How NOT to do business in Real Estate . . .

Question

[b]NOTE FROM BIGGERPOCKETS ADMINISTRATION:
THIS DISCUSSION IS A VERY GOOD EXAMPLE OF HOW NOT TO DO BUSINESS.  I HAVE KEPT THIS ON THE SITE BECAUSE I BELIEVE IT IS IMPORTANT FOR NEWBIES TO READ AND LEARN FROM.

PLEASE DO NOT FOLLOW THE ADVICE OR EXAMPLE SET BY THIS MEMBER (DavidJaxFL). IT WILL GET YOU IN A LOT OF TROUBLE![/b]

i've got 3 houses all with the rooms rented out. all bought at retail. the one i live in breaks even. the other 2 make 500 a mo each. does anyone else rent rooms and how do you manage it with even more houses? btw, i don't have to go through the BS eviction process SFH landlords have to go through. i just throw thier sh@t out. it's a civil matter of which 99% of them can't afford to deal with. it would be awesome if there were a company here in jax that would manage it all though..

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i love the industry and love what rental income does for my wallet..but i certainly don't respect them in the least bit or think they deserve the landlord biased rights they enjoy. it's morally wrong for someone to be allowed to stay in my house if they don't pay, destroy property or disturb the peace in the residence, period. i won't give in an inch on that concept. they can sue, but they won't get a dime. they can jail me, but i won't change. they can call the police, but the police can't do anything (one tried it nine times one night). i'll just learn from it and be that much better at outsmarting the system next time.

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another mike,

i agree with you.  there's one house in the area i work that has been red-tagged (for unlivable condtions) for years.  water and electricity have been shut-off for years.  more than once there's been a steaming pile of poop in a corner, or in the otherwise unused showers.  and the owners don't care, because they're both heroin addicts.  and they rent the rooms out for dollars a day.  a few times they've had long term tenants there (4 or 5 months) -old, homeless types with a steady social-security check.  prostitutes have a steady job, but like to move around (or pass-out in bus stops or at jail).  just to put this area in perspective:  blowjobs can be had for a handful of change, and crack rocks are popular in the $5 range.  even "bad" biker types might deal dope to these people, but likely that's it.  but most "bad" bikers move quantity, and aren't usually standing on a corner selling $5 rocks.  if these people even had a motorcycle, they would trade it for a hit of crack.

-dean

Jim Gordon · Answer

I just ran into a situation when I was screening a tenant. He had put mom down as a coapplicant because of his income level and mom was going to help out. He was not in a protected class but his friends are. Mom has called fair housing and is in the middle of filing a complaint. The onsite property manager made some racial comments about the noise and the friends that were at the apartment. The friends had an arguement with the property manager. The mom had an arguement with the property manager.  Mom has also called the health department about ongoing issues at that property. Mom has also contacted an attorney because they agreed to have him in the apartment without mom and now are telling her it is a lease violation for her not be there.

Everybody has family.

By the way thanks for sharing the info mom.

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James, the only quote of mine that you need is the one you apparently missed.

We all know a few bikers and ran around when we were younger.  :wink:

Actually, many years ago, I booked spandex rock cover bands into biker and mob owned rock bars in the 80s. Somedays you were the bat. Other days, you were the ball.

Colin Turnbull · Answer

Im glad you banned this guy hes nothing but a deadbeat.

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You didn't come down on ME hard. I simply understand and recognize a certain "street" mentality with regard to a way of "doing business". White collar types who live in the suburbs and have never had any interaction with "goombahs" think in the terms of "laws" and "might sue me". You just encountered a guy who doesn't give a crap, and will have a guy beat down for $50. It's far more prevalent than you care to know. It's a free market economy, and David is simply serving a segment of the market -- as seedy as it is -- and dealing with the constituency as it is.

These people (he and his tenants) simply don't care because they live in a completely different realm far beneath the surface of what soccer mom's & dad's know as "normal". It's like the biker who decides to walk onto the golf course and relieve himself in front of a bunch of beret & pink green knit cardigan-wearing country clubbers who stomp around and hollar about how "tough" they are, he's going to be arrested, this is an outrage, some people.... That biker could care less about the law, the country club regulations about taking a pee on the fairway, your new tartan weave, and can probably kick the entire foursome's ass with his right hand tied behind his back AND wouldn't think twice about doing it just for kicks. You have to understand the fundamentally antisocial acclimation of the demographic.

It's kind of funny reading the cyber-parallel here. I am in no way defending David or his business - just amused at the dichotomy.

Michael Rossi · Answer

David,

I feel the same way about deadbeats, BUT you don't seem to understand why you're in business.  You are in business to make money.  If you are to be successful in the long run, you simply can not operate in the manner you've described.  What's morally right or wrong is irrelevant in this matter.  SHOULD landlords be able to throw out the deadbeats when they don't pay or tear up the property?  YES!!!  ARE landlords legally allowed to do so?  NO.

The illegal evictions you are conducting will catch up with you and you will be out of business.  You do not have a sustainable business model.  In addition, being angry all the time is no way to live.  Many people just don't have the temperament to be a landlord.  If you can calm down and start running your business like a business, you might be able to succeed.  If you stay on your current path, you are destined to fail.

Good Luck,

Mike

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There's a guy in my town that runs a couple of sleeping room "hotels".

Similar mentality, $30-40 a day. You also have to understand the mentality of the "tenant". We're talking about people who are incapable of renting an apartment and staying put for a month, let alone a year lease on an apartment. Complete transients. Mostly indigent, a step above homelessness. They virtually own nothing.

These are people that you have to be hardline with or you might get your throat cut. These are not people who are going to sue you for constructive eviction or adverse possession of their property. These are people who will blow into a town, run a couple of scams, and either be gone or in jail in a couple days time. They're also popular for prostitutes.

You simply cannot apply the same "legalities" that we live and breathe to this "business". It's not even in the same realm. Making their life bad for them generally involves flipping a case of beer to his meathead muscle guy "bouncer" who shakes down the "tenant". It's constructive eviction Tony Soprano style.

Incidently, the guy who owns the sleeping rooms in my town, also owns the worst, most hardcore hilljack, redneck, biker bar.

It's not something we encounter in our day-to-day existence as REIs, but it is a segment of the business that does exist.

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OK.....Good luck with that! :nono:

Frank Adams · Answer

Sometimes the advice on here should NOT be followed as it can and will get you in trouble. If you are a newbie reading this thread, do NOT try any of the following:

In most juridictions this is known as "constructive eviction", kind of like cutting off the power or water or removing the front door. It is a big no-no. I'm not sure how much "cell time" a judge will give violators but it allows victims to sue for "treble damages", which means $90/day damages for a $30/day room.

Which language would in all likelihood make the lease void, or at least voidable.

David, I strongly suggest you get out of the rental business. With your attitude of complete disdain for and hatred of your customers and your industry I would suggest something for which you're more suitably equipped; congressman perhaps, or Vice President of The United States.

all cash