When family is involved the money pit begins. Need PM and advice

48 Replies

My fiancé and I bought a 3bd 3ba sfh in Waukegan, IL.  We agreed that I would house hack while she finished her job in San Diego.  I am active duty military and was stationed in IL for a time.  I allowed my newly divorced brother to rent a room, then we found a roommate to rent the basement suite.  Perfect set up so far.

A month later my mom comes to visit because of a death in the family.  This visit turns into an extended stay and mom agrees to rent my den.  Here's where looking out for family with my business gets messy....

I am suddenly called to duty back in San Diego. After 2 months, my brother stops paying rent and moves out without telling me.  The month after that my tenant in the basement moves out without notice.  Then my mom suddenly can't come up with rent but she's the only person in this house.  She's on disability and has no where to go back home to.

There are repairs that need to be made and my mom has to go. While at the same time I need to find renters asap. My fiancé and I have no clue where to start or how to tackle this. We've been paying our mortgage in IL and our living expenses here in California. MONEY. TOILET. FLUSH. Any suggestions or reccommendations will help the brainstorm.

Never rent to family members. They seem to think you own the property free and clear with zero expenses.

 The deal was actually pretty good.  Purchased the home for 25k under market value.  Without me living in the house, had everyone stuck to their leases it would be running perfectly almost autonomously.  Is there any way to win if we navigated through the obstacles?  Or is selling the quick win? @Eric Adobo

@Aaron Arthur starting with our rentals we actually bought my mom a house and she was going to buy it off us when she got back on her feet...well that never happened. It was a very emotional issue because you have the business side and the family side. So we don’t rent to family anymore. My husbands cousin called last week and needs a rental closer to her job and she hates the one she is in and blah blah blah. I said I’m sorry but we don’t rent to family, because it adds feeling to the business side of it. I don’t think she was too happy, but she understood.
@Aaron Arthur you mentioned it needs work, how much work? And if you are not going to be local I would recommend a property manager. I know many that manage the property they live in...and take discounted rent as payment. I would still pay, so you can use payment for tax purposes, but the payment would wash out.

@Dennis M. It's at a point where she refuses to pay rent because of reasons that are hardy justifiable and I have no clue how to remove her from the residence from so far away. She's become a squatter. Sad to say about mom but my family is kinda savage like that. Lesson learned on the business/family mix.

@Aaron Arthur then if it was me I would keep it, market it and get good tenants in there to start making some money back. Maybe find a real estate agent or a good property manager to do the tenant search for you. As long as you run your numbers and are making a fair profit in the end to me it is worth having.
@Aaron Arthur I evicted my mom (nothing I’m really that happy about doing), and that is what ended my renting to family. If you are able to talk to her, and explain To her that you have to have income coming from all the units to succeed, otherwise you will be forced to sell. Or hopefully since you are far away, another family member could help you with this. Possibly pay her deposit to get her in somewhere else (if possible)...it is cheaper than losing money monthly. Good luck! I know it is a really hard road.

Wow that sucks . Even though I don’t get along with my mom I couldn’t imagine having to evict her . That would be very strange but if you don’t watch your finances then who will ? If you don’t protect yourself or your investment then who will ? Sometimes you must do what you gotta do and I think you already know what needs done unfortunately 

Sadly, it really looks like your family has been reduced to a cash nexus. You have one property out in Illinois, while you pay living costs in San Diego. You are not going to manage the one duplex property effectively out there through property management, that's a fantasy. Successful lond-distance landlording requires volume and a good team, and that takes time, effort, and expense to build. Smallholders investing in one or two properties out-of-state almost invariably get screwed. The only thing that had you buying out there was obviously your cash-nexus family.

I would sell, and throw Mom right under the bus. She and your brother already tossed you down there.

If the fixes are worth fixing financially do those quickly. Then sell the house. 

Theres nothing wrong with out of state property but this doesn't sound worth it to me. Especially since this is a SFH.

Originally posted by @Aaron Arthur :

My fiancé and I bought a 3bd 3ba sfh in Waukegan, IL.  We agreed that I would house hack while she finished her job in San Diego.  I am active duty military and was stationed in IL for a time.  I allowed my newly divorced brother to rent a room, then we found a roommate to rent the basement suite.  Perfect set up so far.

A month later my mom comes to visit because of a death in the family.  This visit turns into an extended stay and mom agrees to rent my den.  Here's where looking out for family with my business gets messy....

I am suddenly called to duty back in San Diego. After 2 months, my brother stops paying rent and moves out without telling me.  The month after that my tenant in the basement moves out without notice.  Then my mom suddenly can't come up with rent but she's the only person in this house.  She's on disability and has no where to go back home to.

There are repairs that need to be made and my mom has to go. While at the same time I need to find renters asap. My fiancé and I have no clue where to start or how to tackle this. We've been paying our mortgage in IL and our living expenses here in California. MONEY. TOILET. FLUSH. Any suggestions or reccommendations will help the brainstorm.

I know this won't help now but here is what you do (for the future, or maybe even now). GET A PROPERTY MANAGER TO RUN THINGS. While that would have helped before, now you can still tell your family that this rental is causing too much stress and you're going to hire a property management company to run things. If you had a management company running things from the beginning then you can use them as the 'bad guy'. Let them go after your renters (including your brother) for not paying.

You're not helping your mom here as no rent = no payments to bank = no home for her to live in.  SHe's an adult and should know this. 

Originally posted by @Aaron Arthur :
"had everyone stuck to their leases it would be running perfectly almost autonomously."
 

hahah, dude, and if I had wings I'd be a bird.   People occupying a rental and paying rent is NEVER a given. 

Hire a management company and let them handle it.  When your mom moves out, you can always go back to self management...or continue on with the management company if it is working well.

@Aaron Arthur that's a tough one; a costly lesson but usually in the long run the lesson learned ends up being worth the cost if you just keep moving forward.

Frankly people will only find a way when they're forced to. Even if that's your mom. The market is relatively hot everywhere now, I see no reason for you to hold onto the place in hopes of a better price when you're bleeding money and facing real family drama with your mom. Tell her you need to sell and bite that bullet. Your opportunity cost of sitting on that under performing asset is huge. Sell it, keep to yourself about what you end up buying after you've sold it, but keep moving forward. Good luck sir! 

Originally posted by @Aaron Arthur :

@Cody L. HAhahaha!  You're absolutely right brother.  Im online looking for a PM now.  They can still be the "bad guy" in this one as I've exhausted being nice and firm with mom.  

 I own a lot of property.  Sometimes family wants it.  Like I own a lakehouse in Wisconson.  They ask if they can stay there.  I just say "Call the property manager -- I don't deal with it".  They ask if I can call her for them and hook them up.  I say "no as that will take away from her ability to manage the property correctly for me"

@Aaron Arthur I would sell it. Let your mom know you can’t afford it and that she will have to leave because you have to sell. For relationship purposes I think it will be easier to sell it and get her out than to tell her you need her to leave to renovate or find another tenant. Then have the repairs made and sell it. If she does not agree to work on moving out immediately and tale steps to do so then sadly you will need to hire a lawyer and go thru the eviction process to get her out. Your family sounds like leeches so I hope you have learned from this and do not allow your family to stay in your home or any rentals again. I would buy a rental closer to home with the proceeds from the sale.

@Aaron Arthur Don't forget, you only get one mother! I would contact a realtor, to rent out the other rooms for you, and give your mother some time to get on her feet. Presumably you don't need every dollar your rental generates to cover your mortgage. Try Airbnb, and pay her to turn over the units (viola! rent money) I have had problems regarding business and family, and have always been confused when people choose money over flesh and blood. Money can be replaced! Mommy can not! Figure out a way to make it work. After all, without her, there would be no you! You know, Aaron the professional real estate investor/problem solver? You got this! Hope this helps