[Real Example] An Expense You Might Have Never Thought Of

[Austin Petrie]

Hey everyone!

I just got back from touring a colleague of mine's properties and came across an interesting (and expensive) situation he's currently dealing with. I figure it is worth sharing so that this doesn't happen to any of you.

So what was this unexpected expense? ... Meth Abatement. Turns out one of his tenants was smoking (not cooking) meth in the unit. When this was discovered the tenant was promptly evicted, but the damage was done. Apparently, the residue from meth smoke seeps into the floors, walls, and ceiling and above a certain legal level, requires a professional meth abatement. From the research I did, it seems like depending on the levels, you might only need a thorough cleaning, but these levels required the entire drywall and ceiling to be torn down. This ended up costing around $25,000 (not including loss of rent during this time).

The painful part of this is that at least as of right now, his insurance is saying this is not covered as part of his policy. I'm still trying to find out exactly what insurance policy he has and understand why this wouldn't be covered. From everything I've read, this should be covered by a landlord insurance policy that covers damage done by tenants (specifically, this tends to be categorized as Vandalism because the tenant is knowingly doing damage to your property).

Here are some photos of the aftermath

tldr; A tenant smoking meth cost my colleague over $25,000.

The key takeaways here I believe are: 1) get a good insurance policy, being stingy might cost you years worth of profit, 2) screen your tenants well and inspect frequently (especially for lower class properties), and 3) be prepared for unexpected costs, this might be a rarer case but **** happens.

Also I'm not a lawyer or insurance expert so you should consult professionals with regards to your state laws and local insurance policies to figure out how to cover yourself from a situation like this.

I'm interested to hear if any of you have had to deal with something similar and also any suggestions you might have.