Evictions on an 8 unit property

[Roxie Kim]

Hello,

I am currently in escrow for an 8-unit "C" property in Central California and was hoping someone could help me with something. I received the property's one-year P&L statement today and there were a lot of legal fees and missed rental payments. The explanation was that two tenants had to be evicted about 6 months ago.  Can anyone tell me what to expect as far as the rate of tenants that turn out to need eviction? Is this a common occurrence for low-income apartments? This is my first multi-unit property so I guess I'm just trying to get a sense of how common something like this is.  I've never had a problem with any of my tenants in my single family condos which are located in Los Angeles, but that is obviously not an apples to apples comparison. I guess a lot of it would start at screening tenants properly which would mean the PM hasn't been doing their job properly. 

I entered escrow using an estimated expense of 45% of gross rents. Given the cost of my debt, if I had to evict two tenants within a year, this would destroy my cash flow.  Any insight would be appreciated.  Thanks!

[Nick Rutkowski]

It’s only common if you pick bad tenants. Screen, screen, screen! Class C people are usually low income individuals, who may or may not be tidy, and have the behavior of a teenager when it comes to taking care of the apartment. The best thing to do when it comes to screening this group is look into every single aspect of their lives.
Take what they say to face value. I had a semi pro football player living in a unit of mine and he ended up being addicted to hard drugs...it wasn’t steroids. Never paid rent and got
kicked out.

Partner up with a lawyer, you’ll need to use his services every now and then. Nonpayment evictions could cost less than a holdover in your state. Ask your new partner.

Finally, You’ll know you picked a bad tenant when they don’t pay the second month. (Unless they paid months ahead.) My advice to you would be to start the eviction process IMMEDIATELY, don’t wait. They know they can’t pay and are milking you.
Good luck!