All Forum Posts by: Mark Kelley

Hey @Nathan Gesner

How much do you want to kick someone when they are already down?

There were no threats from an attorney or other fears of my opponent. I had come to learn he was a charlatan and not of a person of means, which makes him both difficult to pin down and not worth the effort to do so.  

I offered the gentleman's agreement for the charitable donation in my name to a cause that I care about. Along with the apology notes, this met my need to hold him accountable. I was glad to show some unexpected kindness when he cried poor at Christmas. That's me being a gentleman, not him. More like a duel out of Hamilton. 

When gathering evidence for the lawsuit, it became clear his life was unraveling. We found evidence of mental health and familial issues, all sorts of debt, IRS issues, and even YouTube videos showing a life in disarray. The guy did lose his job at the company he founded. He left town. Last I heard, his primary home had been put up for sale. Even if he got a tax break for the donation, he's accruing credit card interest on it. I'm sure his credit is scorched already.

No need to beat him down further for me to feel I had done what I needed to do to hold a charlatan accountable. Perhaps he'll think twice before sticking it another landlord. 

That's a great point @Bill B. I did exactly that to make sure the charity got and kept the money, which they did. 

Long overdue update:

I pursued the tenant through small claims court, and won, kind of. 

My main goal in pursuing the person was not to recoup for damages, but instead to hold him accountable in some way.

Not wanting to throw good money after bad, I went the DIY approach to filing suit. It was easy to file a small claims suit against the person using the online tools available from the court system. The hard part was finding out where the tenant had gone so I could have him served papers by the constable. At first, he never responded to the suit though it had been delivered, and I continued moving the process forward, filing for summary judgement.

Late in the process, long after his deadlines to respond had passed, he hired a small time tenant attorney to intervene. I appeared remotely in one session front of the judge alongside the attorney, who was barely competent.

We ended up reaching a settlement through the court system, which I offered as a gentleman's agreement. The tenant and his wife would write apology notes to my wife and I, and they would make a $5,000 donation to the charity of my choice. 

$5,000 was not an amount of money they readily had, and they requested I allow them a couple of months to gather the funds so their kids could have a Christmas. I obliged to give them the time.

But they didn't pay by agreed upon date in the new year. After giving some grace, I had to turn the heat back up on them to force them to make the donation.

They made the donation on a credit card, and while it's a far cry from the $50k+ in damages, it was a meaningful amount of money to them.

It was a lot of effort on my part for a small win, and I'm glad I did it. 

Unfortunately, to my knowledge, I don't believe there's any documentation that a future landlord might find to tip them off to the poor character of these tenants.

Moving forward, I'm less dismissive of warning signs in the tenant screening process. I had let my guard down and given a tenant the benefit of the doubt (a tenant who is (now was) a CEO and raised millions of dollars for a newsworthy venture). I'm more cautious now in tenant screening. 

I don't know @Scott Mac. Neighbors and others have speculated about what may have been going on in the house and with the tenant, but no one knows for certain what occurred behind closed doors.

Thanks everyone for the replies. These are helpful thoughts. 

We called the police within hours of taking the property back, and the police report has been filed and a case number issued. An investigation does not appear to have any momentum, so I might need to press the police action.

On the legal front, I'm torn between 1.) Going after the tenant for a portion of the claim in small claims court, just to get to a judgement faster and with less of my own spent going after bad, as the tenant does not appear to have assets. Or 2.) Suing in district or superior court, as it's my understanding most cases settle without actually getting to a judgement, which I think is counter to my goal to leaving a record.

Any thoughts on this?

@Theresa Harris - He's not providing any explanation for the damages, the missing property, the abandoned property, or his actions. He didn't even acknowledge a blistering letter from the PM in which she documented that the tenant's aggression and a threat from his spouse on the final day made her feel unsafe to press for and conduct a walk through, which the tenant had been putting off.

@Pat Lulewicz I've though about contacting the news channel that currently has story published about him and his business, though I'm hesitant to do so as it probably opens me up to some liability. The damage is well documented and the photos, witness statements, and contractor reports are pretty damning.

Thanks again to everyone who weighed in.

TL;DR. I am looking for advice on how I can take appropriate action to warn future landlords and LPs about a deceptive and destructive executive-level tenant who is also a GP on real estate deals.

I rented a fully furnished luxury executive rental in Raleigh to the CEO of a company that builds and operates healthcare facilities. When he vacated the property and returned to his home state, he left under hostile circumstances and left significant damage at the house. I’ve spent $51k so far in the last 65 days on property repairs and replacement. Some of the damages include ~$7,800 of missing property, kitchen cabinet doors ripped off, a mangled chandelier, a damaged refrigerator, divots from a claw hammer in the granite, and urine and feces stains on rugs, furniture, and hardwoods from an unauthorized puppy. The house, appliances, and furnishings were disgusting throughout, and we even found bird droppings on the piano. In short, getting the place restored was akin to remediating damage from a natural disaster.

In the trash and belongings abandoned by the tenant, he also left the OM for his healthcare real estate endeavor, nasty-grams from the IRS about his personal taxes, and collections letters from several creditors after him.

I got burned here and so did my property manager. In retrospect, some yellow flags found by the property manager during the tenant screening are now bright red flashing sirens, but the tenant showed decent credit, had a positive previous landlord reference, wrote a charming cover letter in his application, and applied through the referral of a reputable real estate agent. He was also featured on the local news station for his innovative work.

The tenant is of course taking no responsibility for any of his actions or the damage, and he mainly just throws out empty and somewhat comical threats about a team of lawyers on standby, accusations of insurance fraud, and leaving bad reviews for the property manager.

I am not seeking advice on how to recoup my financial losses. Losing $50k through this is not ideal, but I’m fortunate that it is not a painful sum to lose.

What I am seeking is advice on how to leave evidence in the public record that could be found by future landlords and limited partners vetting the GP, who’s seeking $8M total / $250k each from accredited investors per facility as he seems to have a plan to move around the country opening facilities.

A $57k bill could be a devastating to many landlords, and I want to help prevent them from experiencing a similar situation. 

My recent research indicates small claims courts judgements no longer show on someone’s credit report. I originally thought this would be a low cost route to documenting the issues and alerting others. I filed a police report regarding the missing property, but that’s unlikely to lead to a charge and conviction.

So, what action do I need to take to help a future landlord or a potential LP uncover these facts in their due diligence?

Thank you,
Mark Kelley
Raleigh, NC

Thank you, @Adam Lacey for the advice also. I will be speaking with more than one operator to get a sense of the differences. 

One question for all:

For this operator, I met the CEO yesterday and am meeting other members of the management team next week for additional context.

This company is basing their expected property sale value in year six on a 15x multiple of EBITDA.

I was a partner in selling an IT services company at a 10x multiple of EBITDA which I was thrilled with, so 15x seems pretty ambitious.

Any perspective on this?

MWK

Got it. Thank you @Justin Goodin

Thanks at Justin. @Justin Goodin did you mean to include a link to the article?

@Evan Polaski very helpful questions and guidance. I appreciate you taking the time to share some wisdom. 

@Danny Randazzo I sent you message. Thanks for offering to share.