Rental house in disrepair with tenants

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Rental house in disrepair with tenants

Bill Robinson
Member since 2020 · 4 posts · 2 votes

I have a general question about rental property in disrepair.  My parents have a rental house that has some major floor rot problems.  The house is on peer and beam, not a concrete slab. The tenants have been in the house for two years.  The rot started about 1 year ago.  The rot is so bad that the tenants cannot use one room.  I looked at it today and it is bad enough that a person could fall through. The tenants do not want to move out.  My parents do not have the money to do all of the necessary repairs.  Can my parents request the tenants to move and if they want to stay can they have the tenants sign something relieving them of liability?   Any advice would be very much appreciated.  

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Matthew CrivelliBusiness Member
Lender · MA · Member since 2021 · 1k+ posts · 1k+ votes
5y

Why not sell the house? Let someone else deal with it. If the tenants are not on a long term lease give them notice to vacate. How much is the house worth? If its owned free and clear you could also refi or take a HELOC out to fix it up. I think you have some options here.

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  • Matthew CrivelliBusiness Member
    Lender · MA · Member since 2021 · 1k+ posts · 1k+ votes
    5y

    Why not sell the house? Let someone else deal with it. If the tenants are not on a long term lease give them notice to vacate. How much is the house worth? If its owned free and clear you could also refi or take a HELOC out to fix it up. I think you have some options here.

    [email protected]413-348-8346
    Freedom Capital Funding, LLC523 Reviews
    WebsiteView Page
    4Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    5y

    How much would repairs cost and can your parents borrow money (eg HELOC) to get them done? They can't leave it as is and have people live in it.

    0Reply
  • Bill Robinson
    OP
    Member since 2020 · 4 posts · 2 votes
    5y

    House is worth $125,000.   Repairs will cost in the range of $40,000.  The most it will rent for comparing comps is $1,400.  It is owned free and clear.  Without being to specific, it is located in a small town outside of Houston, TX.  

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  • Matt Devincenzo
    Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
    5y

    There is a false idea that by having someone sign a liability waiver, you're no longer 'at risk'. There is a basic legal principal that is often ignored by residential LLs that you cannot request someone waive certain rights. There is also a principal that certain situations, like a commercial lease, both parties are sophisticated enough to waive their rights. But in residential leases it is presumed that the LL is the more sophisticated party, and in a better negotiating position, so the tenant is at a disadvantage in these type of negotiations.

    So to that end I'd suggest they either get the repairs done, or sell the property. If the tenants want to stay that is fine, let them know what that takes. Get your HELOC, and GC lined up and then tell them the repairs will be 1 month during which they need to be staying somewhere else. You wouldn't charge rent during that time, because they can't stay in the house.

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  • Kay W.
    New York City, NY · Member since 2017 · 7 posts · 8 votes
    5y

    Sell the house.  If your parents don't have the money to make the necessary repairs, why are you determined to keep a rotting house?  since this is a rental house, there is also no point in keeping it also since it does not seem like you are not generating enough income to even cover repairs. 

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  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    5y

    Like @Matt Devincenzo said there is no way to get rid of the risk. They will fall through that hole on some drunken night and then come sue you. The judge will scold them and then rule against you. There goes your house and a lot more.

    Sell it. Now. Quick.

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  • Scott M.
    Real Estate Broker · Rochester Hills, MI · Member since 2009 · 2k+ posts · 2k+ votes
    5y

    Simple solution is to go to the city building department and tattle on yourself.  They will declare the home inhabitable and that will force the tenants to leave.  All this assumes it is as bad as you say.  

    1Reply
  • Scott Mac
    Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
    5y
    Originally posted by @Bill Robinson:

    House is worth $125,000.   Repairs will cost in the range of $40,000.  The most it will rent for comparing comps is $1,400.  It is owned free and clear.  Without being to specific, it is located in a small town outside of Houston, TX.  

     $125,000 - $40,000 = $85,000 less realtor fees to sell it, and will a lender finance it in it's present condition.

    Also, those pier and beams go out of wack all the time and maybe just adjusting them will fix it.

    Some of the older homes are jacked up with all kinds of automobile junk yard scissor jacks and Auto Zone bottle jacks, piles of rocks, stacks of 2 x 4's on grade, wooden shingles, tar shingles, etc... vs proper peirs.

    So maybe one of the renters (or one of their friends) crawled under there and removed the jacks to use on their car repair or sell at the pawn shop for beer money and now the floor bounces.

    Meaning get a 2nd opinion from a pier company (that's legit, has an office and a website, etc...) and have them confirm the ROT--if any.

    Because the floors do rot (sometimes) and also the piers go out of wack and sometimes also sometimes disappear into thin air--and no one knows what happened to them.

    Getting a 2nd opinion on if there is rot--with cell phone pics of it--would be smart--if none then adjust/replace the jacks.

    Good Luck!

    1Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    5y

    @Scott Mac Where'd you get all those pics of the houses I built...? :-)

    3Reply
  • Bill Robinson
    OP
    Member since 2020 · 4 posts · 2 votes
    5y

    Thank you for all the replies.  It is a more complicated situation than I can put on here, but all the advice is on par with what I was thinking.  

    1Reply
  • Genny Li
    Baltimore, MD · Member since 2018 · 432 posts · 281 votes
    5y

    I'm really worried about 0 to unusable rot in 2 years. What changed? Got a water leak down there?

    1Reply
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