Stressed: Non-paying pro tenant suing for everythingg.

[Jack Lauer]

Hi guys,

Newer sfh investor.  Started eviction after non payments. After the delays in court date process.  It's month 4 no payment.  Now they repeatedly threatened with a lawyers demand letter inhabitable health issues for mold and other issues.  They shut down phones and emails.  

From the PM and us.  Every repair has been taken care of and documented.  Definitely stressed about it.  Called insurance and they aren't sure about mold coverage liability.  Calling insurance might have been a mistake also since it's only a threat. 

Should I get my own lawyer and proceed? I'm stuck in a tough situation.  Need some help.  

[Account Closed]

You must have specific philosophies you adhere to to run any business and to keep yourself in-check and safe from a nervous breakdown. Before you start your a business you need to set yourself up with a mind-set, business plan and business model that protects yourself both financially so you make better profits and protect yourself from not wanting to run a very profitable business. Yes! Being a landlord is really a serious business and should not be looked at like it is something that does not need any thought in regards to how you will react and what you will do when you have tenant problems.

This is how it works. You knew that tenants can be problems and drive you insane when they tear up your property and don't pay the rent. The day I put my first multi-unit property in escrow I make a promise to myself that I would never let a tenant get me emotionally upset. I told myself that running a rental property business was exactly the same as running a gas station, liquor store, or any other type of business and every type business has inherent problems that can drive most people crazy.

So, I closed escrow on my first 28-unit building, called in my bulldozer operator, knocked down the entrance doors to the courtyard, ripped out the trees, stairs, concrete sidewalks and swimming pool. The tenants were so angry about the mess one tenant spit in my face and wanted to fight. I am quite a hothead myself and this tenant was a wimpy 4-/1/2 foot 85 pound Asian, but I actually smiled and asked the tenant when he was going to move. My wife and workers could not believe I was so cool and was smiling and they asked me why. I said it was because I made that promise to myself, ahead of time, and because when a tenant moves I make an instant $36,000 profit by increasing the rents.

I also set up a business plan with operating policies to keep from going insane. Whenever you want to evict a tenant, or any time you have a tenant with a trash mouth you do not every say one word to that tenant. The only want you can communicate is in writing. This way you don't antagonize each other and you don't put yourself in a situation where you have to argue in court about what happened.

When I write a letter and make a demand I do not give tenants the idea that they can negotiate and drag out the eviction. I spell out exactly what their deadline, when I will file with an attorney and that they will be liable for all the costs.

Then, even though you are taking a loss, turn your eviction over to an attorney and bear the costs because if you don't get an attorney very quickly you are injuring yourself. I've evicted about 40 tenants and almost every one takes exactly 7 weeks and costs about $650. That is not bad at all when you should have at least a one-month security deposit. So, maybe you lose 1 month rent plus attorney costs. As for mold and all the other garbage, any judge should understand that you have the 'tenant from hell' and tenant's claim is only a ploy to remain in the rental unit he is not paying rent for.

I've has several tenants bring up the issue about mold in their apartment. The first thing I tell a tenant is that if they even suspect there is a mold problem they cannot remain in the unit for even one more night, or they do so at their own risk. Then this is my procedure.

1) I immediately give the tenant a notice to vacate the apartment, immediately, or they remain at their own risk.

2) The second thing I do is I give the tenant a 24-hour notice telling them that we are entering their apartment, with or without them being present, and I have the apartment tested for mold. The cost for the test is about $500, but the peace-of-mind and knowing that I am acting for the best interest of the tenant is well-worth $500. 

3) Usually, the only mold you find in rental properties is penicillium found on bathtub walls and in showers. This mold is caused by the tenants when they don't clean the walls and grout. I send a letter telling tenants that there was no mold in the bathroom when they moved in and mold growth was caused due to their failure to keep their bathroom clean.

4) I evict every tenant who even mentions the word 'mold' because sooner or later you will have problems with this type mentality. I had one tenant who lived in an apartment for only a few weeks and he said his nose was bleeding due to mold in the apartment. I spent $20,000 remodeling the entire apartment just before he moved in. The day the tenant told me he was sick from the mold I told him that he could not stay in the apartment for one more night. We argued for about 3 hours and finally I convinced him to move into another apartment on the same property before the end of the day. I moved him within a few hours on a Saturday and I evicted him from that apartment on Monday morning. Then, I paid a mold testing company to test the apartment just in case the tenant sued me.

For the landlords who don't have the proper business plan and mind-set the loss is much greater and these landlords hate owning rental properties. Then, it is all downhill from there.