Bad tenants happen. Everybody has a story. What I’ve noticed recently in my own business is that bad tenants are happening a lot more often. At first I blamed myself – what am I doing wrong? What am I missing in my background checks? Am I rushing through the application process just to get a place rented?
It made me paranoid. My husband and I have tightened up our criteria so much we still have six empty units. We’re improving the buildings themselves in an effort to attract a better class of tenant. But are they out there at all? It seems the people currently looking to rent are the trashiest of the trash!
Social Media Brings Landlords Together To Address Our Interests!
The social media revolution has revealed that I am not the only landlord going through this, and that is a bit comforting. Here are a few recent postings from a landlords’ social media group:
“So I evicted ____________ …Not only did they stuff playdough in the locks and electrical outlets, they dumped food all over the carpets, smashed eggs on my walls and windows, dumped milk on the floor, smashed blueberries in the carpet, put spaghetti in the tub, dumped raisins in the vent to the dryer, left the heat on full bore with rotting meat in my ceilings! I don't know how to change the laws but something needs to change. I am so tired of this zero accountability for what these tenants do.”
“He lived there 10 years & had 3 cats. We had NO idea it was that bad! NEVER late, clean cut with 2 jobs and very nice! Unfortunately this was an $8,000 cat piss HOARDING nightmare!! It happened in Oct 2015 when he informed us he was moving. Walking in, the urine smell made your eyes water & choke! Hazmat suits had to be worn by a TEAM of people and be completely covered. They also had to use respirators. Shovels had to be used as EVERYTHING was covered in PISS! The fridge smell made a person vomit. Apparently it broke, so instead of calling us, shut it (with all food in there for a longggg time) and bought a mini fridge.”
And this post pretty sums up the frustration of trying to get a decent tenant to move in in the first place: “ISO tenant who knows how to read an ad. Shows up for showings, and doesn’t have insane dramatic criminal histories with long drawn out explanations as to why none of it is ever their fault.”
Something, obviously, has to change. There appears to be a large portion of the renting population who has no concept of personal responsibility. My first guru, H. Roger Neal warned me about “professional tenants” in his book Streetwise Investing in Rental Housing. These are people who know exactly what their “rights” are. They know precisely what they can do to a landlord with no real consequences. They tend to have no assets and to take their wages under the table so liens and judgements are no detriment. And under current law, the acts of vandalism described in the posts above are not crimes. The police will not respond. They will tell you it’s a civil matter.
So it’s time for some laws to change. Before some frustrated landlord takes the law into his own hands! Several buildings, several deep basements. Just sayin’.
How Can Landlords Change The Laws In Our Favor?
We’ve already started the first step, thanks to social media – coming together as landlords. Nothing changes unless a group of like-minded people come together to spearhead that change. My husband is going to talk about this issue during his Investors Network NEPA meeting on the second Wednesday of the month, which will be February 8th, 7pm at Perkins restaurant in Pittston. I think we should also bring it to the Wyoming Valley Real Estate Investors Association meeting as well. That’s on the last Tuesday of each month. Maybe we can get on the agenda for the end of February?
There are a couple of ways to approach this. Investor Adam Ruderman has put a great deal of thought into a proposal. Adam is involved in local government, so he has the connections to at least get his ideas heard by people who could do something. Here’s an excerpt from his group post:
I call it the "Registered Lease Proposal"
It is designed to create more accountability on the part of both tenants and landlords. It also raises a bit of revenue and increases tax collection (both RE taxes and income taxes).
Landlords pay an initial registration fee to register their lease and then an annual fee to maintain registration. These amounts would have to be debated, but I'm thinking about $75-$100 for registration and $25/year.
The registration results in a unique number for that lease, and connects the tenants and landlords by drivers license number, social security number etc.
A registered lease payment history could be reported to a credit bureau like a credit card or loan, so it encourages a good payment history.
Registration is completely voluntary for landlords so a tenant can decide whether to rent a registered unit or not, knowing the difference in accountability and cost. A registered unit is going to meet a higher standard and therefore will rent for a little more than a similar non-registered unit. Over time, more units will likely become registered as positive experience and fewer damages are experienced.
Part of the registration fee goes to the state, part to County, part to local govt, part to a special court fund that reimburses landlords and tenants their court costs if they win in court.
If the tenant leaves damages resulting in the landlord winning a court judgment, the tenant would be forced to pay the judgment amount through witholding from benefits and tax refunds until the judgment was satisfied. Likewise the tenant could win a judgment against landlord for failing to make repairs, etc.
The landlord must be current on all licenses and re taxes, and the property must be declared on landlord's income tax returns.
I for one would be willing to pay a little more for the assurance that I would be compensated from the deadbeat’s tax refund, SSI disability or other benefits. Being able to garnish wages doesn’t help me if the deadbeat doesn’t work, or works under the table, or earns just under the line where the government lets you attach wages. But the idea of that tax refund coming back to me until my judgement is satisfied is very pleasing, indeed.
I’m just not sure how that would work. Aren’t tax refunds under the jurisdiction of the Federal Government? Ditto for SSI disability.
I think what we really want is some accountability from tenants. There has to be consequences. Perhaps making this sort of vandalism criminal as well as civil would be a good place to start. No need to get the Federal government involved there!
We also need an effective method for landlords to collect on civil judgements. The current law allows us to do that, but we don’t, because we don’t know how. It’s a time drain and it will cost us money to chase these lowlifes. And we still may never get our due. Maybe some enterprising trailblazer will figure out a way to make the system work for us landlords!
You’ve heard it before – Multiple Streams of Income!
Our rental business is down at the moment, but our flipping business is up. Flipping, wholesaling and rehabbing properties for other investors is paying our operation costs and allowing us to upgrade the rentals and hold them empty longer. It’s going to take us longer to find good tenants now that we have to sift through all this riff-raff.
But we’ll figure it out. Together.
Wednesday, February 8th, 7pm. Perkins Restaurant, Highway 315 Pittston Township. Steve Franco (my Dear Husband!) hosts the Investors Network NEPA monthly meeting and we’ll be discussing this issue. The meeting is free – you just pay for your food.
If you’re reading this blog outside of Luzerne County, Pennsylvania, and you’re facing the same issues, get together with landlords in your area. Search for groups on Facebook. Look for meetings on Meetup.com. Go to your local Real Estate Investors Association meeting – just about every region has one. If there isn’t one, think about starting one yourself. Some cities even have property owners associations. Sometimes it’s enough to know that you’re not alone.