patrick.net

Brentok - very good write up.
Any pointers on weeding out bad tenants (besides the obvious ones?)

What I would do is get extra deposit. I also explain to potential tenants that should their employer not meet their payroll, they (tenants) would be dusting off their interview suits and resumes before dinner that day. Not paying rent on time has the SAME EFFECT.

Wasn't it easy enough to drop off the left kids at the nearest orphanage?

Excellent post on the realities of being a land lord.

Brentok3,

Which state and city did you managed/owned rental properties?

Great writeup -- it shows that there is risk, and the reality of the situation is usually not as sweet as the numbers might suggest. My family is in this business, so I have been exposed to it second-hand -- they have done well with real estate on the whole, but they do have to deal with most or all of the problems you mentioned. Being able and willing to do much of the repair work themselves has been an important part of their success, as has their willingness to take the eviction (and eventual collection) process to court without a lawyer. Of course, it sounds like you have had a worse time than most due to the collapse of the local economy you were in.

Thanks for sharing your experiences -- I think it's helpful for others considering the "I want to be a landlord" path -- often on this board all you hear is the juicy returns, accumulating wealth, and relative ease of the whole operation. The other side of the coin doesn't see enough daylight here.

-S

I've been a landlord for years and agree with most of this (never had anyone leave their kids yet); Eviction proceedings can only begin once the tenant has been served - and I've had tenants evade service for MONTHS - all the while trashing the unit and not paying. Even if the tenant comes to the door he has to admit to the process server that he is the tenant in order to be served. Once the tenant is served the clock starts ticking and depending on whether they feel like going to court and/or mediation it can still take several more months to get them out. I've been in the business for over 20 years and it's worse now than ever. My theory is that the moral hazard of that the banks create when they allow people to squat in their houses for months and years is having a corrosive effect on the rental business. A lot of people have freinds and relatives who are living rent free and they figure they should be able to do so also. Also tenants who have lost their homes to foreclosure have usually already lived rent free for months or years and resent having to pay rent to the landlord. The tenants I've evicted in the last 2 years had not lost their jobs, gotten divorced, or suffered some other unexpected calamity - they just didn't feel like paying the rent and figured by the time they were evicted they would be into me for thousands of dollars. It isn't hard to get a judgment and hand it over to a collector - but then you have another set of problems. Once the account goes to garnishment don't be surprised if the tenant quits his job - basically the games never end and a lot of tenants are effectively judgment proof. I've come to the conclusion that the best you can do is get the tenant out as soon as possible with the least amount of damage - offer to forego any judgment and walk away from unpaid rent in exchange for having them move out immediately.

APOCALYPSEFUCK is Shostakovich says

Can't you just write it into the lease that the tenant can be physically removed and their shit thrown on the side walk for any reason

You can probably do something like this with commercial RE, but definitely not Residential.
That wouldn't comply with state and local laws - supposetly they are trying to "protect" the tenant.

Anyone who would know basic economics would note they are actually hurting tenants with these laws - landlords won't take tenants with credit blemishes, must take extra deposits, and/or exit the landlording business - hence shrinking the supply of rentals.

These laws also ensure that if anyone ever had any evictions - they will not be able to rent ever again.

Just another example of unintended consequences - while trying to help, government ends up hurting tenants.

An old slum lord once told me: "Never rent anything with a bed." Advice I have taken, I have stayed with commercial properties they fit my temperament better. There are always problems in any landlord /tenant relationship, it is just too "personal" for me when you are dealing with the place someone lives.

AlexS says

You can probably do something like this with commercial RE, but definitely not Residential.
That wouldn't comply with state and local laws - supposetly they are trying to "protect" the tenant.

You have definitely have more latitude in a commercial lease but there are still State laws that must be followed that would not allow a 60 minute eviction process regardless of if it was written in the signed lease or not. State/ City law trumps lease language. Commercial leases have default clauses and list reasons for default by both landlord and tenant. There is a time period given in which to "cure" the default after which various remedies given in the lease can be acted upon. These are or should be in compliance with law.

Yah the little bit of law that I took in uni taught that you can break an "unconscionable" contract. That would be one that violated or caused you to violate the law, invoke personal harm on yourself, or was written in such a lopsided way that nobody would sign it except under duress.
Sorry Apoc, the lawyers have thought of everything.

without risk, there's no gain... u want a free ride, go deposit your money in the bank and try to retire off the interest.

phikapme says

without risk, there's no gain... u want a free ride, go deposit your money in the bank and try to retire off the interest.

That formula simply doesn't work anymore - the Fedster-Banksters will print money faster than your "interest".

Essentially they are forcing people to gamble on wall street casinos - just to have a shot at beating the inflation (rate they print money with).

Or buy real assets, like gold, but keep in mind, asset is not an "investment", assets is to store and protect wealth, not to multiply it.

“Your so right, everything sucks, sucks, sucks. Bless you” Exactly Killer, EXACTLY. Economy shmonomy. These crybabies cant seem to understand how to DREAM THEIR WAY TO REALITY. I mean come on, just dive in, seriously the name tells you how its going to be landLORD, yep. Can’t possibly go wrong because you are a LORD. Get out there and buy a crap ton of houses, rent them out and BOOM rich!!! (Don’t forget to pay full commission, Realtors ™ got your back afterall!) KAJAGOOGOO!

Brentok3 says

Anybody who thinks that most, or even 30% of tenants will pay their rent on time, honor the lease always, not tear up your property, not get dogs, not move in friends or relatives, not start some destructive business on your property, not commit criminal acts on your property, notify you of any needed repairs, etc, is living in a fools paradise and needs to grow up fast.

I must be in a fools paradise then, I'm getting about 80%-90% of my tenants to avoid the above list for the last 20 years. Where were you doing all this renting 20 years ago that you saw these things "hundreds" of times?

Dogs? Bring them on, I advertise as pet friendly rental. I get so many applicants my property manager can sort for the cream of the crop. Not pay the rent? In Tx you can have them out fast. Wouldn't own rentals anywhere I couldn't. The only rent stiff I've had was a doctor. Booted him in 3 weeks after the second payment missed.

The rest of the list shows a very poor selection of tenants and/or not keeping an eye on the properties. My property manager physically eyeballs properties a couple times a month. I have the yard work done as part of the lease. I have used the same person for years and have an understanding that he will tell me if he sees anything wrong. It's not often I hear from him but it's nice to get a heads up.

I do market to a specific target. Most of my tenants are medical residents doing an away year at the local hospital or business people on a temporary stay for a year or two. These are great tenants if you have a property that is suitable.

Perhaps bad tenants are an opportunity for Patrick.net maybe, although I am not sure about the legality in some locations that have nutty tenant rights.

Would be nice if landlords had a place to go where you could search a 'tenant blacklist', so the trouble makers get flagged somehow. Have a raft of people who lied on applications, or my screening process turned up some ghastly stuff on.

Part of the difficulty today is I think fewer bad tenants actually get evicted. I think landlords by and large have started using other means to get rid of them. Speaking from my own experience, I have had two tenants who I needed gone. In both cases I offered a discount on the last months rent plus full security deposit back if they left it in good condition. I also explained what would happen if they didn't go (carrot + stick approach) In both cases they were someone else's problem in under 30 days. Actually, I never got a call from the next landlord asking for a reference on either of them, if I had, I would have told them not to rent to them. Guessing they just lied on their next application.

A question for those of you who have had the nightmare tenants. In hindsight were there any clues you feel you could have caught during the application process if you had it to do over? Anyone that knows the drill well enough to avoid being served for months probably has played this game before.

Listen to yourselves, buy foreclosures to rent them out is IMHO nothing but more housing crap all over again, just worse on so many levels, it is a sucker game. You all sit and rant and bitch about the real estate bust and the whores in the industry but still so many are still trying to grab that cheap overpriced dump and make that fast buck. It is sickening. It just amazes me how people think.

ptiemann says

cheap overpriced dump

In other words, these people who in their own minds have or are looking to buy on the "cheap" to so-called jump into the new bullshite of being a so-called "landlord" to IMHO just "rent and dump" whereas in my view in reality everything today that some are considering cheap is still grossly overpriced.

What astonishes me is that people bitch about being taken, they walk away from loans they themselves took which only helped fuel the economic disaster this country is in, this depression because that is what it is to me. I see what appears to be the same type of people failing to realise that the past ten years reflect a false increase in pricing. On one hand they are bitching about being taken, wanting essentially to stick it to whomever just not to accept responsibility for their mistakes or debt yet on the same hand their greedy mouths are foaming to make a kill of their own. I find it all just SICK.

Let's talk about CA. You are in Capitola, California? I too grew up in California, and IMHO there is NO small dump of a house in my opinion anywhere in CA or elsewhere, no average fixer crap house worth 800K.

But there are people coming out from under their rocks because the greed bug appears to be expanding again must see a made up price or a price based on some smoke and mirror sale of the past ten years at 800K and see the new magical price for some dump 500K and must think it's cheap.

Here is my take on it any average house that was 200K but then after 9/11 was 800K then now 500K sorry to say in my view that damn dump is still a freaking rip-off.

I also am disgusted by both the so-called "Lower-Class" humour and this issue of so-called "Middle-Class" falling a few rungs so they will be renting. To me that is utterly ridiculous and hysterical like someone looking to buy a dump to rent and play landlord is above someone.

Reality check is that renting has nothing to do with "class" or the issues being dealt in terms of falling down rungs the people who better worry about falling down rungs are the fools who bought cars, houses and clothes at outragious prices and then couldn't afford. In reality today you are making it look like renting is some ill some disease when in fact it is the smartest thing people could have done in the past ten years.

I hate the term "class" used in terms of economics. Class has nothing to do with money or economics and in IMHO should be tossed however some apparently some need an social education as to how real "social class" functions in terms of both money and spending.

red flags:

"i really-really NEED to move for xyz reason."

if they NEED to move and make it plain that they are in a hurry and will pretty much take any rental that will accept them, they are usually a. on the lam (failed to pay, have psycho-stalker former live-in lovers after them, you name it) b. hate & despise all their neighbors and are having a secret, passive-aggressive war over who left a wad of chewing gum stuck to the doormat (aka "professional complainers") c. are doing an ill-planned relocation in the hopes that their lives suddenly stop being shit simply due to a change in location even though their lives have always been shit up to now (aka "professionally un, or underemployed with no life plan).

basically, look for a long-term plan. if it is not illegal to do so, as "why are you looking to move right about now?" and gauge the judgement reflected in their answer. if they show forethought and strategic thinking, they're generally not going to cause issues. it matters less what color their collar is. they'll probably quietly pay rent, tell you about important matters that arise, and not call every weekend to bitch about some other thing that they believe needs to be attended to immediately like they are being waited on in a five-star resort and you are simply a hired maitre-de.

edited to add: be very, very careful of the "three/four bedroom rental to 3 clean-cut appearing students scenario". some of them are exactly what they appear to be, which is a a group of people with the goal to keep housing costs as low as can be while attending school and working their asses off to pay rent. but i've seen way too many turn into the party house from hell with different roomates and all of their boyfriends/girlfriends moving in and out every other week. yes, i know this sounds like the dreaded and illegal 'age discrimination', but that's the nature of being a 'young adult, away from home & parental guidance for the first time'. the GOOD version do as advertised: pay their rent, live quietly, study and move along when the time comes for them to proceed on their path in life. the BAD version have loud parties every weekend causing complaints from all the neighbors, bash holes in all of the doors, never clean, and have a revolving circus of characters 'staying over temporarily' for whatever reason. they also firmly believe that paying you money entitles them to do whatever they want, and typically threaten to sue when they leave and you chargeback their deposit for the damages (which are never fully covered by said deposit).

How to be a good landlord who keeps your place well maintained:
1. When a tenant tells you about a problem, don't tell them they're mistaken and the item is supposed to work that way. (My landlady said "you're not supposed to put vegetable matter in the disposal.")
2. When a tenant asks to get something fixed, don't argue about scheduling the repair when the tenant can be present in the house. (My unemployed landlady could never find a time that would work for the two of us.)
3. Don't use workmen off the streets to save money. They might not be honest people with good jobs and might burglarize later. (Happened to my mother.)
4. When you ask tenants they are responsible for the yard, provide the proper equipment. Don't expect the tenant to go out and buy a lawnmower, pruning equipment, and new hoses themselves. (My landlady provided me with a broken mower and nothing else.)
5. Provide a place that's well-maintained and clean and we will assume that you care about the place. (If we point out black spots on the carpet when we move in, don't say "what spots"? If we tell you that there are holes in the screens, replace them.)

"First, most people vastly underestimate the cost and frequency of repairs."

My landlord sure did, new furnace going in but he's having to put off needed drainage work for now not enough "liquidity" atm. LOL

Oh well some more water damage in the basement on the menu this winter. I just laugh at it, don't use that area for anything.

APOCALYPSEFUCK is Shostakovich says

PatNet should have a Tenant Sniper service.

Trouble with a tenant, or just want to clear a property for a better paying tenant.

Call in the PatNet Sniper Brigade and watch all your troubles crumble into a bloody pulped pile on the lawn.

Yeah but a violent death on the premises can hurt your property value. Best wait until they've hit the street.

APOCALYPSEFUCK is Shostakovich says

Efficient Life Church says

How about getting them to agree to installing a device that is remotely controlled by the landlord that will release Liquid Ass when needed?

How about getting them to agree to have a tactical nuke sitting on a tripod on the front window that would be fired into the living room unless a new, one-time key code is typed into it before the 2nd of every month that can only be provided by the landlord after the rent is paid?

Again setting off a nuke will definitely affect your property value.

Better to wire all the utilities to automatically shut off unless the code is entered remotely by the landlord upon the check clearing. If that doesn't work have the floor wired to shock the occupants until rent is paid or they leave.