Process to collect damage post move out?

[Mohan Deep]

I have a tenant who moved out recently. The damages exceed their security deposit. I mailed them a security deposit statement using certified mail after 7 days of their move out. They refused that certified mail. Can anyone explain the process of recovering the damages? Should I hire a collection agency? If yes, do you have any recommendations in the Milwaukee, WI area? Should I do anything else?   

[Kevin Sobilo]

@Mohan Deep, in most situations you will never recover that money.

The general process is to go to small claims court to sue them for any additional damages. So, you end up paying money to file the lawsuit which gets added to what they owe.

Then after they don't pay the lawsuit, you have to pay more money to try to enforce the judgement. This part probably varies by state a fair bit. You can seize assets and have them sold but again the costs are paid by you and added to what they owe. You MAY be able to garnish wages, BUT most tenants may not earn enough to do that and that may not be an option in all states.

The vast majority of these judgements are never paid.

If you believe these tenants may eventually buy a home, you can record the judgement creating a lien and they would need to pay that off to get the financing to buy a home.

I think some people sell their judgements to collection companies for a very small amount but I have never done that. 

[Theresa Harris]

Depends where you are and the local laws.  If you sent the letter certified mail to their last known address or the forwarding address they gave you and they returned it, keep it unopened.  Give them a call to let them know.  As for the damages above what the deposit covered, you are unlikely ever to see that money.  You can try small claims court, but in my experience, it will be a waste of time trying to collect.  You are unlikely to ever see that money even if the judge awards it to you.

Kevin typed in the same thing, but was faster than me.

[Jay Hinrichs]

waste of time money and brain cells.. move on  its part of the bizz.

[Nathan Gesner]

It isn't a complete waste. Sending them to collections may get some money back, but you shouldn't count on it. The more important piece is that it reports the collection action on their credit report, which could prevent them from cheating another Landlord or qualifying for a loan.

If you PM me I can share the company I use.

[Marcus Auerbach]

Quote from @Mohan Deep:

I have a tenant who moved out recently. The damages exceed their security deposit. I mailed them a security deposit statement using certified mail after 7 days of their move out. They refused that certified mail. Can anyone explain the process of recovering the damages? Should I hire a collection agency? If yes, do you have any recommendations in the Milwaukee, WI area? Should I do anything else?   

 Do they have money and great credit? If the answer is no, then write it off, because you have no leverage. If the answer is yes, you can go Nathan's route and maybe recoup a third or so, but IMO not worth it.

We focus more on preventing these situations in the first place with solid screening and frequent inspections, once the damage is done it's too late.

Milwaukee is currently the second most competitive market for tenants right after Mimai, FL according to the Q1 report from rentcafe. You have plenty of tenants to choose from. Selecting the right tenant is probably equally important than selecting the property to buy in the first place - in a way the house is not cash flowing, it's the tenant.

[Adam Bartomeo]

We always give the tenant 2 months to pay the monies owed. We contact them weekly using different forms of communication - email, text, calls, and mail. After 2 months we send them to a formal collections company to attempt to collect. Sending them to collections puts the monies owned on all 3 credit reporting agencies which is intended to put pressure on them to pay their bill AND warn any other potential creditors of their past.

[Michael Haynes]

Hello Mohan Deep in Milwaukee. You can't get blood from a stone. The only guarantee in the Rental Business is to get First, Last and Full Security Deposit. Here in Tampa, Florida a 3/2 House goes for up to $3000 a Month. Do you know anyone with $9000 Cash in order to move into a nice house in a good neighborhood? I don't. 

[Jim Peret]

Michael,

So how much do you typically collect at move in?

[Michael Haynes]

Hello Jim Peret in Delafield, WI. Your in Waukeshaw. I was in Milwaukee two months ago with my old partner visiting her mother in an Assisted Living. I'm 75 and I had 12 Rental Duplexes and Houses in South Tampa, Florida for 30 years. This is before the "Gold Rush" of building and immigration in Hillsborough and our surrounding Counties on the beaches. Tampa was on a list last month of the Best Place to Live. It is the safest in the Gulf of Mexico as we have not been hit by a hurricane since 1921. My Tenants were almost all Service Workers. Minimum Wage Slaves. Just like me when I started at 8 years old. I self-managed my properties and tried to help everyone with just First and Last. But, you had to jump on the Three Day Notice with the first day Late. At that time we could Evict in nine days if we hit it on a Monday. Then, we got the Woke, Bleeding Heart Judges and with a letter of hardship at Mediation the Deadbeat, Single Mother with kids and Older ones on Fixed Incomes could get another 90 days to stay for free. Some guys were handymen who helped me on the next fixer-upper or maintenance or building a new shed or fence etc. I had one who was with me for ten years not wake up one morning and his wife called me instead of the cops. Everything for me was hands on. I learned to build houses with my guys and my last Rentals and Farm and Beach Home etc. are in Brazil. The big, golf course type, Rental Apartment developments, along with the 55 and over Communities, Doctors with 100 Doors etc. have Managers who demand the First, Last and Deposit and go after you with Lawyers to file for a Judgement and ruin your Credit and next Rental Apartment application. But, then they also have, "First Month Free" offers when things get tight. The new development here are all the Latinos etc. who have Service Trucks and Trailers and they Rent a big house with five to ten friends to divide the cost of Rent in good neighborhoods. There is nowhere to park except on the lawns and the neighbors call Code Enforcement. Here in Florida we are a Right to Work State with lots of Seniors and it is very hard to make $20 an hour if you do not have a Profession or Business. 

[James De Stefano]

Agreeded with the first 2 posts, I've only experienced this once to have damages/ missed payments exceed security deposit.  Honestly, If they've moved out, that's already a Win.   You saved time and energy and money to have to file eviction, wait for them to be remvoed, then clean up, then put it back on market.  

Last item would be on the chance that the damages were SO severe, that you could look to file a claim with your hazard/ home insurance.  In case it's 10k  + or something like that, could be worth looking into. 

Otherwise if it's a few thousand of lost damages, keep it moving