Cleaning up an infested apartment bldg in Zanesville, Ohio

[Account Closed]

Within the last month I purchased an older 12 unit apartment building. Many of the tenants have been there for over 20 years. The previous landlord was 87 years old and completely let it go. It is infested with roaches and bed bugs. So my question is, what basis can I use to evict the couple serious offenders or hoarders I would call them so I can start turning this place around? I have 2 particular tenants who are the obvious main causes of the bug problems but they faithfully pay there rent monthly. What is the correct procedure to get them to clean up or get out as quickly as possible? I am very familiar with the eviction process of non payment of rent. Keep in mind these people have lived in this squalor for decades at this point and I firmly believe they wont clean up to the standards I need them to be.

[Erik Nowacki]

@Account Closed If you don't have any written leases, your tenants are most likely on a month-to-month basis.  You may be able to give a 30 day notice that you are terminating the tenancy, without reason.  Verify everything with your R/E lawyer, but usually, you can refuse to renew for any reason, except a bad reason.  A bad reason would be discrimination against someone in a protected class.  I don't believe hoarders are a protected class (although California is probably considering it...).   Just tell the tenant that you are going to renovate the apartment in order to get more rent.  

I'm not sure if this is your first multifamily or if you have some experience, so this may be old news to you. When you purchase a multifamily property, you should work actively to increase the value of the property. In order to increase the value of the property, you need to raise the NOI. To raise the NOI, you need to increase income and/or decrease expenses.

On the expense side, there are some simple methods you can use, such as replacing all of the common area lights with LED's and installing low flow shower heads and plumbing fixtures.  You can also shop around for services like insurance and yard maintenance.

On the income side, you need to raise the rents.  In order to raise the rents, you need to improve the units.  However, even if you improve the units, if you have a bad tenant in one of the units, the people who  would gladly pay you a premium for your newly renovated unit will not move there (or if they move in, they won't stay).  One of the major differences between single and multifamily investing is that with multifamily, you are "responsible" for who lives in all of the units.

Sometimes, you need to lift a building in stages.  You take over a building with a bunch of C and D grade tenants.  You start by getting rid of the D tenants.  Then you rent the renovated units to C and B- tenants.  Then you start getting rid of the C tenants and rent only to B tenants.  Once you have only B tenants, you can appeal to A tenants (the best available for your particular area).

Also, when renovating, keep in mind not to over improve for the area and to keep the finishes as durable as possible to make turnovers easier.

If this is your first multifamily investment, welcome to the club and please ask any questions you may have.  Someone has seen and solved your problem in the past, no need to reinvent the wheel!

Happy Investing

Erik