All Forum Posts by: John Chapman

Yeah, I agree with @Frank S., in terms of problems to have after closing, this doesn't seem huge.  Roofs collapsing, HVAC systems dying, flooding, meth cooking on the property, etc.   Those are problems.  Pest control, even when it's bad, is very fixable with a decent extermination and a lot of understanding extended to the tenant.  Going to need to toughen up and get that checkbook out, particularly if you're out of state.  Not trying to be mean, just give you some perspective.  

M'eh.  Gotta be honest that stuff happens all the time.  Sounds like a leaky toilet or water line or other non-structural, plumbing issue.  You can run into this type of issue at any time as a landlord.  Get a credit, have them fix it, whatever.  Unless there's something I'm missing, doesn't seem like a super expensive repair or big of a deal.  

Bigger issue to me seems to be that you're out of state, don't seem to have a great handle on construction/maintenance, and don't have trustworthy people on the ground.  The questions you're asking seem like your very new to this, which is ok, but it also sounds like you don't have a great support crew (e.g. maintenance man) or knowledgeable people on the ground who can provide you context or answer your questions.  (Unless your agent is an experienced property manager or investor, he or she is not that person.)  If you don't have trustworthy people on the ground who can tell you how big of a deal this is, then you should probably not be investing out of state.

I think this thread is going off the rails a little when I see people accusing him of not addressing it in a timely manner or prioritizing the issue with the water.  He was pretty clear that he immediately took steps, it just took a while to identify and fix, which can happen.  The issue is really how he interacted with the tenant and handled that aspect.  

If it's any consolation to @Ryan Behnke, I've made horrifically bad decisions in my landlording career, particularly when I've been high handed or misjudged a situation, and it has cost me tens of thousands of dollars.  At least for me, it took getting whacked on the nose a couple of times (once, really bad) before I learned my lesson.   In the end, those lessons made me a better business person.  I think he's trying to learn from this experience, and I've seen and heard nothing to suggest he's a deliberate slumlord, so I'm not sure browbeating him on his past decisions at this point is going to help. 

I'm not sure I'm understanding  your post @Chris Fuller. Are you saying that hard money lenders are starting to deliberately breach lending agreements so as to deliberately push borrowers into foreclosure? If so, I can't see how that's a money making scheme. Foreclosure isn't an opportunity to make excess profits so much as an opportunity to mitigate losses, particularly if you have a performing borrower. Plus, most HML lenders I know make more money from points and fees, meaning they want to recirculate their money as fast as possible. Foreclosure drags out how long their money is tied up.

Disputes/gripes over  draws are pretty common.  Some companies are worse than others, and word gets around about bad ones.

As for HML's relationships with junior lenders, how does that impact you, the ultimate borrower? Bottom line is that there are always shady characters in all areas of real estate.

@Ryan Behnke, I'm not sure it matters, but standing water in any area of the house is going to be considered by most to be gross and to render the house uninhabitable.  Moreover, it's the kind of situation where an opportunistic tenant is going to make mold claims.  

Here's how I would have probably handled it.  First, I would have offered to release them from the lease without penalty and offered to give them their full deposit back (assuming they didn't trash the place.)  That's just the right thing to do when you can't deliver a home in the condition it's supposed to be in.  It also garners goodwill because they now have the choice to stay in the home.  If they take you up on it, then this makes it much easier to get the repairs done.  (Major repairs to tenant-occupied homes are very difficult.)  

Second, if the tenant chose to stay, then I would have covered the bedbug treatment as a courtesy.  Again, builds goodwill and most likely you're going to have to pay for it anyway since I'm guessing you're renting to a pool of tenants that does not have the funds to pay for this treatment.  Also, it ensures treatment is done correctly (don't let tenants do pest control themselves, it never works out). I've been landlording for over 12 years, and I can tell you more often than not, covering stuff like this (even when it's the tenant's fault) builds goodwill and loyalty that pays off far more than whatever the upfront cost is.  

Third, I would not have sent that debt to collections.  The tenant most likely doesn't have the money and it jacks with the tenant's life beyond your relationship with the tenant.  You forced the tenant to sue you to get that collections off his or her record and/or made the tenant mad enough to do so.

Fourth, I would not have withheld the deposit the way you did.  Unpaid utilities, sure. Everything else sounds like make ready stuff.  And with one month left on the lease?  I would not have kept that last month's rent given everything the tenant had been through.

Lots of lessons to learn, but it sounds like you want to do the right thing and tried to handle it above board.   Maybe just a softer touch in the future would be my parting thought.

@Joel Owens sounds about right.  This really sounds like a bit of penny wise pound foolish.  You admit in your post there were some pretty significant issues with the property that at least arguably rendered the home uninhabitable.  You kept the entirety of her deposit (it's not clear what the grounds were for doing so) and then sued her for the balance and turned it over to collections.  I'm a lawyer in a landlord friendly state, and I would not want to be standing in front of a judge arguing this  one.  In landlord/tenant disputes, you need to make sure your hands are really clean or they can go sidewise on you real fast and in unpredictable ways.  Small claims down here is like the wild west and it's basically almost totally up to the judges (forget the law).  Maybe you didn't have the intent to be a slumlord (sounds like you tried to be diligent), but your intent is probably irrelevant and the court will just look at how long it took to fix the issues.  Maybe you had the right keep the deposit and send her to collections, but that doesn't mean you should have.  Final note, sure  there's the bed bugs issue, but that seems pretty insignificant in comparison to the other issues and bed bugs are just a way of life in the landlord/tenant arena.  My advice is to get a lawyer and get this resolved out of court.  

You need to watch yourself @Vishakha Penney.  Contrary to what the movies show, lack of personal service does not necessarily insulate you from having a judgment rendered against you.  I haven't practiced in your area but most courts have rules for alternative service (e.g. mailing, newspaper notice, taping to building, whatever).  Think about it, otherwise every deadbeat tenant going through eviction could stay in your property forever if they just ducked personal service.  If alternative service is available and your former tenant does that, then he or she can usually take a default judgment if you don't answer and defend.  Then the burden is on  you to get that overturned.  Better consult an attorney in your area is my advice.

I'm confused.  Is your post buried in that Zillow image thing?

Remodeling with a tenant living in the unit is always really, really hard.  Even if everything starts off hunky dory, it will go south a lot of the time.  @Jeff Willis is absolutely correct that getting a waiver is a horrendously bad idea, particularly if you think you are actually creating a hazardous condition.  (You don't really give much in the way of detail so this is hard to assess.)  

It may be that your tenant just doesn't want to live through a dusty mess.  If that's the case, then you need to wait until your lease is up and not renew or, if it's month to month, terminate the lease.  You don't want to try to force a remodel on a non-cooperative tenant.  

I'll say this, too, if you are going to end your relationship with your tenant, do so nicely.  It will make your life infinitely easier.  

There's really not enough information to answer your questions.  Not sure what you mean by "funding".  Do you mean you have enough cash to invest and just need lending sources?  Or do you mean you do not even have cash to invest and are looking for equity partners where they put in cash and you do the labor?  Those are pretty different scenarios.

In terms of building vs. buying, again, there's not enough information to really answer.  What are your pre-existing build options?  Market? Build costs?  Etc.  

Finally, I don't know what California is like, but I'm not sure the numbers will pencil out if you build a rental in a million dollar home area.  Just an off-the-cuff response.