Over $11,000 in missing rent… Is there any hope?

Question

Greetings BP community! Newbie investor here, learning some lessons the hard way. I have over $11,000 in missing rent/late fees from a total of 5 tenants. Luckily they have all vacated the property, I am currently cleaning up their messes and making repairs to the property, but they are now obviously refusing to pay and just not replying to calls, texts and emails. I was using RentRedi to collect rent. I was quoted by a lawyer around $3,200 to pursue them in small claims court, but that’s also assuming I can figure out where they currently work (good chance they have bounced around jobs and would be hard to find) because they need to be “served” in person.

I am posting here for anyone’s advice moving forward. I understand realistically I wont get all the missing money, but maybe and small portion from selling the debt to collections? Any words of wisdom is appreciated!

Thank you in advance!

Melanie Thomas · Answer

Hi Brian, I can definitely empathize with your sentiment. Having been in the property management business for a considerable amount of time, it's disheartening to witness the staggering amount of unpaid rent/fees by tenants. To tackle this issue, we've established a partnership with a third-party collection company. While they do charge a small fee based on the amount collected, they have proven to be effective in arranging payment plans and facilitating settlements. Unfortunately, unpaid rent often remains unresolved for extended periods, but we've found that many tenants eventually realize the need or desire to repair their credit in order to purchase a home or secure a new rental property. At that point, they often reach out to us to discuss payment arrangements and find a resolution. Dealing with unpaid rent is an inevitable part of property management. The key is to find reliable partners who can report the delinquencies on the tenants' credit records and assist in the collection process. It's a time-consuming and labor-intensive task that I personally prefer to outsource to dedicated professionals. Good luck & happy investing!

Nathan Gesner · Answer

You have to figure out how to take them to court on your own, turn them over to collections, or both. Taking someone to Small Claims is usually cheap, they often have forms available for you to use, and you can represent yourself.Unfortunately, getting a judgment doesn't mean you'll get paid. Most of these bad renters don't care about their credit and they'll let the judgment sit on their credit report forever.Send me a DM and I'll share the collection company I use. They outperform anyone I've ever used over the last 13 years. Maybe they can help.

Phillip Austin · Answer

@Brian Barbarow I would try reaching out to Zillow's customer support to see if you can pull the application info. Applications should always be kept and stored secure for this exact scenario. As a leader in our industry, I'm surprised Zillow would put an expiration date on access to applications. DO NOT spend the money to get an attorney involved. @Nathan Gesner and @Tim J. are correct in advising you to pursue small claims on your own. Visit the courthouse or simply give them a call and they can advise you on the process. It's quite simple.I would file in small claims, send the account to a collection agency, then unfortunately move on with the loss and hope that the agency can collect something.

Brian Barbarow · Answer

That’s certainly been the lesson learned here- get ‘em out before the financials get wrecked! I’m learning the lesson of compassion being taken advantage of

Andrew Syrios · Answer

Once a tenant has left the unit, it's quite hard to collect from them. Honestly, I would just turn it over to a collections agency and move on. It's not worth your time chasing money from the past. Focus on screening better in the future and move forward.

Robert Dalton · Answer

Yeah, we I go the compassionate route I expect to get burned. Lol

Robert Dalton · Answer

Yeah, I don’t think $11K is worth going to court for. I’m not sure going to small claims is worth the hassle either. It really depends on your financial status. I try to get renters out of places prior to the unpaid rents getting high for this very reason.

Phillip Austin · Answer

@Brian Barbarow Here is a good read on the topic: https://www.biggerpockets.com/...

Brian Barbarow · Answer

Thanks Tim- I used Zillow for applicants inquiring about my property, and logging into the Zillow Rental Manager now, the information is expired and I cannot review it any longer. I used Zillow to screen tenants because I thought this would be efficient, is there a preferred method you like to use?Thanks Melanie- I would be open to selling the debt to a collector, I just don’t want to pay $3,200 to pursue in small claims court.Thanks Nathan- I will look into taking them to small claims court on my own, representing myself.

Tim J. · Answer

Most jurisdictions don't require lawyers or significant money to go to small claims court. Not sure where that 3200 came from. If you are willing to spend the time you can pursue in small claims. If you can discover where they live and if they work/where they work or if they have a job, then it is worth pursuing in small claims. If they are uncollectable then don't waste the time.You did get their SSNs and their employer info on their rental application, right?