately I have seen this happen too many times. 14K is a lot for damages but you’d be surprised how some people can tear up a house in such a short time. The property Manager is right in the sense it would be a waste of time trying to reclaim any damages. Also sometimes these people manage way too many properties that they cannot give you personalized service. At this point you should cut your losses and move on. I’d be interested to speak with you further as I am looking to expand in that market.
    1Reply
  • Steven Gesis
    Investor · Miami, FL · Member since 2015 · 1k+ posts · 390 votes
    8y
    Originally posted by @Jay Hinrichs:
    Originally posted by @Steven Gesis:
    Originally posted by @Mary Ann Casey:

    Wow, I didn't expect this much help and advice on this topic from so many people! Thank you soooo much!

    @Jay Hinrichs @Steven Gesis @Daniel F. Harb @Tom Gimer @Ryan Mullin @Dominic R. @Diane G. @Ned J. @Matt K. @Mike D'Arrigo @Thomas S. @David Moore @Aron D. @Billy Smith

    @JD Martin @Account Closed @Maugno M. 

    It has been difficult to read/hear some of your input. The truth bites, but I'm so grateful to all of you for being candid with your expertise and experience. I have taken detailed notes on everyone's input and suggestions, and I plan to put them to good use.

    My husband and I have made a decision: We own this property free and clear (no mortgage on it), and we are going to keep it, fix it up again, and get it rented out. Hopefully, we'll do a better job at managing the risks going forward.

    That said, here are our questions:

    1. Can anyone please recommend a good Property Management company in Indianapolis?
    We would be very interested in a PM company that has a successful track record of managing lower class neighborhood rentals. 

    2. Your vote - Should we file a claim with our insurance company, or should we pay for all the damages ourselves?
    We can pay for the fixes ourselves, but we would welcome payment help for the damages beyond wear and tear (it's why we bought insurance). We're worried that, if we file an insurance claim, we may get a black-mark with insurers and they'll increase our premiums, or find an excuse to cancel the policy, or make it difficult to find another insurer, etc.

    3. Any recommendations for a good attorney in Indianapolis who deals with issues like these?
    We may go after rent losses as well as losses related to property damage.

    4. Should we file a police report?

    @JD Martin

     1) Cannot help you

    2) How much is your deductible? Have you had previous claims? Do you expect to do this under the vandalism rider?  Might be quicker and easier to just pay out of pocket, get it back to market and producing income again to recoup some of the losses

    3) Cannot help you with attorney - but yes, you should do all of those things - over the years we have had enough of these cases and sent them to collections that now it is another monthly income stream

    4) Yes, it will not hurt, then you will have it depending on the avenue you elect to pursue to stabilize it

     Steven while in theory for someone of your caliber IE managing hundreds if not 1000 plus doors I get the take the B@@@stds to court.. but a one of person in CA... seems like that would be a waste of their time and energy and the likely hood of collecting is pretty slim..

    I think If I was her I would tune up my insurance that is where I would be spending my energy.. who knows how long the house has been vacant and unless ( as you know) you have a vacant home RYDER if that house now catchs fire and burns to the ground its uninsured and it will be a total loss.. ( I know it happened to me  I speak of personal first hand experience ).. Insurance is something most people just don't put the time and effort into understanding and getting appropriate protection in these areas..  Then further more.. to get appropriate insurance the rates are going to be a tad higher.. so the proforma's most put out there have bear bones insurance coverage that needs in IMHO to be beefed up.. especially someone like this that owns it free and clear.

     Agreed, you correct, if it is a one here and there situation, hit the carrier up and have them carry the weight. I to always fear to make that call to the carrier, but they are that for that reason. Insurance has it figured it out - they scare you about everything and then they scare you about using them, that your premium might go up and you may get kicked out - wow, they are so smart!

    :)

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y

    @Steven Gesis  I can't speak for others but we usually have a claim or two a year as we will have 200 plus properties on our insurance at anyone time.. so if its not hail in the deep south.. its tenant or some other issue.. or car running into it.. or who knows.

    but I make a claim on any event I think they will cover and if they cover it I pay the deduct.. ( we have high deduct because of our sheer volume of properties) but my rates have never changed..

    I think many fear this as they relate it to auto insurance.. IE your in a wreck turn it in and your rate goes up... this is what insurance is for.. makes no sense to have it then when you need it your afraid to use it.

    that's my take on it..

    insurance is a racket in the home building side.. we have a 1 million dollar 10 year policy that cost me up front 30k.. and this is just for INCASE someone sues me in the next 10 years.. it will pay my legal bills.. LOL

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  • Mary Ann Casey
    OP
    Lafayette, CA · Member since 2013 · 91 posts · 45 votes
    8y

     @Jay Hinrichs @Daniel F. Harb   @JingJing He @Tom Gimer  @Chuck Low  @Account Closed 

    Thank you for your continued advice! I'm putting it all to good use.Here's an update...not good...

    INSURANCE:

    I took your suggestions and filed an insurance claim this week. It was denied. Turns out, there's a clause in the fine print that says vandalism by the tenant is not covered. What the...!!! Can't believe I didn't catch this when I read the policy!  So, now I'm looking for new rental property insurance for the 8 Indianapolis rentals. 

    Any rental insurance company recommendations? Any key coverage questions I should ask?

    TENANT SCREENING:

    I talked to the PM. He said he checks the following when screening tenants: Credit, sex preditor, criminal background, rental background, vehicle background, judgements, pay stubs, and verifies rent from the prior place. Then he went on to say they don’t have a minimum credit score standard since most tenants that apply in the lower-cost areaa have bad credit. So, their priority in selecting a tenant is a steady income, time in job, and rental history.

    What do you think about this? 

    PROPERTY WALKTHROUGHS:

    The PM said they have done drive-by's and never noticed anything unusual. He further said they don't normally do interior walkthroughs unless there's a reason or request for it. (I went back and checked our contract—he’s right, it says they have the right of entry & inspections…upon their discretion. Yet again, my fault for not catching this in the contract.)  So, I shared this with him: Do a walkthrough (a) 2 months after move-in, (b) 4 months after that/a 6-month inspection, then (c) every 6 months after that. While there, check for leaks, damages, maintenance needs, change filters, take pictures and send them to me, and notify me of any issues. The PM said he can arrange for that to be done, but he will need to charge for that service.

    Your thoughts?

    P.S. I also think before and after photos and property-conditions checklists should be done.  I thought this was standard…guess not.

    @Jay Hinricks I will be reaching out to the PM company you recommended.

    1Reply
  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    8y
    Originally posted by @Mary Ann Casey:

    I talked to the PM. He said he checks the following when screening tenants: Credit, sex preditor, criminal background, rental background, vehicle background, judgements, pay stubs, and verifies rent from the prior place. Then he went on to say they don’t have a minimum credit score standard since most tenants that apply in the lower-cost areaa have bad credit. So, their priority in selecting a tenant is a steady income, time in job, and rental history.

    What do you think about this? 

    PROPERTY WALKTHROUGHS:

    The PM said they have done drive-by's and never noticed anything unusual. He further said they don't normally do interior walkthroughs unless there's a reason or request for it. (I went back and checked our contract—he’s right, it says they have the right of entry & inspections…upon their discretion. Yet again, my fault for not catching this in the contract.)  So, I shared this with him: Do a walkthrough (a) 2 months after move-in, (b) 4 months after that/a 6-month inspection, then (c) every 6 months after that. While there, check for leaks, damages, maintenance needs, change filters, take pictures and send them to me, and notify me of any issues. The PM said he can arrange for that to be done, but he will need to charge for that service.

    Your thoughts?

    P.S. I also think before and after photos and property-conditions checklists should be done.  I thought this was standard…guess not.

    @Jay Hinricks I will be reaching out to the PM company you recommended.

     In bad areas, a lot of times you're looking at the ability of the person to pay the rent regularly first and foremost. Is this property in a bad area? It's one reason that some LLs (like me) avoid any housing/neighborhood in low C/D areas. Consider it flipped around - if you're a decent person, with steady work, and not a trouble maker, how likely are you to move into a rough neighborhood given some other choice? 

    As for the PM, I don't use one so I can't say, but not doing any interior walk-throughs at all, ever, doesn't sound right to me. How can you verify a property's condition if you don't do it at least between tenants? As for when tenants are in there, the PM companies that I know of by me do an annual inspection of the inside of the property, usually close to lease renewal time. These are mostly corporate-owned apartment blocks. 

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  • Matt K.
    Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    8y

    @Mary Ann Casey what about the lost rents or they trying to say they won't cover it because of the vandalism?

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y
    Originally posted by @Mary Ann Casey:

     @Jay Hinrichs @Daniel F. Harb   @JingJing He @Tom Gimer  @Chuck Low  @Account Closed @Isabel Peraza  @JD Martin  @Brian M. @Mike D'Arrigo @Steven Gesis 

    Thank you for your continued advice! I'm putting it all to good use.Here's an update...not good...

    INSURANCE:

    I took your suggestions and filed an insurance claim this week. It was denied. Turns out, there's a clause in the fine print that says vandalism by the tenant is not covered. What the...!!! Can't believe I didn't catch this when I read the policy!  So, now I'm looking for new rental property insurance for the 8 Indianapolis rentals. 

    Any rental insurance company recommendations? Any key coverage questions I should ask?

    TENANT SCREENING:

    I talked to the PM. He said he checks the following when screening tenants: Credit, sex preditor, criminal background, rental background, vehicle background, judgements, pay stubs, and verifies rent from the prior place. Then he went on to say they don’t have a minimum credit score standard since most tenants that apply in the lower-cost areaa have bad credit. So, their priority in selecting a tenant is a steady income, time in job, and rental history.

    What do you think about this? 

    PROPERTY WALKTHROUGHS:

    The PM said they have done drive-by's and never noticed anything unusual. He further said they don't normally do interior walkthroughs unless there's a reason or request for it. (I went back and checked our contract—he’s right, it says they have the right of entry & inspections…upon their discretion. Yet again, my fault for not catching this in the contract.)  So, I shared this with him: Do a walkthrough (a) 2 months after move-in, (b) 4 months after that/a 6-month inspection, then (c) every 6 months after that. While there, check for leaks, damages, maintenance needs, change filters, take pictures and send them to me, and notify me of any issues. The PM said he can arrange for that to be done, but he will need to charge for that service.

    Your thoughts?

    P.S. I also think before and after photos and property-conditions checklists should be done.  I thought this was standard…guess not.

    @Jay Hinricks I will be reaching out to the PM company you recommended.

    well your learning about low end rentals by a baptism by fire.

    the other thing you should read fine print in your insurance is how many days the house can be vacant and then the insurance is no good.. many times that is 60 days.. IE no one living there for 60 days and you have a fire day 65 and burns it down.. your out of luck 100% loss..  I know it happened to me personally... so do keep reading the fine print.

    Also your learning and its good for everyone else that again low end rentals you will NEVER get good credit scores.. waste of time.. its why these people rent these homes and they are pretty much lifers.. so what the PM"s I know do is basically run credit to see if they are paying their cell bill etc.. if those are bad they deny.. but just because they have a 480 fico .. is not a reason to deny.. most simply won't make the standards that a A class property manager or owner would require.

    And yes you should have to pay for those inspections its someones time.. not only do they have to go there they have to call make appointments etc.. in these low end assets.. to me personally  this is not property management.

    This is a step above this is ASSET management tenants are unmanageable many times its all about protecting the asset. And if I was a PM in those areas I would have a minimum fee of 200.00 a month but I would give the 30 and 60 day services like you ask for.. this is what is required when you own these.

    lastly if you can I would punt and reposition.. you will no doubt be better off down the line.. if you own these all free and clear then your clearly an accredited investor.. go find a top shelf syndicator and you will make far more than you ever will trying to make these low end houses work.. and that's just my honest opinion on it..

    Look at the thread going by Lance Robinson right now  2017 Turnkey review  he bought in INDY same time you did.. we had a nice conversation before he did.. took what I told him did his own due diligence and decided against low value assets bought Bs and As and he is having the polar opposite experience as you are having..  Just saying !

    Good luck and get on your insurance guy..

    Lastly the reason most get the cheapest insurance is they don't realize that they need beefed up policy and when  you pay for beefed up policy your yield goes way down.. becsaue yoiur spending more.  wereas with better quality properties you don't need it..

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

    Well done, Mary Ann Casey. You are certainly going above and beyond to get your "House back in Order". Let us know when you find an excellent insurance company. I have to start researching Ins companies that specialize in RE rental props. I want to see what is covered and what is not. I'm sure the RE wizards on BP will give their expert advice on premiere rental insurance companies that have excellent coverage. 

    Most likely starting with Mr. Jay Hinrichs. He knows! Mr. Hinrichs needs to expand his repertoire into writing. I'm sure he would write a killer RE book. Pick any topic! :)

    Best to you, Mary Ann!

    Daniel F. Harb

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

     @Jay Hinrichs @Daniel F. Harb   @JingJing He @Tom Gimer  @Chuck Low  @Account Closed 

    TENANT SCREENING:

    I talked to the PM. He said he checks the following when screening tenants: Credit, sex preditor, criminal background, rental background, vehicle background, judgements, pay stubs, and verifies rent from the prior place. Then he went on to say they don’t have a minimum credit score standard since most tenants that apply in the lower-cost areaa have bad credit. So, their priority in selecting a tenant is a steady income, time in job, and rental history.

    What do you think about this? 

    Personally, I don't think this is a tenant screening issue. It just goes with the territory with this class of property and every property manager is going to be dealing with the same low quality tenant pool. Even if you can get a good PM that will manage in this area (most of the good ones don't), it's not like they're going to magically attract great tenants with good incomes, good credit, no evictions that will take care of the place. That's like looking for unicorns. Personally, I would try to unload it and cut your losses. Otherwise you're going to put a ton of money in to it and have it happen all over again. If it was a better class of property but you just happened to get a bum tenant, I would recommend getting it stabilized and cash flowing which you can then recoup your losses. You'll never be able to do that with this kind of property. It will continue to cost you money and be a drain. I don't mean to sound negative but I think that is the reality. I know the Indianapolis market well and have seen it over and over. That's why we don't deal with this class of property in these areas.

    0Reply
  • Joel Wilmoth
    Property Management · Indianapolis, IN · Member since 2015 · 111 posts · 94 votes
    8y

    @Mary Ann Casey  In the screening you don't mention if PM checks for previous evictions.  I do agree with him that credit scores are not an indicator in B-/C areas that have merit.  History of employment or income that is consistent and enough to cover rent at least 3x and a clean prior rental history are the two most important factors. 

    Inspections-not sure where the schedule came from you suggested to the PM but I would agree..not normal for that many inspections and you should expect to pay to have that many completed.  Access to images from the inspections is normal and reasonable to expect.  We provide one mid-lease as part of management fee.  Then one at renewals so we are in for inspections 2-3 times a year depending on a move-in as part of the annual cycle. 

    In my experience, the majority of the damage occurs at move-out.  When serious issues like this have occurred it often seems to revolve around circumstances on the move-out.  Personal issues often seem to make for leaving a home in terrible condition. 

    Finally, I still am surprised by the total bid and wonder if this rent-ready process is a income stream for your manager. 

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y
    Originally posted by @Daniel F. Harb:

    Well done, Mary Ann Casey. You are certainly going above and beyond to get your "House back in Order". Let us know when you find an excellent insurance company. I have to start researching Ins companies that specialize in RE rental props. I want to see what is covered and what is not. I'm sure the RE wizards on BP will give their expert advice on premiere rental insurance companies that have excellent coverage. 

    Most likely starting with Mr. Jay Hinrichs. He knows! Mr. Hinrichs needs to expand his repertoire into writing. I'm sure he would write a killer RE book. Pick any topic! :)

    Best to you, Mary Ann!

    Daniel F. Harb

     Daniel I actually did write a book on out of state and out of country investing its called the perfect storm.. I don't mention it much anymore I probably gave 500 + of them out to BP members for free of course I don't charge.. 

    in it I talk about all the little nasty gothcha's that are out there.. including insurance  PM  neighborhood quality etc..   its an e book

    available upon PM request.. after watching the  Morris/Oceanpointe threads.  I should start offering it again as there are all new crop of first time investors on BP..

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    3Reply
  • Sam Booth
    Member since 2022 · 241 posts · 62 votes
    3y
    Quote from @Jay Hinrichs:

    @Daniel F. Harb  I had a tenant do far more damage than this in one of my houses I bought brand new for 200k they did about 40k plus in damage.. PM not their fault and no liability.. Insurance went after the tenant like a pit bull.. and that is what needs to happen here.. this is beyond normal wear and tear .

    its also critical that landlords go through their insurance policies with a fine tooth comb most don't understand they are woefully under insured.. like this little tid bit  most policies if your home is vacant for more than 60 days  ( EXTREMELY COMMON) your insurance just lapsed you have a fire NO INSURANCE you need a special rider for that.. some is 90 days.. but it can't sit there vacant.

    the revolving tenants is extreme.. although this just also goes with the asset class.. people move in they move out break the lease happens very often and it will happen to you..  most C class or below if you can get rent 8 months in any 12 month period over time your doing about average.

    Can you recommend what sort of insurance policy would be good for rentals an what to look for? I have a few single family rentals but new to the game.
    0Reply
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