What would you do? Evict or take state assistance?
Here are the facts:
In July or August of 2019 we were selling one of our most expensive properties at the time for $330,000. We got a couple who wanted to buy the property but couldn't qualify for the loan at that time because of some credit issues. We decided to do a lease option with them because they were willing to put down 30k we gave them an option to buy the property within 3 years for 300k. The lease option tenant would be paying about $2000 a month and our expenses were about $1800 for the property. So we knew that we wouldn't cash flow very much during the 3 years on the property but we needed the 30k at the time and that particular property had fallen out of escrow a few times because the property was on hauled water rather than city water or a well and the lenders were having issues at the time finding sold comps with hauled water making it difficult for them to do a proper appraisal.
So we went with this couple with 4 kids and did the lease option with them. After living in the property for 2 months, the husband left without our knowledge and the they stopped paying the rent. When we became aware of this we tried to find the wife and her kids a less expensive property that she could live in where we were going to transfer her option fee so that she could buy a less expensive property that she could afford on her own. Rather than moving out of the property, her in-laws stepped in and got her current with her payments and started paying her rent. And since we were getting paid rent, we stopped worrying about the situation and focused on other things we were doing with real estate.
Fast forward to May of 2020. We didn't receive a rent payment. We tried calling the tenant but she didn't answer. So we called the family member that was making the rent payments and the family member said that she would no long be paying her rent. At this time the pandemic was had started and we were trying to work with tenants that were being effected by job losses but we still couldn't get ahold of the tenant in this property even though we were stopping by her home and it appeared that people were in the house. So after 4 months of little to no communication from the tenant we started the eviction process and we went to court via Zoom. We were won the case and she was ordered to leave the property. But when the constable came to remove her from the property, she brought out the CDC form and claimed that she had been effected by Covid since her kids were at home instead of school and she couldn't go to her "job" which was a temp job where she worked a little bit and earned a few hundred dollars a month. She was granted the ability to stay in the property.
This was really frustrating to us because she communicated with us so little and wouldn't work anything out with us regarding any type of partial rent payments. We did get one email from her stating that if we kept contacting her that she would consider it harassment. So we stopped contacting her.
Fast forward to November. With no rent payments and very little communication from our tenant we went back to court. We let the judge know that she hadn't paid any rent and that she had threatened to charge us with harassment if we continued to contact her. The judge asked her how she expected us to work with her if she threatened to charge us with harassment if we did contact her and he told her that there were assistance programs that she could apply to help out with the rent. But ultimately, there was still a moratorium on evictions through December so even though we won again, the judge said that the eviction couldn't be carried out until January. And, as investors, we all know that come the end of December, the moratorium was extended through March.
After court, we didn't hear from our tenant except for 1 email that stated that she was trying to apply for rent assistance and then nothing.
By the time February and March came around she owed us over $20,000. We hired lawyer and gave him all of the information about the case and about going to court twice before and that she had done little to nothing about the situation. He filed some motions and we went back to court. He explained to the judge that she wasn't following the CDC's guidelines in making efforts to pay and that she was just taking advantage of the pandemic situation. The judge told her that she should have followed his orders and tried to work with us and seek rent assistance. The judge sided with us again and we won the case again. This was on April 6th. She was ordered to be out of the property on April 12th. We called her and left her messages and sent emails trying to find a time when we could pick up the keys from her. She didn't respond. Then on Friday, April 9th, she sent an email asking us to fill out our portion of the rental assistance application but she didn't include a link to the application, however, she did include her case worker's name and email address. I emailed her case worker and was able to get her on the phone on April 12th.
The case worker stated that I could fill out the land lords portion of the rental assistance and they could start helping pay for her rent. I asked if they would be able to pay the $25,000 that she owed. The case worker said that she couldn't promise that. This was Tuesday at 5 pm.
On Wednesday morning the constable contacted my assistant to schedule a time to remove the tenant and her kids from the property. At this point, the house has appreciated to around $430,000 and could be easily sold and bring in over $110,000 into our accounts. So what would you do in this situation? Would you go ahead with he eviction on Thursday or would you try to get the state rental assistance for as long as they were willing to pay and allow the tenant to stay in the property and possibly go through this situation again in the future?
