All Forum Posts by: Randy E.

@Jimmy S., lying schmying.  I don't care about the lying, per se.  Applicants lie or mislead all the time.  A separated woman might say she's "divorced" when she is still married.  I've had that happen more than once.  None of you would disqualify her for that.

What we all care about is the eviction.  

14 years is a long time and the man would have been relatively young at the time.  Still, this is my business and if I see a prior eviction, so far it's always been an automatic "NO" for me.  No consideration of other things, just no.

Not because of the lie, but because of the eviction.

 Sant, people like that who are in a crisis and need help, ALWAYS are in a crisis and need help.  If Aaron continues to let her live there rent free, he won't be able to rent out the house and make money.  If Aaron doesn't make money from rent, he can't pay the mortgage.  If Aaron doesn't pay the mortgage, the house will be foreclosed and his mother will be evicted.  Either way, she will be out of that particular house.

And you know what?  She'll find somewhere else to live.  Some other family member somewhere.  Some facility that she qualifies for.  Some friend (old or new) who will put her up for a while.

Yes, his mother raised him, but having a child was her choice, not his.  The obligation of support was her obligation to support her minor child, not the minor child's obligation to support his adult mother for fifty or sixty years.  He can help her, but he should not be expected to ruin his life to help her out of repeated, continuous bad decisions she has made for years and decades.

Harsh?  Maybe, but it's the hard truth that will get Aaron through this and on to a successful future for him and his own (one-day) children.

@Aaron Arthur, if you don't plan on living in IL again, I'd first evict everyone, then repair, then sell for profit.  Take the profit and get started on another property closer to where you are currently, and DO NOT RENT TO FAMILY again.  Do no attempt to repair the house while your mother or anyone else is living there.  It will not go well and you'll spend more money on more repairs.  Evict, repair, sell.

If you're intent on keeping the house in IL, evict, repair, hire property manager, rent.

I love my family and friends, but the only people I'm going broke for are my minor children.  Adults get my love, but not the money I need to live on and/or build my future upon.  Besides, as you said Aaron, you can continue to lose money until you cannot afford the house any more, it will be foreclosed upon, and your mother will have to move anyway.  So, whether she's forced to move in six months or forced to move now isn't really a big deal.  The only real difference is you'll maintain your investment, maintain your ability to create a better future for yourself and your fiance, and in the long run, if you are successful in your Real Estate Investments you will be able to financially aid your mother in future years.  Just not right now.  You have to save yourself before you can save others.

Either way, your first step is evict.  Don't let the crabs pull you back into the bucket.

Good luck.

File for eviction.  You have a signed lease with the tenant.  The fact that she never paid does not negate the fact you have a legally binding lease signed by both parties.  

Next time, never accept deferred payment on a deposit/1st month payment.  Either receive it in check well before the move-in date so you can make sure it clears, or better yet, insist on a money order or electronic transfer.

If you've never evicted before, go to clerk of courts office in the courthouse and ask for the eviction forms, and follow the instructions.  Or hire an eviction attorney.  This woman is no shrinking violet.  She will drag this out and stay there without paying for as long as you allow it.  Put a stop to it by filing for eviction now.

Good luck,

Welcome to BP and to Durham, Phillip.  Good luck

 You've owned it for at least 14 years, maybe more, right?  That mortgage has to be pretty low right now.  Forget $160K for a comparable house in good condition.  If you're estimating $30K in repairs, don't quickly assume you can price it as-is for $160K minus $30K, because to an investor it will have to sell for much less, and to someone who plans to live there it will also have to sell for much less.  Your house is not in good condition.  Price it to sell as-is, meaning a LOT LESS than $160K.  If you price it correctly, it should sell soon.  If it doesn't sell soon, it is priced too high.

You're right.  You can't continue lower rent indefinitely -- then again, it's also not sustainable to endure frequent turnovers.  That was only one possible solution to your rapid-turnover problem. Another was better screening of tenants. 

Yet another possible solution might be improving the quality of the units.  You mentioned that several things have broken.  A unit with frequently-needed repairs might experience more turnover than one that needs a repair only once a year or every two years.  Maybe one of the tenants who moved out did so because of a breakdown, and that might have been the tenant who would have stayed and paid on time for three years.

Or, you might be right and the neighborhood is so bad that you can't find quality tenants.  But don't forget that you yourself said there are worse neighborhoods nearby.  It's been my experience that good tenants will migrate to better neighborhoods given the option.  Among other things, part of what usually makes a neighborhood "worse" are safety concerns and units in poor condition.  Ostensibly, your rental is in an area that is comparatively safer than the "worse" neighborhood and your units are in better condition.  Price your units between the rent points of the two areas, but closer in price to the poorer area, and you should be able to attract more applicants which will include some of those from the "worse" area who might be good tenants wishing to escape the "worse" area.  Screen properly and you'll snag a good long term tenant.

Yet another obstacle to your succeeding or failing in this area is your ability to effectively communicate with your tenant pool.  If you find yourself overly frustrated by what they say to you, or because they seem to not understand what you're saying to them, or how they speak to you, it just may be that you're not yet suited to being a landlord in that area.  Some people are cut out to be landlords in low-income neighborhoods, many are not suited for it.  Because of that reason, some investors stick exclusively to B- and up neighborhoods.  It costs more to invest there, but the tenant pool may be a better fit for your abilities.

Good luck,

 Nick, when I bought my first rental, I had very little financial wiggle room.  More or less, I had to have a tenant paying rent.  I could absorb a vacant month here or there, but frequent vacancies or a long-term vacancy would have been trouble.  

My solution was to rent at lower than market-rate prices.  Many landlords (including many on these forums) recommend against doing that.  My logic was that if market rent was $700 and I charged $700, then as soon as the tenant found a better rental (either the unit or the neighborhood being better) for the same money, they would move; or if they found a similar rental for less money, they would move.  So, I priced my house at 15-20% lower than the going rate.  For tenants at that price level, saving $50-$100 a month is a big deal.  Also, being newly renovated, my house was in better shape than other comps.  

My first tenant stayed 18 months, and the second in that house stayed more than two years.  In the first 42 months, I had one month with no rent.  Maybe I earned less per month, but I feel it worked out best for me at the time.  Those first two tenants KNEW they were getting a good deal and neither moved until they had to.  The second tenant lost his job, told me he couldn't afford it any more, and moved out at an agreed upon date. In my eyes, it was a win-win situation.  Maybe I got lucky.  But maybe my plan worked because it made sense.  

@Nick K., I think your problems were/are mainly two things.  

First, you hired an unreliable contractor who bought defective (used?) materials and probably overcharged you.  Your fault?  Yeah, but you were a first-time investor and we've all been there and done that.  What's done is done and you just have to find a way to get over the past and current financial bumps.  Hopefully, better choices will reduce future financial bumps.

Secondly, it sounds like managing your tenants is creating stress for you.  That stress can probably be reduced by better tenant screening.  As you said, in the beginning you accepted tenants simply to get the units rented quickly.  If one or both of the tenants are causing you headaches (slow pay or non-pay, bringing in pets when they said they have none, breaking stuff, allowing extra roommates you have not agreed to, etc) then you may need new tenants.  It may be best for you to give the problem tenant(s) a 30-day notice, and rent the unit(s) to new tenants.  This time, research how to better screen your applicants and you should end up with better tenants who cause you less stress.

If you can avoid property management, you can avoid fees associated with property management.  Don't forget, most prop mgmt firms will insist on handling repairs and yardwork themselves, then charge more than you pay now.  So that will be an additional cost associated with prop mgmt.  

Regarding the tenant turnover you mentioned: I know a few landlords who own properties in high-turnover neighborhoods who basically charge two months and a one-month security deposit prior to moving in.  That way, they are two months ahead (and a security deposit) if a tenant breaks the lease early.  Include language in your lease saying that breaking the lease results in forfeiture of that, and you will have a cushion to pay for the vacancy and placing a new tenant.

Congratulations, @Justin Fraser.  That was a bold move for a 3-unit owner!