First deal and tenant is a drug dealer!

General Landlording & Rental Properties
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First deal and tenant is a drug dealer!

Matt Blutowski
Pittsburgh, PA · Member since 2009 · 51 posts · 0 votes

Sorry, this is complicated, but I want good advise from any/all, so I'm going to include some details.

I closed on my first duplex two weeks ago. The property was fully occupied and according to the previous lease, I'm stuck with the tenants unless they break the lease.

Issue 1: One of the three people living in UNIT 2 moved out and has not been paying there share of rent. Initially the remaining tenants in unit 2 said they were not going to pay the entire rent, but now they say they will. They also planned to sue the third tenant. The tenant that moved out just contacted me. They will pay me all the rent due for the remainder of the lease, but they want to be removed from the lease. Basically, I create a new lease with the two current tenants for 2/3 of the rent and receive the other 1/3 up front for letting tenant 3 out of the lease. A good solution, until I learned WHY tenant #3 wanted to move out of UNIT 2.

Tenant three claims that UNIT 1 is being occupied by a coke dealer. I suspected something was not right about unit 1 before I was told this. Two other people familiar with this tenant/property have said things before. UNIT 2 pays rent on time, though the lease is for 1 person, but there are two people living there and a dog. They are not allowed to have a dog, nor is occupancy two people.

Apparently, two tenants of UNIT 2 are customers of the tenant in UNIT 1 and there are drugs there all the time. A tenant in Unit 2 has a criminal record which includes several assaults as well as a rape (found not guilty). The suspected drug dealer in UNIT 1 has no record.

I'm supportive of a new lease for UNIT 2 that does not include that third teanant. However my larger concern is the teanant in UNIT 1 and his drug dealing. He is in violation of the lease (with dog and second occupant)? I don't want to cross this person, but don't want my new property on TV news with busted doors, etc.

Again, these tenants were not mine, but I have to live with them or try to evict for cause. Unit 2 lease ends in April, UNIT 1 lease ends in August. The previous landlords were absentee landlords.

Any helpful advice would be appreciated!!! Should I just try to ride this out until the lease ends, or use the dog as a path to evict??

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Ralph S.
Real Estate Investor · Sacramento, CA · Member since 2008 · 566 posts · 356 votes
14y

Congrats on taking the plunge. Now realize there are many new experiences coming your way, and they are situations that happen every day, and some handle it well, others poorly.

1st. Turn off the fear. You're in charge. It is your duplex, not theirs.

2nd. Learn, if you don't already know, the landlord tenant laws in your state/city. Abide by them, to the letter. Some of what I suggest below are ok in my area, but may not be in yours.

3rd. Your concern is for your investment, and maximizing your return on that investment. Period. You'll never rent to you, someone who looks like you, or treats your duplex as you would. That's why you have to take the lead in keeping things up.

4th. It's not personal. Don't let yourself get drawn into an argument, feel you need to explain anything, or win arguments (you'll never win a argument with a tenant). If they violate, you issue a notice. Little, if any discussion.

Take the money from the threesome now twosome, and accept the reduced rent for the remainder. Deal with the end of the lease at the end of the lease.

Schedule a thorough inspection of both units, with proper notice. Maybe even schedule a pest inspection. Let them know you and you pest inspector will be opening every door, bedroom, closet and cabinet, and inspecting for signs of insects, rat holes in walls and corners, and treating/scheduling repair if necessary. Let them know you'll be checking all windows for proper operation, the furnace for clean filters, etc. etc. Let them know as the new owner, you want to make sure the duplex is as good as it can be. You are a responsible landlord that they can count on, and you're sure they'll be just as responsible in their obligations to you.

Let the suspected drug dealer know he can't have a dog or roommate. Not confrontational, just the way it is. Not according to the lease. If you are so inclined, offer the roommate an application to apply to be added to the lease, for an increased deposit and increase in rent, of course. As far as the dog, again, for a healthy non-refundable pet deposit and increase in monthly rent, you'll consider letting them stay. You're such a freakin nice guy, aren't you? Then hand him the 3 or 5 day notice to vacate or remedy. Be nice. It's his choice, not yours. He's in the drivers seat. His choice to either live up to his agreement, pay to change the agreement, or leave. His choice. Just another day at the office for you. No big deal. You're an old hand at this. You do this all the time.
Service with a smile. And be prepared to follow through with eviction if necessary. I suggest a lawyer write the five day, and let them handle the eviction if needed.

Welcome to landlording.

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  • Greg B.
    Homeowner · Burleson, TX · Member since 2008 · 756 posts · 376 votes
    14y

    If you can prove that Unit 1 is a drug dealer I would call the police and discuss this with them.

    If the people in Unit 2 are his customers then they are out as well. I have a clause against illegal activity in my lease.

    I don't think I would be waiting too much longer.

    0Reply
  • Dick M.
    Electrical Contractor · both, Maine & Florida · Member since 2011 · 129 posts · 53 votes
    14y

    Good luck proving anything in court.. Do they pay the rent without problems? then no problem, at least til lease end.

    1Reply
  • Matt Blutowski
    OP
    Pittsburgh, PA · Member since 2009 · 51 posts · 0 votes
    14y

    I can't prove the tenant is a drug dealer, nor do I know for sure. I do know that they have an arrest record which includes theft and possession - enough to know I don't want them in my property, but not enough to remove them legally. The dog should enable me to remove them legally, though I'm not sure I want to force the issue with someone who has a record. Of course, he may move without much of a fuss to avoid the spotlight...

    0Reply
  • James H.
    Investor · Fort Worth, TX · Member since 2011 · 1k+ posts · 450 votes
    14y

    What are the rules in the existing leases? Enforce those rules. I would not write up a new one. Enforce the existing contracts and don't renew if you don't want them there after the lease expires. I wouldn't get involved in the soap opera. It sounds like there was a single lease to include the three tenants in Unit 1. If this is the case, any one of the three is on the hook for the entire balance regardless of what they "want" to do. Never negotiate with terrorists, lol! But seriously, don't.

    Like Dick said, if they pay their rent, take the money and just don't renew when the lease expires. Its just business. I wonder who you'll ultimately have more trouble collecting from, the dealer or the customer..... :idea:, lol.

    0Reply
  • Kevin PolitePro Member
    Investor · Decatur Atlanta, GA · Member since 2011 · 612 posts · 232 votes
    14y

    I would definitely contact the authorities and let them know what you know. You could be held liable in some way if you know and don't report, for instance if there is a fire from the coke your insurance company could say you violated the terms of the insurance by knowingly letting crime occur in your building and not reporting. This isn't really far fetched because, think about it you just acknowledged it here on this board. Protect your assets.

    1Reply
  • Matt Blutowski
    OP
    Pittsburgh, PA · Member since 2009 · 51 posts · 0 votes
    14y

    Thanks Kevin,
    I was concerned about my liability, so I contacted a good friend who put me at ease. I'm not liable in this case. My friend has the experience to know about legal issues related to drugs. My friend did say that I could have a busted front/back door, or even more seriously a dead body - that would be a disaster (according to my friend). They advised I either give them a name to investigate, or wait until I have a problem to pursue this. I'm not interested in having this person busted, I'm just looking to avoid trouble. I just don't know which is less trouble, having a drug dealer or evicting one...

    0Reply
  • Ralph S.
    Real Estate Investor · Sacramento, CA · Member since 2008 · 566 posts · 356 votes
    14y

    Congrats on taking the plunge. Now realize there are many new experiences coming your way, and they are situations that happen every day, and some handle it well, others poorly.

    1st. Turn off the fear. You're in charge. It is your duplex, not theirs.

    2nd. Learn, if you don't already know, the landlord tenant laws in your state/city. Abide by them, to the letter. Some of what I suggest below are ok in my area, but may not be in yours.

    3rd. Your concern is for your investment, and maximizing your return on that investment. Period. You'll never rent to you, someone who looks like you, or treats your duplex as you would. That's why you have to take the lead in keeping things up.

    4th. It's not personal. Don't let yourself get drawn into an argument, feel you need to explain anything, or win arguments (you'll never win a argument with a tenant). If they violate, you issue a notice. Little, if any discussion.

    Take the money from the threesome now twosome, and accept the reduced rent for the remainder. Deal with the end of the lease at the end of the lease.

    Schedule a thorough inspection of both units, with proper notice. Maybe even schedule a pest inspection. Let them know you and you pest inspector will be opening every door, bedroom, closet and cabinet, and inspecting for signs of insects, rat holes in walls and corners, and treating/scheduling repair if necessary. Let them know you'll be checking all windows for proper operation, the furnace for clean filters, etc. etc. Let them know as the new owner, you want to make sure the duplex is as good as it can be. You are a responsible landlord that they can count on, and you're sure they'll be just as responsible in their obligations to you.

    Let the suspected drug dealer know he can't have a dog or roommate. Not confrontational, just the way it is. Not according to the lease. If you are so inclined, offer the roommate an application to apply to be added to the lease, for an increased deposit and increase in rent, of course. As far as the dog, again, for a healthy non-refundable pet deposit and increase in monthly rent, you'll consider letting them stay. You're such a freakin nice guy, aren't you? Then hand him the 3 or 5 day notice to vacate or remedy. Be nice. It's his choice, not yours. He's in the drivers seat. His choice to either live up to his agreement, pay to change the agreement, or leave. His choice. Just another day at the office for you. No big deal. You're an old hand at this. You do this all the time.
    Service with a smile. And be prepared to follow through with eviction if necessary. I suggest a lawyer write the five day, and let them handle the eviction if needed.

    Welcome to landlording.

    8Reply
  • John C.
    Investor · Suwanee, GA · Member since 2010 · 104 posts · 22 votes
    14y

    Not sure how long tenants can live for free after you've filed for eviction in Pittsburgh but I've heard that up North particularly in the winter it can be a long time. I know in Georgia the quickest eviction I ever had was when I got a call from SWAT at 2am letting me know they were boarding my place up after coming in through the windows and doors to remove the tenant who it turns out was into all sorts of illegal activities. I had already filed eviction due to non-payment of rent.

    We were out there the next day and we were able to get the unit turned and re-rented to some good people in less than a week. Saved me at least two months. I'd definitely let the cops know. They'll either do something with the info or not. Can't hurt. In conjunction with everything Ralph S said of course.

    1Reply
  • Joel Block
    Real Estate Investor · Agoura Hills, CA · Member since 2010 · 55 posts · 66 votes
    14y

    Don't you just love managing rental property! JGB

    0Reply
  • Dick M.
    Electrical Contractor · both, Maine & Florida · Member since 2011 · 129 posts · 53 votes
    14y

    Just don't over manage, some things just aren't your business, even if you own the property...

    1Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    14y

    I have a bunch of tenants.I will tell you what I tell my property manager.Do not get over involved in tenants problems and lives.

    Simply collect the rent and handle repairs and make sure the tenants are in compliance with the terms of the lease.

    I am very picky in who I allow to rent in my buildings.I turn down about 3 to 4 out of every 5 applicants.

    No pit bulls,aggressive breeds of animals,sex offenders,felony offenders,drugs,loud parties,unclean tenants,evictions from other apartments,no smoking inside of the units,etc.

    I go through this the first time I meet a potential tenant before I say anything else.The deadbeats leave real quick and the good ones like that I do that upfront and want to apply for a unit.

    You should have researched the tenants on the lease way before closing on this property.At the least it would have given you leverage to drive down the price further to take on a bigger problem.

    A good deal is only relative to the problems you take on when purchasing.Do not kid yourself on the drug dealing.If they grow pot,smoke meth,etc. the costs to remediate the units after you get them out can put you under.

    Just go talk to the sheriffs department about drug damaged units.

    Did you pull a criminal report for the area before buying??

    Don't fear the tenants or let them control you.I bought some buildings in a nice area but the buildings were older.The units were on the verge of turning into a bad area or staying a good one.I banded together with other landlords and we got the bad element out.

    We have Glocks,shotguns and everything else.I don't care who it is if they come on my property they better not try anything.We have made police reports of suspicious people,tenants trying to steal cable,power,etc.

    Once the scum know they have a light shining on them they crawl away to another area to go hide under some other rocks.

    So do not be intimidated.My place is cleaned up real well now.

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    3Reply
  • Greg B.
    Homeowner · Burleson, TX · Member since 2008 · 756 posts · 376 votes
    14y

    I came across this when I was buying my first 3 units. My inspector discovered syringes hidden in the A/C vents. We also found baggies hidden in the toilet tank. This was near a religious college and the tenant was a divinity student. He knew that we were coming to inspect before the purchase. Maybe he thought he had his stuff hidden well enough. The final straw was the 3 out of state arrest warrants he left in plain site on the coffee table.

    I contacted my rep and said the deal was off if he was still in the unit. Our deal was contingent on the units having stable renters. I was very nervous about my ability to find renters. The tenant was gone within a week and a new tenant was in place the next week.

    I paid the inspector a little extra for saving my butt.

    0Reply
  • Jason A.
    Rental Property Investor · North Huntingdon, PA · Member since 2011 · 64 posts · 20 votes
    14y

    I've used this trick to deal with suspected drug dealers.......Draft a letter notifying the tenants that you have given permission for the authorities (state police) to use your properties as a training ground for their narcotic dogs. Tell the tenants not to be alarmed at the sight of these dogs, but they could show-up with police trainers with no notice. Hopefully this will send the suspected drug dealers packing, and hopefully they won't move into any of my rentals! Best of luck.

    2Reply
  • Don Hines
    Investor · Little Rock, AR · Member since 2010 · 628 posts · 251 votes
    14y

    Joel's post reminded me of my stint working with a management company my freind owned in Texas. We cleaned up 5 properties containing over 1500 apartment units. I became alarmed about a couple of guys that we had living in Brownsville. They had $150,000 cars and was paying only $500 a month for rent. I just knew they were dealers. After monitoring them a couple of weeks and listening to the managers and maintainance men, I was sure of it. So, I "manned" up and confronted them and told them I didn't like their kind living there. I offererd cash to help them relocate. It turns out they were DEA and were there to monitor some other tennants. I had to live with that secret for a while to give them time to really clean out the rift raft.
    Don

    3Reply
  • Jake Kucheck
    Residential Real Estate Agent · Costa Mesa, CA · Member since 2008 · 1k+ posts · 380 votes
    14y

    Whatever you do, don't do it the way you're doing it now.

    Problem tenants aren't people you want to build relationships with, so there's really no point in handling problem tenants personally. Lawyers, process servers, etc are better for these sorts of things. Yes, it costs money, but it is more predictable and there's generally less chance of bodily harm, especially if you own your duplex in an entity or trust that does not make it blatantly obvious who you are.

    Once the problem tenants are out, then you can start building a relationship with your (hopefully law-abiding) new tenants. This you can do personally or impersonally, your choice.

    0Reply
  • Rob Gillespie
    Specialist · Cleveland, OH · Member since 2011 · 1k+ posts · 852 votes
    14y

    Why complain, at least they can pay the rent!!! LOL!!! :mrgreen: I am sure I have had plenty over the years in some of my ghetto places, I know it is wrong, but I embrace the don't ask don't tell policy! :mrgreen:

    0Reply
  • Matt Blutowski
    OP
    Pittsburgh, PA · Member since 2009 · 51 posts · 0 votes
    14y

    Good advice, several points taken. I did get involved upstairs, but I'm glad I did. Now I have a better idea who/what I'm dealing with, and I have three tenants willing to pay and put this to rest.

    The first unit is another story. I've have mentioned the dog and am using it as leverage - I want him to pay on time and be quiet. The dog can't weigh 10 pounds. I will tell them I'm scheduling a pest inspection. I'm considering having my handy-man/ county narcotics detective friend do the inspection for me. He works for free and knows how to spot roaches.

    Other than that, my preference is to take the rent and not renew the lease. At the first issue, I'll give notice. I appreciate the feedback given, truly.

    0Reply
  • Al Williamson
    Rental Property Investor · Sacramento, CA · Member since 2011 · 2k+ posts · 1k+ votes
    14y

    Don't try to coexist with drug dealers. It's band for your brand, bad for the neighborhood, and IMO an unethical way to build equity. Being a bystander contributes to the problem and makes you an accomplice. Financially speaking, you'll do much better exercising some leadership to improve your area and you've got to lead by example.

    1Reply
  • Ralph S.
    Real Estate Investor · Sacramento, CA · Member since 2008 · 566 posts · 356 votes
    14y

    While I agree with Al in spirit, there are certain realities. Right now, there is nothing but rumor about the drug thing. Nothing anyone will do without hard evidence. But, he seems to have a handle on that.
    A handyman/narcotics cop/pest inspector friend. That's some landlords friend.

    0Reply
  • Matt Blutowski
    OP
    Pittsburgh, PA · Member since 2009 · 51 posts · 0 votes
    14y
    Originally posted by Al Williamson:
    Don't try to coexist with drug dealers. It's band for your brand, bad for the neighborhood, and IMO an unethical way to build equity. Being a bystander contributes to the problem and makes you an accomplice. Financially speaking, you'll do much better exercising some leadership to improve your area and you've got to lead by example.

    Brand?! I haven't been a landlord for more than a few weeks! :D But you're right, and I appreciate that you shared an outlook I'd like to model. I also agree with Ralph - I have no proof, only strong suspicion and a past criminal record.

    I also agree that I have a great contact in my friend. He knows the area, the dealers, the scene, the law. If the tenant is dealing, I have options. With the feedback here, I have a better understanding of the best path forward.

    0Reply
  • Rob Gerv
    General Contractor · Denver, CO · Member since 2009 · 5 posts · 0 votes
    14y

    I would schedule the 'appraisal walk', 'maintenance walk', and 'quarterly walk' through the apartments with a written notice to the tenants. This may help them clean up. In the mean time if they are not paying, give them the 3 day notice and find an eviction lawyer. Just think about the consequences of your place being boarded up or losing the total rent for a few months.. I've had better days and I hope you do too. If the best tenants in town are drug dealers and bums, it will still be best to set your standard to weed out the bottom feeders. Check out the tenant screening postings and links in BP. In the mean time I would think about future tenants and your screening process and think about what you can do in the future. The previous owner obviously was relaxed on screening.

    0Reply
  • John C
    Real Estate Investor · SouthCentral, IA · Member since 2010 · 97 posts · 45 votes
    14y

    Man I would Raise unit 1 rent to cover the hassle

    0Reply
  • Andy Collins
    SFR Investor · Dallas, TX · Member since 2011 · 604 posts · 243 votes
    14y

    Send a letter to each side of the unit telling them you are hiring a new 'handy man' and he happens to be a police officer so they should feel safe having him doing the work.

    Thats probable all you need to do.

    andy

    0Reply
  • Robert Dobbs
    Residential Real Estate Agent · Delray Beach, FL · Member since 2010 · 115 posts · 83 votes
    14y

    DO A CRIMINAL BACKGROUND CHECK

    CHECK REFERENCES

    EMPLOYMENT VERIFICATION

    BEFORE YOU RENT

    NOT AFTER!

    A concern for you to consider:

    You were given information about illegal/criminal activities going on at your property.

    You may be in violation of the law by NOT reporting possible criminal activities going on at your property?

    It would be too bad if these thugs "got busted" and the police found out that you knew about possible drug dealing on your property from that ex-tenant but IT WENT UNREPORTED BY YOU TO LAW ENFORCEMENT!

    I'd hate to see you lose your first rental property, confiscated by law enforcement! Yikes!

    Better check this out ASAP!

    Bob

    1Reply
  • James H.
    Investor · Fort Worth, TX · Member since 2011 · 1k+ posts · 450 votes
    14y

    The tenants are ALREADY THERE, leased to by seller, not current owner. Advice about screening is not very relevant here, except as a side bar.

    I think these concerns about getting in legal trouble for harboring drug dealers are a little (a lot) overblown. Even if the (alleged)drug dealing was reported, OP would be lucky if the police department even kept a record of a report of a suspicion of drug dealing that he heard from someone else about someone else.

    Really, just enforce the lease and evict if necessary, renew or don't renew based on if they are a hassle or not.

    I am just posting this because I think its important that new investors who have yet to take the plunge should know what is a real concern vs a one in a million boogie man. You could never protect yourself everything, so it is important to know where to prioritize your concerns so you provide better protection for yourself and still make a little money. Worrying *too much* about the outside chance, rather than the likely and typical items, will stunt your growth.

    1Reply
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