Bad Landlord Year how to Stop the Pain

Bad Landlord Year how to Stop the Pain

Member since 2019 · 90 posts · 56 votes

Hi BP Community,

I have 2, 4 units total Duplexes that I purchased in the last 2 years that were money makers last year. Everything was going well before 2022 hit and tenant turnover happened. 

Unit 1 turn: renter went M2M, didn't up their rental insurance, 2 huskies from previous owner's lease lived there urinated and destroyed hardwood floors. The security deposit was $800, damage was over 5,200 with insurance already expired after the lease. Took 2 months to rerent the unit at a higher rent.

Unit 2 turn: better, $1,500. Took 1.5 months to rent. Rented at a higher rate. 

Unit 1: had a leak in AC Unit: $600.

Unit 2: leak causes molding and $3500 of damage for both units.

Unit 3: Tenant smoking and put cigarettes on countertops while cooking making incredible black circles. Countertops and turn $2450. 1 month vacancy, rented for $300 more.

Unit 4: At this point, I've had it and raised the rent only $100 so they stay. Find out they have a pitbull mix and the tenant cannot sign lease due to mental illness and PM is unsure how they signed in the first place. 2-month delay in signing the lease extension, no pitpull mix on-premise.

Both properties were purchased sub 4% financing. PM is better than first PM I hired in the area. Has anyone else gone through similar and been through this?

0Reply
92 views

Most Popular Reply

Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
4y

Get rid of everyone, fix them up nice and rent to a higher quality tenant for more $$

Sorry for your bad year.....makes ya wonder why we want to be landlords sometimes, huh?

See this reply in the discussion

34 Replies

Jump to latestLatest
  • Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    4y

    Better screening and larger security deposits. It sounds like a rough year but many of us had a larger expense on one turnover on one unit. Helpfully you;ge turned the corner. 

    If these are older properties (say pre-1980) you might want to run more 4-6 month inspections looking for problems. Make sure you get 2nd and or 3rd quotes on major repairs. 

    Good luck. 

  • Member since 2019 · 90 posts · 56 votes
    4y

    Bill, good points. These are newer properties with bad tenents that I inherited from the previous owners who got small security deposits. I started to require renters insurance for MTM leases and these two properties are 1990 and 1991. My PM's get me the quotes as I'm out of state, so my hands are a bit tied there. Other learning here is I should have kept a bigger budget for reserves.

  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y

    Get rid of everyone, fix them up nice and rent to a higher quality tenant for more $$

    Sorry for your bad year.....makes ya wonder why we want to be landlords sometimes, huh?

  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    4y

    @Vlad B.

    If these are c class or lower this is not uncommon

    7e investments53 Reviews
  • Member since 2019 · 90 posts · 56 votes
    4y
    Quote from @Chris Seveney:

    @Vlad B.

    If these are c class or lower this is not uncommon

    One is in a C area. The other isn’t. The dream is to get rid of everyone and get cash flow but that doesn’t exist to my knowledge. 

  • Real Estate Broker · Kansas City, MO · Member since 2017 · 537 posts · 292 votes
    4y

    Yeah, bro.  It’s called real estate investing.  🙂 You’re in the game now.  Cheers, @Vlad B. You gotta learn this way sometimes.  Every seasoned investor is loaded with stories about rentals, flips, and all kinds of stuff related to tenants and toilets.  If you’re gonna hold rentals then this is pretty much what you’re in store for.  If you want something easier to manage but still cash flows you might look at notes or creative financing.  

  • Member since 2019 · 90 posts · 56 votes
    4y
    Quote from @Luther Wilson III:

    Yeah, bro.  It’s called real estate investing.  🙂 You’re in the game now.  Cheers, @Vlad B. You gotta learn this way sometimes.  Every seasoned investor is loaded with stories about rentals, flips, and all kinds of stuff related to tenants and toilets.  If you’re gonna hold rentals then this is pretty much what you’re in store for.  If you want something easier to manage but still cash flows you might look at notes or creative financing.  

     So I decided I am in for the long run. 

  • Member since 2019 · 90 posts · 56 votes
    4y
    Quote from @Luther Wilson III:

    Yeah, bro.  It’s called real estate investing.  🙂 You’re in the game now.  Cheers, @Vlad B. You gotta learn this way sometimes.  Every seasoned investor is loaded with stories about rentals, flips, and all kinds of stuff related to tenants and toilets.  If you’re gonna hold rentals then this is pretty much what you’re in store for.  If you want something easier to manage but still cash flows you might look at notes or creative financing.  


    NICE REALITY Check.

  • Real Estate Broker · Kansas City, MO · Member since 2017 · 537 posts · 292 votes
    4y

    Right on, Vlad.  That’s legit - if you’re in it for the long haul then you’ll be good.  It’ll get better as you’re rolling.  You’ve made it clear that you’re reinvesting back into the properties which is clutch as well.  You’ll be paying down the debt along the way too.  Along with the write offs and stuff, there’s so many benefits.  There will be rough patches during the journey but it it absolutely pays off!  
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y
    Quote from @Vlad B.:

    You have a PM and this is still happening???

    Leaking A/C and other maintenance is not an issue. Tenants with unauthorized animals? PM allowed a pre-existing Tenant to go month-to-month without a rent increase, new lease, pet fees, inspection, etc? 

    Your story is common. People say everything is going swell, but the truth is they are ignorant of the truth. I can assure you the Huskies did not destroy the hardwood floors in their last couple of months occupancy. It should have been discovered in a previous inspection, which should have taken place at least twice a year in that situation. Tenants smoking in the house and putting out butts on the counter? That kind of behavior comes from renters that wouldn't pass my screening and I would have caught them in an inspection. And the fourth person you kept the rent low and ended up with a bad Tenant, which is how the world works.

    You need to find a decent PM. What market is this in?

    The DIY Landlord Book4.7248 Reviews
  • Member since 2019 · 90 posts · 56 votes
    4y
    Quote from @Nathan Gesner:
    Quote from @Vlad B.:

    You have a PM and this is still happening???

    Leaking A/C and other maintenance is not an issue. Tenants with unauthorized animals? PM allowed a pre-existing Tenant to go month-to-month without a rent increase, new lease, pet fees, inspection, etc? 

    Your story is common. People say everything is going swell, but the truth is they are ignorant of the truth. I can assure you the Huskies did not destroy the hardwood floors in their last couple of months occupancy. It should have been discovered in a previous inspection, which should have taken place at least twice a year in that situation. Tenants smoking in the house and putting out butts on the counter? That kind of behavior comes from renters that wouldn't pass my screening and I would have caught them in an inspection. And the fourth person you kept the rent low and ended up with a bad Tenant, which is how the world works.

    You need to find a decent PM. What market is this in?

    Kansas City, this is my second PM. I am from out of state. PM is not responding at times and I just signed a new contract with lower PM fees, lower lease fees, and lower resigning lease fees as I added more units. 

    I am trying to push them but they’re not doing anything so I paid for the repairs and hopefully my distributions will come in as now I have more units. They have me in a bad spot.

  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y
    Quote from @Vlad B.:
    Finding a good PM is like finding a good renter: you need to know what one looks like, set some standards, then search until you find one that meets your standards.

    Remember: cheaper doesn't mean you'll make more money.

    Start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. You can also search Google and read reviews. Regardless of how you find them, try to interview at least three managers.

    1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their staff qualifications.

    2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.

    3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 6% management fee but the extra fees can add up to be more than the other company that charges 10% with no additional fees. Fees should be clearly stated in writing, easy to understand, and justifiable. Common fees will include a set-up fee, leasing fee for each turnover or a lease renewal fee, marking up maintenance, retaining late fees, and more. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate, particularly if you have a lot of rentals.

    4. Review their lease agreement and addenda. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.

    5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that policies are enforced equally and fairly by their entire staff.

    6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact that a tenant is complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.

    7. Look at their marketing strategy. Are they doing everything they can to expose properties to the widest possible market? Are their listings detailed with good quality photos? Can they prove how long it takes to rent a vacant property?

    This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!
    The DIY Landlord Book4.7248 Reviews
  • Rental Property Investor · Tampa, FL · Member since 2018 · 21 posts · 8 votes
    4y

    Nathan's post about finding a good PM is great. I don't use a PM for my own properties, so I don't have much experience there.

    I do have experience in what's worked well for me to find good tenants.

    My first rental had awful tenants. I was time pressured into picking them. I couldn't afford to not take them.

    I eventually sold that property and am so happy I did.

    For the next properties I set very clear screening criteria. Immovable requirements on credit score, income, and eviction history.

    If I'm not getting at least 3 applicants for the property that meet those, then I lower the price.

    I'd rather lower the rent to get good tenants. This is a long game for me. I raise rent annually by at least 2%, so I'll make it back eventually.

    Hope this helps.

  • Member since 2019 · 90 posts · 56 votes
    4y
    Quote from @Trae Robrock:

    Nathan's post about finding a good PM is great. I don't use a PM for my own properties, so I don't have much experience there.

    I do have experience in what's worked well for me to find good tenants.

    My first rental had awful tenants. I was time pressured into picking them. I couldn't afford to not take them.

    I eventually sold that property and am so happy I did.

    For the next properties I set very clear screening criteria. Immovable requirements on credit score, income, and eviction history.

    If I'm not getting at least 3 applicants for the property that meet those, then I lower the price.

    I'd rather lower the rent to get good tenants. This is a long game for me. I raise rent annually by at least 2%, so I'll make it back eventually.

    Hope this helps.

    All good stuff, but I am relying on the PM as I am out of state. I got great deals on the properties and now I am paying for it on the back end with inherited tenants from previous owners that didn’t screen or increase rents. Rough! 

    I like all of your ideas!
  • Jared HottleBusiness Member
    Real Estate Agent · Cedar falls IA Waterloo, IA · Member since 2020 · 902 posts · 549 votes
    4y

    This too shall pass. The only constant in life. Breathe, regroup, and get after it. You got good terms so don't panic. If you got some reserves for turns see if you can non-renew or cash for keys your major problem tenants and work with PM to get a better screening process. Once you get things stabilized figure out how some of these issues could of been avoided and use it to filter for your next deal. Unsure on the makeup of these properties but it sounds like problems that occur alot in older homes (1930 or older) and converted single family homes like up/down duplexes. I have seen this alot so anytime a deal like this comes up it is a pass for me.  

  • Member since 2019 · 90 posts · 56 votes
    4y
    Quote from @Jared Hottle:

    This too shall pass. The only constant in life. Breathe, regroup, and get after it. You got good terms so don't panic. If you got some reserves for turns see if you can non-renew or cash for keys your major problem tenants and work with PM to get a better screening process. Once you get things stabilized figure out how some of these issues could of been avoided and use it to filter for your next deal. Unsure on the makeup of these properties but it sounds like problems that occur alot in older homes (1930 or older) and converted single family homes like up/down duplexes. I have seen this alot so anytime a deal like this comes up it is a pass for me.  


     I avoid the century homes. These are 1990 builds. Just turnover with PM and no 6mo check in is bad. This is something I added with the new contract. 

    I do think I have everything set up for the future but the continued little maintenance has already eaten all profits for 2022. I added a 4plex to normalize fees and move into bigger profits in 2023. Long game. But PM is slow. One unit is vacant. 2 units are MTM. And they screwed up my accounts in accounting. 

    These are low paid workers, maybe I’m expecting too much?

  • Rental Property Investor · Tampa, FL · Member since 2018 · 21 posts · 8 votes
    4y
    Quote from @Vlad B.:
    Quote from @Trae Robrock:

    Nathan's post about finding a good PM is great. I don't use a PM for my own properties, so I don't have much experience there.

    I do have experience in what's worked well for me to find good tenants.

    My first rental had awful tenants. I was time pressured into picking them. I couldn't afford to not take them.

    I eventually sold that property and am so happy I did.

    For the next properties I set very clear screening criteria. Immovable requirements on credit score, income, and eviction history.

    If I'm not getting at least 3 applicants for the property that meet those, then I lower the price.

    I'd rather lower the rent to get good tenants. This is a long game for me. I raise rent annually by at least 2%, so I'll make it back eventually.

    Hope this helps.

    All good stuff, but I am relying on the PM as I am out of state. I got great deals on the properties and now I am paying for it on the back end with inherited tenants from previous owners that didn’t screen or increase rents. Rough! 

    I like all of your ideas!

     No problem. Don't let being out of state stop you either.

    All of my properties are out of state from me as well.

    Good luck.

  • Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes
    4y

    @Vlad B.,

    It sounds like you bought duplexes, where the prior landlord had an absentee PM, and the tenants did whatever they wanted.   They got away with everything.   

    It's VERY common to see this in C-/D properties, where the landlord only cares about rent-- as long as they get rent-- they never check on their properties, and it goes south fast.    I got a quadplex where they rented to a girl who was a local drug dealer (mom paid of the rent), all the other units complained about people coming in 1-5AM-- but when we got it, the PM gave me no warning-- just said she always paid on time.     Bad behavior has been accepted in your units for years, you coming in enforcing things will  honestly likely not work, to them-- it's the same place, why would they change?    Will your units be trashed?  Absolutely-- you should expect it from this type of tenant, this shouldn't be a surprise at all.   You're facing a battle I doubt you will win, and the amount of headaches and stress-- yikes!   Just wait for one of them to contact a lawyer and sue YOU about that mold, or wait for that pit bull to bite and injure another tenant (this happened to us at a property  we got with inherited tenants FYI!)--- bad tenants are going to be consistently bad tenants. 

    Your best option IMO is to non-renew, start fresh-- remodel and have them be nice higher quality units.  Hire a different PM,-- clearly explain what you expect and demand inspections.   A clean slate with new tenants will be your best option with disrespectful inherited tenants.   Also-- be proactive with your property, if the roof is really old, or has a history of leaks-- it my be time to plan to replace it.   

  • Real Estate Broker · Kansas City Metro · Member since 2015 · 2k+ posts · 1k+ votes
    4y

    @Vlad B. If it were me, I would get them leased up asap and then sell them, perform a 1031 exchange to defer taxes on any gains and buy newer townhouse style apartments that cash flow. I can show you some examples of others that have done this. Tough decision but sometimes it it best to cut bait, get something new, and see if that works for you better. 

  • Member since 2019 · 90 posts · 56 votes
    4y

    New tenants are in the units and problems from old tenants lingering like a skunk.

  • Member since 2019 · 90 posts · 56 votes
    4y
    Quote from @Alex Olson:

    @Vlad B. If it were me, I would get them leased up asap and then sell them, perform a 1031 exchange to defer taxes on any gains and buy newer townhouse style apartments that cash flow. I can show you some examples of others that have done this. Tough decision but sometimes it it best to cut bait, get something new, and see if that works for you better. 

    These did cash flow last year 13% as nobody submitted any repairs. :) Now I understand why. The unit purchased in 2019 appreciated 40%, in the opportunity zone. Sub 4% rate on this duplex. Do I sell this thing now or wait as it can cash flow again as I raised rents by 13.5% this year? The property I bought just now was almost 7% rate. Is it worth it to go through the 1031, will I get anything in KCMO as I'm not seeing any inventory worthwhile at all.


  • Erin AzarPro Member
    Rental Property Investor · IN · Member since 2021 · 47 posts · 36 votes
    4y
    Quote from @Nathan Gesner:
    Quote from @Vlad B.:
    Finding a good PM is like finding a good renter: you need to know what one looks like, set some standards, then search until you find one that meets your standards.

    Remember: cheaper doesn't mean you'll make more money.

    Start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. You can also search Google and read reviews. Regardless of how you find them, try to interview at least three managers.

    1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their staff qualifications.

    2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.

    3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 6% management fee but the extra fees can add up to be more than the other company that charges 10% with no additional fees. Fees should be clearly stated in writing, easy to understand, and justifiable. Common fees will include a set-up fee, leasing fee for each turnover or a lease renewal fee, marking up maintenance, retaining late fees, and more. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate, particularly if you have a lot of rentals.

    4. Review their lease agreement and addenda. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.

    5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that policies are enforced equally and fairly by their entire staff.

    6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact that a tenant is complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.

    7. Look at their marketing strategy. Are they doing everything they can to expose properties to the widest possible market? Are their listings detailed with good quality photos? Can they prove how long it takes to rent a vacant property?

    This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!

     Very helpful! Thanks.

  • Real Estate Broker · Kansas City, MO · Member since 2017 · 537 posts · 292 votes
    4y
    Quote from @Vlad B.:
    These did cash flow last year 13% as nobody submitted any repairs. :) Now I understand why. The unit purchased in 2019 appreciated 40%, in the opportunity zone. Sub 4% rate on this duplex. Do I sell this thing now or wait as it can cash flow again as I raised rents by 13.5% this year? The property I bought just now was almost 7% rate. Is it worth it to go through the 1031, will I get anything in KCMO as I'm not seeing any inventory worthwhile at all.

     You might as well hold on, @Vlad B..  If you push through the rough patch while continuing to take care of your properties -  and you’ve been raising rents so that’s a plus too - then I do believe it’ll pay off big in the long run.  Property managers, tenants, contractors, and even agents will come and go… This **** isn’t rocket science. The longer you hold on the better odds you’ll get.  When the time comes buy another property!  This time, maybe in a better location.  🙂

  • Investor · Berkeley, CA · Member since 2015 · 1k+ posts · 713 votes
    4y

    1. Don't invest in duplexes or fourplexes that are in rental neighborhoods (most are).

    2. Do not allow dogs in fourplexes

    3. Do not allow any aggressive breed dogs (allowing them on your property will automatically VOID your property insurance).

    My suggestion: Sell what you have and start over.

    The property attracts the tenant.  So, only invest in high-quality property with which you can attract high-quality tenants with high incomes, high credit (non-criminals).  Don't invest in the ghetto if you want an easier time managing your rentals.

  • John MorganPro Member
    Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
    4y

    @Vlad B.

    Sorry about this. Been there done that. I’ve had 4 rentals that had tenants from hell in there sort of like this. Fortunately the new tenants who moved in after I cleaned them up have all been excellent with no problems and plan to stay for years. Stay positive and know you’ll probably get great tenants to move in that will take great care of your properties. And market rent will go up quite a bit over time, so they’ll be cash cows in a few years. Hang in there and be patient.

Join the conversationCreate a free account to reply, vote on answers and follow this thread.