I've got a problem with a group of tenants who haven't been willing to keep their unit even remotely clean during showings for the last four weeks. They've got three cats and two litter boxes, and the entire unit stinks of litter -- they've also got food and dishes everywhere, and huge piles of dirty clothes everywhere.
This is a nice, fairly high-end apartment in a not-so-great area, it should stand out as being nicer than the surrounding apartments. Before showing the unit to potential tenants, I've started having to warn them about the smell and have made promises that a professional cleaning crew will be in the unit during the flip period to make sure that the smell is removed.
The unit is a major turnoff to everyone who sees it. Very few people are able to look past its current condition, and I'm sure everyone is worried about committing to an apartment with the risk that the smell will linger. I'd be willing to offer them an escape clause in the lease, or just start off month-to-month, but I haven't been able to get anyone interested enough to even get to that point. I've impressed upon the tenants that they need to improve the condition of their unit, and they've made some modest efforts, but the situation is far from acceptable.
I need to have this unit filled in 10 days and I only have one applicant who really doesn't meet the financial criteria I would prefer. I consider them a big risk, and I think the condition of the apartment has forced me to accept them when I otherwise could have been able to get a much higher quality tenant.
QUESTION: Other than damages for cleaning the unit after they move out, can I deduct damages for the condition of the apartment during the showing period? Will this hold up in court? If I failed to find a tenant, I could see claiming one months rent in damages, but if I accept a lower-quality tenant, this seems hard to quantify or justify. Although I've talked to the tenants a few times about cleaning up, I haven't sent them any formal letters or threatened to take money from their deposit for the state of the apartment during the showing period, which I feel like would be important documentation if they protested my damage assessment in court. Thoughts? Should I add conditions in my lease saying what the expectations are during the showing period? Can I have language in the lease saying that there are basic expectations of cleanliness even apart from the showing period?
I'm in Minnesota.
That's a great example of why I don't allow pets in any of my units. Absolutely no good ever comes from renters and their pets. Even an extra pet deposit will never cover the cost pet damages to carpet and padding plus potential liability dog bites.
This is just part of the business. I've had similarly messy tenants and its nearly impossible to find a replacement tenant while they're still there. There's little you can do buy to wait until they exist, get the place thoroughly cleaned and then start seriously showing it. If they leave it stinky and messy, they get charged for the cleaning. But you can't charge them for your lost rent from the delay. That's just part of the business.
You say "I need to have this unit filled in 10 days". What's that mean? They're leaving on July 31 and you want to get a new tenant in on Aug 1? That's what we all want for every turnover, but it doesn't always happen.
No, you can't charge "damages" for them being messy. You can charge for what it takes to get the unit ready for the next tenant, provided it not just "normal wear and tear". That is, you're not going to be able to charge them full replacement cost for a five year old carpet, even if its trashed when they leave.
No, you can't charge them for "lost rent" after they leave, provide they have given proper notice and moved out as dictated by the lease. Sometimes it takes time to repair and then re-rent a unit. That is just part of the business. If you business model assumes you will be able to collect full rent every month you have a problem with your business model. Some vacancy is almost inevitable with every turnover. When you avoid a vacancy, its a bonus.
Ken: stop showing the unit until the tenants are gone. It sounds like you might be borderline harassing the tenants. They are not required to clean for your showings.
With that many cats and that much noticeable odor there is most likely pet damage in the unit. Pet damage to surfaces like hardwoods and carpet and baseboards isn't something that can usually be eliminated by just a cleaning. Get the tenants out, assess the damage and keep the appropriate amount of their deposit. Start showing it while you are repairing it.
Ken why in the world are you showing this thing in that condition??
No quality tenant in their right mind would sign a lease with you on a PROMISE that you will clean it and get rid of the smell.
What some landlords might do is get the tenant to sign a lease and take a deposit and then see all the repairs needed and rig the apartment afterwords once the get the bad tenant out to save money and try to force the new tenants to move in or lose the deposit.
You wouldn't try to show a house that is falling down to sell would you?? Exactly.
Evict these tenants and get them out.If you own the apartment building and not just one unit you will also get bug problems between the walls and rats and the good tenants next door will move out.
You should have gotten these people out long ago.If you purchase a property where you have to service the debt and didn't have enough reserves then you should have waited to purchased a property at a later date so that you could land the right tenant..
I've had luck so far with filling units without vacancy, I realize it's not always possible, but my financial model, admittedly, does not have enough room for vacancy in it. When it was created, it did, but in practice, it doesn't. I've recently taken over management from a professional property manager who did a poor job (and stole from me).
They're moving out at the end of July, so I'm not going to evict them. I was told by another business partner that I could charge for damages incurred because of gross lack of cleanliness during the showings, but I don't have a legal citation for that and I don't want to screw up on legal matters, which is why I asked here. Worst case, for now, I get some tenants in there who don't have the best rent/income ratio (2X).
Originally posted by Ken Durden:
... I realize it's not always possible, but my financial model, admittedly, does not have enough room for vacancy in it.
Worst case, for now, I get some tenants in there who don't have the best rent/income ratio (2X).
Wow, only 2X rent for income, and you can't afford to have vacancy - do you think you can afford to have tenants who can't afford to pay? That's usually how renting to a tenant with income of 2X rent plays out. How long can you afford to hold out while evicting a non-paying tenant?
Sometimes it is better to have a unit stay vacant than to have an unqualified tenant. This sure seems like one of those ...
One of the clauses that I have in the rental contract is that during the last 30 days of the lease the tenants must allow showings. If the tenants decline a showing or the property is not in "show" condition as dictated in a separate addendum to the contract, they are charged a prearrange fee. At the end of the lease term this fee is deducted from the deposit as unpaid charges.
This is in Texas and has been upheld in court on several occasions. The key is to have it in writing and agreed to prior to execution of the lease and to have the "conditions" explicitly detailed in the amendment and recorder at the time of the showing. It is helpful to have someone other than yourself to record the conditions as well.
Thanks for your reply -- it's frustrating that the laws are so different in every state, it's very difficult to get a solid answer on what is allowed, and I'm loathe to pay a lawyer $200/hr to research all the various questions I have, I'm obviously not in the best financial situation.
I have a clause about showing the unit, but I don't think it says anything about "show" condition, nor about damages being taken otherwise. I want to add this to my lease, whether it's legal or not at least it gives a basis to demand a certain level of cleanliness during that time.
but my financial model, admittedly, does not have enough room for vacancy in it.
What that really means is you're going to be out of pocket when you do have a vacancy. Those really do happen. You cannot avoid them. You have one coming up in August. From your description, sounds like you may have more than one in the not too distant future.
It doesn't seem like the fee would help you anyway. Seems like the mess is going to eat up all the deposit anyway. I supposed its possible to extract more money out of a tenant after they have left, but I've never been able to do it.
Ken do you own these properties local???
If so I would encourage you to go to the court house and listen in on attorneys and property managers and landlords on the plaintiff side and listen to to the tenants or their attorneys on the defendant side.
You will learn so much for your area.
Go by the writ office and eviction during a slow time and chat them up.They will give you great pointers to help you out.
"I've had luck so far with filling units without vacancy, I realize it's not always possible, but my financial model, admittedly, does not have enough room for vacancy in it."
If people thinking about investing read anything please read the above statement.This is the number one mistake made in real estate.
Please find yourself a competent commercial or residential broker who knows investing or another investor who is seasoned.If you are going to put down your hard earned cash to do an investment you need to buy it the right way.
Not buying it the right way makes you tread water to lose money and also takes away lost positive cash flow that you could have used to grow into more properties.
Ken you can try to get damages against the tenant if you want.Even if you get a judgement good luck on collecting it.It will be a waste of your time.
The existing tenants saying they will be out by a certain date I put no faith in that whatsoever.They haven't even kept the place up.
You need to file eviction period.This keeps them honest by saying they will move out by a certain date with the eviction looming they have to make good on their promise.
Otherwise they simply make up a story when the date comes about (they haven't found anything suitable,they lost some income and no cannot move,they got sick,and on and on and on.)
Ken simply go to the court and get educated.I have seen attorneys in court lose and I represented myself just fine and the tenant was out.
Just look up landlord tenant law code for your state to start learning.
Hope it helps.
Also, make friend with a local landlord that has been doing it for years. Before I invested I meet a local landlord who owns 68 units. So when ever I have a question I call on him. When I had my first eviction I took him out to lunch and picked his brain. We have become pretty good friends.
My son makes fun of me because I call him so often. He is always willing to help.
If you show a stinky apartment and get a tenant, you will get a tenant who is willing to live in a stinky apartment.
Tenants don't have 'vision' and don't typically believe a landlord will get it cleaned up.
So by showing this apartment in as-is condition, and accepting a non-qualifying tenant, you are lowering your standards and will be affecting the quality of tenants in the building going forward. You'll start a downward spiral that will sink you.
Some of the best advice I've ever heard is "lower your rents, not your standards".
So, my advice is:
1.Stop showing the stinky apartment
2. Make sure to get that tenant out by what ever means works, ie, if you need to evict if they don't move out by 7/20, then do so.
3. Clean up the apartment properly when they move out and
4. THEN show the apartment.
5 Understand it is virtually impossible to have zero vacancy so adjust your expectations and business model accordingly
You will have a vacancy period, but vacant is way cheaper in the long run than a bad tenant. You have an example of that right now.
Yep, existing tenants usually have a different level of cleanliness than I expect during showings.
It won't help you now but, in the future, if you video the apartment in perfect condition you can upload it to youtube. You place the video on hidden status until you begin marketing the unit for impending turnover.
You would tell the future applicant that you do not want to bring strangers into your renter's home due to privacy and that they can view the unit on youtube. Applicants love to hear that you respect your current renters.
I certainly would not continue showing this unit until the animals and smell are gone. Your sense of smell is powerful and lasting. You remember good and bad things by sense of smell. You don't want your unit becoming one of those bad memories.
Yeah, you guys are too soft. You can contract almost anything in a lease. Try this on for size:
"RESIDENT(S) understand and agree that they are receiving a $150/mo. discount in exchange for completing a one-year minimum term and that failure to complete the full term will result in an administrative charge-back for the months completed. For any chronic late payments of room fees or utilities, more than 3 late payments in either category, will result in room fee increase of $50.00 per month."
then...just to put a boot in their ***...
Completing Term & Qualifying for Discount:
RESIDENTS will pay all fees on time.
RESIDENTS will have no house rules or policies violations.
RESIDENTS will keep room clean and be cooperative with showings prior to their departure.
RESIDENTS agree that an un-showable room is the same as being uncooperative.
RESIDENTS agree that being uncooperative will disqualify RESIDENTS from the discount.
See...you just have to arm yourself better. Is it Enforceable? Who knows! Is it Believable? Absolutely!
The kiss of death:
The Parties agree that any and all claims, controversies, breaches or disputes arising from or related to this Agreement, including those pertaining to the formation, construction, performance, applicability, interpretation, or enforce-ability of this Agreement, or any claim or assertion that all or part of this Agreement is void or voidable, shall be settled by binding arbitration according to the procedures of The Federal Arbitration Act which shall govern the interpretation, enforcement and proceedings pursuant to the arbitration clause in this agreement. The arbitrator may consider the testimony and evidence presented by the parties through any or all of the following types of hearings: documentary hearing, teleconference hearing, or through a standard scheduled hearing physically attended by the parties and legal counsel if any. Any standard arbitration hearing that requires the parties’ physical presence shall be held in Los Angeles, CA. or at any location within 30 miles of Los Angeles at the sole discretion of Management. The Parties also agree that any award tendered by the arbitrator may be entered as a judgment in the United States court in and for the district within which such award was made and enforceable as an order of said court and the Parties hereby submit to the venue and jurisdiction of that court for purposes of enforcement of any arbitration award.
Good luck...and don't be a *****!
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