Need advice one tenant situation

Need advice one tenant situation

Member since 2018 · 9 posts · 3 votes

I recently fired renter's warehouse as my PM company and when they finally turned over all of the documents i requested I found a host of things missing. My mistake early on was not double checking behind the PM company to ensure certain procedures were being followed. I understand that moving forward as this was my first time using a PM company so I'm really here looking for advice on what to do now.

After firing them I discovered the tenants have a credit score of 530 and 432: I know about the 620 requirement in the city in which I live and have followed that and found a good tenant with no issues and pays on time.

Renter's warehouse has no documents that they've done a criminal background or eviction record check.

They also barely make above the 30% rent to income ratio.

In my lease it states renters must carry renter's insurance: There is no renter's insurance on file: I'm thinking about sending them a letter to provide proof and if not having it or they wont get it following through with an eviction.

I have a pet policy that states all pets must be approved by landlord: No pets were approved but they keep an outside dog on premises and no pet deposit was collected. Technically I have not approved the pet so it would be a breach of contract but to give the benefit of the doubt since it is an outside dog I'm thinking I should I offer them to pay or provide a pet deposit or get rid of the dog?

There was no move in inspection performed by my PM which the tenant complained about when I recently scheduled a routine inspection. My thoughts on the inspection is to properly get everything documented: I remember everything that was damaged prior to the tenant moving in (One crack in the ceiling one in the wall) in which will be documented but I also want to check regular items such as appliances, smoke detectors HVAC air filters- attic for leaks since it has been raining heavily. I have been to the property more than normal due to an HVAC issue that was finally replaced and I am also doing a final walk through with the contractor during the routine inspection. When I informed the tenant of the route inspection they got defensive and asked why have I been to the property so much. My thoughts are at the end of the day it's my property and I'm making sure repairs are being completed correctly which I had a plumbing issue as well that was fully repaired and normally I would not been at the property as much. And it may have been my mistake by not doing the inspection while I was there previously but its that time (6 month into their lease)

Also they have been consistently late on rent. More so recently in May and incurred a $50 late fee but have not paid it. The lease renter's warehouse had drawn up is not iron clad on late fees and turning them into rent that is owed. June payment is coming up and I am wondering should I reject rent if they do not provide the $50 late fee? Also renter's warehouse allowed them to make partial payments in the past. Also when rent was due they decided to bring up an maintenance issue in which they knew about for some a week but did not say anything to me except after they were late on rent. It appears they are trying to get over.

Sorry to ramble but would love to hear you all's take on it as what I plan on doing is completing the routine inspection, sending a certified letter about a breach of contract by not having renter's insurance and having an unauthorized pet (requesting a pet deposit) and then when rent is due see if they are going to pay one time and the full amount plus the late fee. If not then I;m going to proceed towards the eviction process (I do not think the cash for keys will work in this scenario but could be an option.)

Also I'm having a PM I'm thinking about hiring do the inspection with me- This property is long distance and I'm wanting to find a good PM do manage my other properties once they are ready to rent. So this is a long run play to build a relationship with a good PM.

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Property Manager · Cleveland, OH · Member since 2019 · 446 posts · 566 votes
6y

What is the result you are hoping for?

It's really unfortunate that your former PM did not enforce standards that they promised you (or didn't document attempts at enforcement).

However, you are where you are now. Is the $50 late fee and the dog etc worth the cost of eviction and vacancy and turnover repairs? Will they do more damage if they stay through the term of their lease? Usually the damage is already done, and removing them early via eviction doesn't really help you rein in your turnover costs (unless they get behind on the rent, then of course it makes a big difference to your bottom line).

Sometimes, it is a better business decision not to enforce the lease to a T if it's going to cause you premature vacancy at an inconvenient time.

You should do a cost/benefit analysis of all the factors you are listing to decide if pursuing eviction is going to be financially beneficial in the long run.

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  • Property Manager · Cleveland, OH · Member since 2019 · 446 posts · 566 votes
    6y

    What is the result you are hoping for?

    It's really unfortunate that your former PM did not enforce standards that they promised you (or didn't document attempts at enforcement).

    However, you are where you are now. Is the $50 late fee and the dog etc worth the cost of eviction and vacancy and turnover repairs? Will they do more damage if they stay through the term of their lease? Usually the damage is already done, and removing them early via eviction doesn't really help you rein in your turnover costs (unless they get behind on the rent, then of course it makes a big difference to your bottom line).

    Sometimes, it is a better business decision not to enforce the lease to a T if it's going to cause you premature vacancy at an inconvenient time.

    You should do a cost/benefit analysis of all the factors you are listing to decide if pursuing eviction is going to be financially beneficial in the long run.

  • Member since 2018 · 9 posts · 3 votes
    6y

    Thanks for your input! I like how you said do a cost /benefit analysis which I will do. Hopefully it wont go the route of an eviction as simply I want them to abide by the lease. Why create a lease only for it to be allowed to be broken?: I've already have suspicion that their dog had got under the house and destroyed some duct work and if something like this happens again I have not pet deposit to pull from. I understand the cost of an eviction sometimes is not worth it but I can't tolerate continued late payments. Prior to me taking over my previous PM collected their late fee and was never persuasive against turning rent in late as a late fee was additional income to them. A pet deposit was suppose to be collected. In this case it wasn't. Renter's insurance is required to protect me in the long run from damages as I've heard others say it's important to have and saved a few landlords in the past. My goal is to get them to understand late/partial payments are not acceptable and to enforce the lease that they signed. 

  • Rental Property Investor · 30078 · Member since 2018 · 13 posts · 6 votes
    6y

    Hey Donald, I know that Renter's Warehouse can have a confusing fee structure. Depending on the state your rental is located, you can file the eviction in order to come up with a court appointed payment plan. Be careful to collect partial payments if you want to go this route. I work with AllCounty Expert Property Management in Atlanta. Where is your property located?

  • Member since 2018 · 9 posts · 3 votes
    6y

    The property is in Birmingham AL. I ended my contract with Renters Warehouse as of a month ago and have been managing the rental myself. I’ve heard from lawyers cost of eviction may end up being around 1-2k plus lost rent and takes anywhere from 4-6 weeks to several months- 

  • Member since 2020 · 10 posts · 8 votes
    6y

    Hey Donald! I am terribly sorry to hear about your trouble with your current PM. Going through an eviction process can be a headache, so I hope that things are resolved without having to take that step. 

    My advice on hiring a new PM would be to ask as many questions upfront as possible. I know on my end, I would rather an investor ask me questions and establish expectations (on both sides) upfront rather than have issues down the road. Hiring a trusted PM is so important for not only you as the owner, but also for the tenant.

    Let me know if you have any specific questions or if I can help with anything at all. I know the situation is frustrating so I would love to help with advice as much as I can. Wishing you the best!

  • Member since 2018 · 9 posts · 3 votes
    6y
    Originally posted by @Savannah Kennedy:

    Hey Donald! I am terribly sorry to hear about your trouble with your current PM. Going through an eviction process can be a headache, so I hope that things are resolved without having to take that step. 

    My advice on hiring a new PM would be to ask as many questions upfront as possible. I know on my end, I would rather an investor ask me questions and establish expectations (on both sides) upfront rather than have issues down the road. Hiring a trusted PM is so important for not only you as the owner, but also for the tenant.

    Let me know if you have any specific questions or if I can help with anything at all. I know the situation is frustrating so I would love to help with advice as much as I can. Wishing you the best!

    Love the advice I’ve actually schedule a sit down with a prospective PM and he’s agreed to complete a mid routine inspection with me I guess one question would be since you’re a PM is do you typically find it with enforcing renter’s insurance and pet policy worth it in the long run? 

  • Member since 2020 · 10 posts · 8 votes
    6y

    Donald,

    In the state of Alabama, renter's insurance is not required. In my experience, I typically would not necessarily recommend requiring it. I know my company does not require it because it is very hard to verify if the tenant is actually paying for insurance. The tenant can send in a letter saying "here is my insurance" and then turn right around and cancel it. So, we do not require our tenant's to have it, but we do provide info on it if they are interested. 

    With a pet, absolutely 100% yes. We require a pet fee per pet, non-refundable. We also have a list of restricted breeds due to insurance reason. Keep in mind, you can limit the number of pets, type of pets, size of pet, etc. or no pet at all, as pets are not a protected class. But in the long run, yes! A pet fee (or deposit) is well worth it. 

    I hope this helps!

  • JD, CCIM , Real Estate Broker · Tuscaloosa, AL · Member since 2014 · 1k+ posts · 1k+ votes
    6y

    @Donald Francis Reese Jr., renter's insurance with $40,000 of contents coverage and $100,000 of liability coverage typically costs $19 per month. Landlords can often include it at "no charge," but also price the rent at least $25 a month above market.  It sounds bizarre, but most tenants (a) don't know how cheap the insurance is and never ask; (2) have been turned down for insurance in past because of poor credit and so don't like to risk being embarrassed, so never apply; and/or (3) made monthly insurance payments, missed a payment, were cancelled, nothing bad happened, and ended up feeling like they wasted their money.  That's why many of them never obtain the insurance.

    If you offer it "at no additional charge" then you pay the premium each month, credit scoring is not a factor, you know they have it, and you appear more competitive than other landlords. It's smoke and mirrors of course, but most marketing and market positioning is smoke and mirrors. Are Chiquita bananas really any better than non-branded bananas?

  • Rental Property Investor · Navarre, FL · Member since 2019 · 913 posts · 640 votes
    6y

    @Donald Francis Reese Jr. Can I be the first to congratulate you for firing those scoundrels at RW? Well done, I did the same thing at the start of the year. They still have some of my money. That is one company that can not be trusted to do their job. Good luck with the mess they've left you - I wouldn't rush to evict in Covid climate...they're still paying, albeit late, right? Maybe your new PM will be able to clearly lay down the law to the tenants and bring about change in their behaviour?

  • Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes
    6y

    The first thing to do is check the leases - and enforce those terms.  If the lease calls for Renter's Insurance, send letters/emails asking that they provide proof of coverage. The insurance needs the "with landlord as additionally insured" to give you the coverage from the policy you will want and deserve.  If the pet policy is outlined in the lease, ask the tenant to provide you with a photo of the dog, the vaccination/medical records, and a photo of the dog's license for your records and approval per the lease. At this late date, I would probably let the deposit go but not the Renter's Insurance for pet owners.  Those policies will need to include pet coverage - and it's a must have to protect you from any dog bites/attacks/incidences.  

    The tenants are in place so you're stuck with them until lease end but the best protection you have is to enforce your lease.  I also recommend having an electronic payment system for the payment of rents and the reporting of maintenance requests. There are several systems available for low to no cost for landlords.

    Congrats on taking control of your business.  I wouldn't replace the PM until you have your leases enforced and know the extent of the damage you were left with.  

    Hope this helps...and again, congrats.

  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    6y

    @Donald Francis Reese Jr. wow, sounds like a challenging situation:(

    Not aware that any state or city in the country has minimum credit score requirements for tenants. Credit scores are usually only set by landlords and PM's. You may want to check on that.

    Also, did you confirm with your PM that they would use your lease? Just imagine how hard it would be for staff to manage properties if every owner forced a PM to use their specific lease? There'd be little scales of efficiency, forcing PM's to charge owners more. As a PM, we will NOT use an owner's lease. We will consider adding language to our Lease if something is not covered that an owner wants.

    What do you & the tenant define as a MoveIn Inspection? Most states give a tenant a chance to complete & submit a MoveIn Checklist to note issues with the home that they do not want to be held liable for upon MoveOut. We followup with tenants to obtain this Checklist within the 2 weeks required by Michigan state law, but you would not believe how many tenants ignore us and never turn them in!

    Regarding the pet and any other lease violations, the credit scores of 530 and 432 make it highly likely that your property is in a "C" area. It is VERY difficult to get "C" type tenants to follow their lease exactly. Sometimes, you lose a battle to win the war - as several others commented already.

    Not sure what you mean that lease by previous PM wasn't, "iron clad on late fees and turning them into rent that is owed"? Most leases have a section that states how funds received from a tenant will be applied. You may want to look for that.

    Overall, it sound's like you an the previous PM weren't on the same page as to your expectations, which is ultimtely their fault. Hopefully, you can apply all these issues and more in your search for a new PM.

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