Tenant paying late, making excuses and ignoring property management company

OP

Member since 2016 · 5 posts · 0 votes

Quote from @JD Martin:

Quote from @Raymond Yan:

I recently purchased a property in the Warrendale neighborhood of Detroit, Michigan about a year ago. The property currently has a tenant who is paying below market rent at $850 per month. While the tenant had a good payment history before my purchase, I'm unsure about their timeliness.

Lately, I've encountered several issues with this tenant. They have received two blight violations for failing to store trash containers properly, resulting in costs of around $400. Additionally, they have been late with their rent payments and did not pay for July. I learned that they lost their job but have secured a new position that started on the 29th.

The property management company has advised me to get the property certified as a rental, but it failed inspection. Given these factors, I am considering a few options:

1. Selling the property, ideally without the non-paying tenants.
2. Offering a cash-for-keys arrangement (what would be a reasonable amount? I believe market rent is between $1000 and $1,200).
3. Evicting the tenants and moving in to perform repairs myself while I explore Detroit, as I have never been there before, but this process might take a long time.

I would appreciate any advice or insights on how to proceed.

You might want to bring weapons, or some bodyguards. Warrendale has one of the highest crime rates in Detroit. I looked up the official crime stats and Warrendale's violent crime rate is almost triple the rest of Detroit, which is pretty bad to begin with, and 700% higher than the rest of the country. How do you know they had a good payment history before your purchase?

Ideally you'd evict the tenants, find some other sucker to buy your high-crime neighborhood property, and start over somewhere else (even in Detroit). But that might not be so simple, so you might end up with cash for keys.

The wholesaler I bought the property from sent me the rent payment ledger and a notorized tenant affidavit of residence signed by the tenant. The wholesaler also has an internal property management team that I'm using.

Drew SygitBusiness Member

Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes

@Raymond Yan so many issues!

1) Blight Tickets: chould be charge to the tenant with a processing fee.
- Owner still has to pay and tenant unlikely to pay, but needs to be done.

2) Eviction: why hasn't PMC started this already?
- We offer structured Payment Plans or we start eviction. Only two options unless owner wants to do Cash-for-Keys.

3) Certificate of Compliance: why wasn't this starte last year?
- Detroit is making it more and more difficult on owners that do not get a CofC.
- It's usually not that difficult to make the required repairs - unless the wholesaler & their PMC have misrepresented the condition of the property!

4) When is tenant lease up as you've owned it for at lease 8 months?
- A "reasonable" rent increase should have already been done!

Get rid of this tenant via eviction or Cash-for-Keys and hire your own inspector when you visit the property to fully understand its condition and needed repairs!

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2 Reply

Theresa HarrisPro Member

Member since 2019 · 15k+ posts · 11k+ votes

I agree with Drew.

OP

Member since 2016 · 5 posts · 0 votes

Quote from @Drew Sygit:

@Raymond Yan so many issues!

1) Blight Tickets: chould be charge to the tenant with a processing fee.
- Owner still has to pay and tenant unlikely to pay, but needs to be done.

2) Eviction: why hasn't PMC started this already?
- We offer structured Payment Plans or we start eviction. Only two options unless owner wants to do Cash-for-Keys.

3) Certificate of Compliance: why wasn't this starte last year?
- Detroit is making it more and more difficult on owners that do not get a CofC.
- It's usually not that difficult to make the required repairs - unless the wholesaler & their PMC have misrepresented the condition of the property!

4) When is tenant lease up as you've owned it for at lease 8 months?
- A "reasonable" rent increase should have already been done!

Get rid of this tenant via eviction or Cash-for-Keys and hire your own inspector when you visit the property to fully understand its condition and needed repairs!

Thanks for replying.

1. Blight tickets: I doubt the tenant will pay since they're having trouble making the rent payments already.

2. Eviction: PMC and I has been going back and forth about evicting the tenant. We wanted to give the tenant some more time since they recently lost their job, but I don't understand why the tenant is dodging the PMC's request to take photos of the interior. The tenants allowed the lead inspector and building inspector in at different times last month.

3. Certificate of Compliance:
- What do you mean making it more and more difficult on owners that do not get a CofC? You mean for eviction?

4. They were month to month when I bought the property, but I never increased the rent since they were good tenants in the beginning.

I already paid for a lead inspection and building inspection for the property via the city of detroit's website, so I know what the condition of the property is in and what repairs are needed in order to get it certified.

Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

Quote from @Raymond Yan:

This is a bad business strategy. Being a 'good tenant' does not excuse that tenant from getting a rent increase every single year. Your costs go up every year, right? So every year you do not compensate by raising rents, you are losing money. Was that your business plan when you started? I doubt it.....

Drew SygitBusiness Member

Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes

@Raymond Yan

2) No excuse ot to start the process! Otherwise, you lose all pressure and accountability of the tenant. Tenants will ALWAYS try to make their problems your problems!

So, are you running a business, a charity or a hobby?

3) City is going to be writing more tickets and making it easier for tenants to escrow their rents with court if property has no CofC.

4) Terrible business approach!

Again, are you running a business, a charity or a hobby?

You may not like the tough love approach, but "pain" is the biggest motivator.

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Steve K.

Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes

Evict the tenant, sell the property, try again in a much better location.

OP

Member since 2016 · 5 posts · 0 votes

Thanks for the replies everything.

I'm new to the eviction process so I found an eviction guide for Michigan (https://www.biggerpockets.com/forums/697/topics/518334-michi...)

Since I'm not located in Michigan, should I hire an eviction attorney to manage the entire process for me or should I have the property management company issue the 30-day notice to quit?

Theresa HarrisPro Member

Member since 2019 · 15k+ posts · 11k+ votes

Quote from @Raymond Yan:

Thanks for the replies everything.

I'm new to the eviction process so I found an eviction guide for Michigan (https://www.biggerpockets.com/forums/697/topics/518334-michi...)

Since I'm not located in Michigan, should I hire an eviction attorney to manage the entire process for me or should I have the property management company issue the 30-day notice to quit?

Your property management company should be doing this, but if you don't trust them, give them a call and let them know you are hiring an attorney to do it. your PM should have started the process as soon as they were late on their rent.

Drew SygitBusiness Member

Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes

@Raymond Yan why are you getting involved in the eviction process?

Only 3 logical reasons:

1) Your PMC is terrible and forcing you to handle the eviction
- FIRE them! They will NEVER get better!

2) You are a control freak and won't let your PMC do their job
- Can't help you

3) You don't really have a PMC and are self-managing, yet don't know what you're doing
- There are inconsistencies in your postings that make this a possibility

For #2 & #3 above, use this:
https://www.legislature.mi.gov/Publications/tenantlandlord.p...

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OP

Member since 2016 · 5 posts · 0 votes

@Drew Sygit In my previous post, I noted that the PMC is also the wholesaler from whom I purchased the property.

I feel like I’ve been managing the property on my own until problems arise. It's at that point that the PMC steps in to connect me with someone who can address the issue.

I was going to sell the property back to the wholesaler a few weeks ago, but he backed out because of the tenant who wasn't paying rent. The PMC is aware of my intention to sell, so there's a possibility they may become less inclined to provide assistance since it doesn't benefit them in any way.

The PMC was supposed to link me with one of their eviction attorneys, but after our conversation two days ago, I haven’t heard anything from him. I ended up finding an attorney on my own and hired them today.

You're right about #3. I self-manage a property in California and have never worked with a PMC before, so I'm uncertain about what my responsibilities are compared to those of the property manager.

Nathan GesnerBusiness Member

Moderator

Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

I don't mean to insult you, but I don't think you have the skills necessary to manage such a difficult situation from afar. I would figure out how to remove the tenant, clean the place up, and sell it.

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Drew SygitBusiness Member

Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes

@Raymond Yan why haven't you replaced your PMC?

It's NOT going to get better:(

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Sara Emmanuelle Dube

Member since 2024 · 33 posts · 18 votes

Hi @Raymond Yan

Ive replaced my PMC after 5 months of nothing.. really. Letters and emails that wouldnt move the needle at all. Im actually not sure if these were sent either.

My new PMC went over there with $850 in cash for keys. He was out 7 days later, new locks and repairs are underway. $850 was equivalent to his rent. In your case it may be more. Deposit for another place + $ to actually pack up and move his stuff. Someone should be able to help.

If you dont want to hire a new PMC now, try to find help aka "boots on the ground". Visit and Join Metro Detroit Real Estate Investors Group theres some people on there that offer that service.

Also just a note, if your PM is also a Wholesaler... then that's his #1 priority. Not property management.

Good luck,

Sara