3 out of 4 Detroit SFHs Non-Paying

6 Replies

Hi all, looking for some advice please!

About a year ago I purchased 4 homes in Detroit, each costing about $38k, all cash and they are still non-financed.  Two were originally Section 8, now only one is (tennant insisted on endless unaffordable improvements, so I had to lose the status).  

An out of state family member is currently managing them on my behalf.

Now the 3 non-section 8 are all 2-3 months behind in rent.  I understand eviction is typically a $3k process, which is almost 4 months worth of rent - not ideal.  I'm not sure offering them $800 (a months rent) in cash to leave would work, as they are effectively making that every month already.  I was also advised that leaving the property empty for any period (seems a possibility during an eviction process) runs the risk of copper pipes etc being stolen in this area.

What would you suggest?  If I regularly have to give up a quarter of annual rent to evict ppl, plus some additional missed rent, i'm not sure if these are worth the investment, even if the headline return should be 18%?  Is there an insurance that can be taken out for this?  What's the best practice in terms of how quickly you would start the eviction process given the high cost?  

Thanks so much for any advice!
Danielle

. start the evictions like ... YESTERDAY !
. Evictions only need the landlord or their representative to present their side in court with PROPER documents (lease,payment receipts, documentation of Landlord /Tenant correspondence)
. Look into hiring a professional property manager, they handle leasing,rent collections,evictions) for approx 10% of rent
. Do NOT delay

. professional renters look for landlords that let evictions linger for long times

Your problem is not where you think . It is not the deadbeat tenants ! It’s actually the “ out of state family member” you referenced .they are doing a very poor job managing your investment and need fired for incompetence .life is not what happens to you ,it’s what you do that makes the difference 

Its not being managed properly. I would have started eviction process after the grace date i.e. 5th of the month.  It sounds like that family member might not be qualified to manage your property. This is costing you thousands and I'm seeing dollar signs if you dont take control. Dont try and negotiate with non-paying tenants at the point they will see you as a pushover. Make sure these tenants are also being screened properly just dont fill the vacancy with anyone.

Danielle,

I completely agree with these responses.  Make sure you send eviction notices to these tenants and start the process formally. Definitely hire a pro property manager.

Brian Hockley

Hi Danielle,

The biggest problem is not the tenants. It is the "out of state" property manager.

Tenants will stop paying rents when their issues (however small) are not addressed. 

It is not that they want to, and none of your tenants would like to be evicted either. Trust me.

They are just normal people like you and me and want a pleasant place to stay.

And they wish to pay their rents. But older houses will have an issue every now and then.

And if they not addressed timely or if they are not able to reach the property manager they do what they "can do" ie pull the pin on the rents till they get it resolved.

The difference to success in Detroit property ownership or any other City/State where you are a High Yield Landlord, is that you are not just an Investor, you have to run this as a Business and active management with good decision-making skills.

All the best,

seems you bought low C or D type property at least at that price point in Detroit in todays market.

very tough to run those properties if you don't live there and manage them yourself.

even with a PM it could mitigate it some but I think you will come to find out that the juice is not worth the squeeze on these type of properties and the tenants they attract..  

Sell them and buy nicer quality units.. that are easier to run..