All Forum Posts by: Justin Scull

Hi everyone, thank you for your comments.  I guess its a lesson learned type of situation.  At this point, she has paid her rent and has not given me any problems prior to this so I will wait a little bit to see what happens with the insurance.  If things start getting messy I will initiate the process then.  This is my first property and first tenant so everything is uncharted territory at this point... 

Thank you all for your help! 

Hi Frank, 

The damage was fairly significant, there was a lot of water and it came out onto a laminate floor.  The water needed to be removed and dried out and then the effected areas needed to be replaced.  The insurance company paid about 2k out for the water removal and the replacement cost was valued at $5900.  When I told my insurance company what happened, they did not give me a choice on whether I wanted to charge the tenant or not because they wanted to get their money back.  

In regards to the plumbing, that is strange because I could clearly see all the pipes and drains and it looks like the plumbing was done professionally but the overflow looked to be pushed in and caulked over.  It does not make sense to me that a plumber would do all of the harder work completely right and give up on the final detail.  My suspicion is that my tenants boyfriend, who is a contractor came in shortly after the incident happened and attempted to save the day for his girlfriend by placing caulk over the drain.  The color on the caulk suggests that it was relatively new and I have not had anyone in to redo the caulk since I purchased the property.  There was also no note about this in my inspection and I watched the inspector go through all of the sinks and drains.  However, even if the overflow was wide open, I do not think it would have the capacity to drain at the same rate that it was filling if the tap was fully open.  I will have everything corrected now that I am aware of it.  

However, I am not sure what to do with my tenant at this point.  If my insurance company takes her to collections for this, what assurance do I have that she will not take it out on the property in some way?

Hello BP Community, 

I am currently house hacking a duplex that I purchased last year.  When I purchased the property, there was already a tenant in place in one of the units and I moved into the first level unit.  The tenant was signed on with a management company and they had high praise for this tenant.  The management company provided me with a lease and also a payment record.  Everything was good and the tenant has been on-time with rent every month and so I approved a 16 month renewal in February.  

Fast forward to last month, my tenant was cleaning and she was washing a few items in the bathtub.  She left the bathtub running as she worked on other things and forgot to shut off the water to the tub which then overflowed onto the floor and into the my unit below.  I was pulling in the driveway when this happened and my girlfriend called me frantically trying to catch the water in buckets before it did any damage.  I ran upstairs to find my tenant outside on her deck and told her what was going on and she ran inside to shut it off.  However, at that point the damage was done and water continued to flow out into the lower unit and so I opened up a claim with my insurance company to repair the extensive damage.  At the time of the incident, my tenant advised that she was clearly responsible and would cover my deductible, however her commitment changed when she started to get an idea of the cost associated with water removal and repair.  Furthermore, she then went on to say that the reason the tub overflowed was due to a blocked overflow and so she was only partially responsible, (there was an overflow in the tub but it looks like it was tampered with and caulked over, possibly as a way to dodge responsibility but I can't prove this.)   However, my insurance adjuster advised me to not collect any money directly from her and that because the damage was caused by the negligence of a 3rd party that they would need to file a claim against her renter's policy for the loss.  I sent over a copy of the lease which had her insurance information and they told me they were taking care of it and that I didn't have a choice on whether or not I wanted to go after her for the damage.  

When my insurance company reached out to the company shown on her lease, it turns out that she either canceled the policy or never had one at all.  My insurance company said that they then tried to contact her directly but she would not return their calls and so they have turned over the claim to a collections company.  

At this point, I am not sure what to do.  I am very disappointed in my management company for not verifying her information but I am more worried about what I should do now with my tenant.  I have not spoken with her since I have found out about the insurance and collections agency.  She paid her rent this month on time but I am worried that this claim will either bankrupt her or cause her to take her frustration out on my property.  She still has a lease going until June of 2018, but she has also violated her lease by not having active renters insurance.  

Has this ever happened to anyone else?  Should I keep her on as a tenant or should I start looking into the eviction process?  Should I reach out to her to clarify that I did not ask the insurance company to file suit against her?

Any help at this point would be appreciated.  Thank you all in advance.  

Hi everyone, thank you for all the support and feedback.  This whole thing is really a learning experience.  I believe that after working on this house, I will be pretty well prepared for the maintenance on a newer home when that time comes.   Due to the fact that I am living there, I am probably more concerned with some of these issues than a potential renter would be.  I keep having to remind myself when I am considering some upgrades, "it is just a rental".  On the other hand, I have copies of the old service invoices from the previous owners and I would like to replace as many of the trouble areas as possible to help avoid on-going service calls for known issues.  

In regards to the roof, the section of roof is literally built underneath a deck for the upstairs unit.  There is only about a 1 ft gap between the roof and the deck in some sections.  I have had a tarp put in place to stop the moisture from getting in.  If you can't see the tarp from the outside of the house and it is working, should I even bother replacing it?  Out of sight, out of mind?

Thank you for the feedback Jon and Ed.  

I have done many of the repairs myself at this point and have been learning a lot.  However, doing some of these things has definitely taught me my limits as well.  Due to the age of the home, I have had a hard time finding standard sizes for any of the items currently installed... The home was sold for around 30k less than what the old owners paid for the house in 2003.  I think this is largely because the previous owners have let many of the maintenance items slip to a point that they could not keep good tenants without doing a major overhaul.  With only 1 tenant, village taxes and 2 partners splitting the revenue, it was no longer worth it for them to keep the property.  However, the property is in a nice and safe community within walking distance to bars and restaurants downtown.    

The planned expenses and projects that I had when I first purchased the home are getting pushed aside to handle the other items that have popped up unexpectedly and I am trying to tackle the biggest items first.  So if the goal is to have the property re-financed to get equity for another house, should I improve the bones of the house or the cosmetic features?  Either way, at this point, I am still saving money and learning valuable skills but I want to start looking for my next steps.  

Hello All, 

I have been viewing some of the topics online and listening to the podcast, but so far this is my first post!  I was hoping that I could reach out to the BP community to get some feedback on the best way to proceed and work towards my next deal.  

In mid July, I closed on my first house.  It is a 100+ year old duplex close to the downtown area of a small town in Oakland County MI.  Going into it, I had the idea that I would like to get into real estate but hadn't done too much research or cash flow analysis.  Initially, I was attracted by the possibility of having a property that I could live in and rent out the other half to cover my mortgage and help me save money while building equity.  The property in question had a tenant occupying the smaller half of the home and she had a solid rent payment history.  

The property had been a rental for several years and was last sold a little over 10 years ago.  There were definitely some maintenance issues that were identified at closing but nothing too major was noted.  The things that were noted were also given what now appears to be extremely low replacement costs...  

Upon closing on the house, I immediately replaced all of the floors in the lower unit that I would be occupying and began to update some of the electrical outlets and fixtures in the house.  I also began to seek out contractors to evaluate the slight foundation issue that was noted at inspection.  Turns out it is not a cheap fix with bracing but instead an entire replacement of the concrete that covers the original cobble stone foundation.  Quoted out at 10k.  Additionally, I then found a roof leak which due to the location and design of the house is extremely hard to access and will cost about 4k to replace the affected area.  The upstairs unit will need to be updated and fixed when the current tenant moves out in order to get a decent rental rate and tenant.  The water pressure and electrical systems could benefit from replacement and the house is in dire need of a paint job.  

In my mind, the property is still a good investment and for the area that it is in, I believe that I got it for a good price.  However, I would like to refinance in the future and start freeing up funds for other projects.  I bought the duplex for 150k and many of the smaller single family homes in the area are going for over 200k.  What improvements should I make to give me the best return from the bank and what items can wait until they wear out?

Thank you all in advance for your help, 

Best regards, 

Justin