All Forum Posts by: Kyle J.

@Account Closed Sorry to hear this happened to you. There are a lot of scammers and fake lenders out there preying on people online, especially in places like Facebook groups, Connected Investors and the like. 

When I read your initial post, I thought there might be a sliver of a chance you were dealing with a legit lender and perhaps the deal just fell through for whatever reason since you said “everyone told you he was legit” and you actually got a contract from him and it was “well done” and even your lawyer didn’t suspect anything.

Granted, I don’t know how much experience you or your lawyer have at reading over lending contracts. However, with most of these scammers, they’re often from out of the country so their English is so poor that it really doesn’t take too much experience to recognize their poorly worded contracts and documents as not being legitimate. 

I am still a little curious about who the “everyone” is that vouched for this lender, and can’t help but wonder if he may have had some “plants” (co-conspirators) in the Facebook group to help convince others that he’s legit.

In any event, if you had been dealing with a legit lender, there MIGHT have been some recourse in this situation. However, by the time I read your second post, I’m quite convinced this was a scam from the start as no legitimate lender would send you their driver’s license. (So I’m also sure the driver’s license you have a copy of belongs to someone else.)

But I didn’t just drop in here to bring you all bad news. I also wanted to leave you with some links to other posts that may help you (or others reading this) from getting scammed in the future. Here’s a couple I’d suggest reading:

How do I spot scam lenders? (See my response in this thread)

Private Money Lender - How to Qualify the Lender? (See the response and list of questions from Jeff in this thread.)

Hopefully this experience doesn’t sour you on real estate investing completely and you’re able to get back up on the proverbial horse and have a successful investing career so that when you look back on this it’s just a small blip on the radar and a lesson learned, albeit a hard one.

Best of luck to you.

@Mikel Kaubfa Definitely don’t include all utilities with your rentals. You’ll never be able to predict/control your expenses.

As @Theresa Harris pointed out, your tenants will have no reason to conserve if they’re not paying the bills. (Picture heaters and AC’s blasting with the windows open.)

Also, for what it’s worth, I would be surprised if “most rentals” in your area are actually including “all utilities”. If you’re in San Diego like your profile says, I can assure you they’re not. (I’d be surprised if they are in any area though.) It just wouldn’t be a profitable business model for most landlords. 

@Oleksandr Ivanovskiy Congrats on getting the judgment. I assume since you already went to the trouble of getting that, you’ll now want to follow-through on enforcing it so you can recoup your costs and lost rents from this deadbeat tenant. (Otherwise, what was the point of getting it?)

You don’t mention where you’re located, so I’ll also have to assume that wage garnishment is an allowable means of collecting on a judgment wherever you’re at since you’re asking about it (it is in many states but not all).

Obtaining a wage garnishment order is not usually difficult or expensive. It’s generally done through the small claims court and, consequently, doesn’t typically involve lawyers. You simply need to know where the tenant works (which it sounds like you do since you’re asking specifically about wage garnishment as a means to collect on your judgment.)

In my state (California), once I have the judgment, I would need three things to enforce it via a wage garnishment order: 1) Writ of Execution, 2) Application for Earnings Withholding Order (the wage garnishment order), and 3) to pay a fee to the Sheriff’s Dept to enforce it. (The Sheriff’s Dept actually collects the money and sends it to me.)

All three of these things combined, even in my expensive state of California, would only cost $80. (And you can charge the tenant for all of it and collect it back.)

I’m guessing your 4 months of skipped rent (and whatever other damages you included) are worth substantially more than that. So don’t give up on the idea. Trust me, it’s not that difficult or expensive.

In my opinion, it makes no sense to go to all the trouble to get a judgment, and then not do the last part to actually collect on it. It’d be like running a race and then walking off the track right before the finish line.

Good luck!

@Wendy Maynard  If you know where this tenant works at (which it sounds like you do), just have him served at work. Then, once you win your small claims judgment, simply get an order for a wage garnishment and provide it to both the tenant's employers.  (Wage garnishment appears to be a valid method of collecting on a small claims judgment in your state, as it is in mine.)

Your tenant's employers will be obligated to withhold a portion of his wages, which will then be sent to you.  This will continue until you're paid in full.  It's not that difficult. You can do it!

(I've done it before and you can read about it in the following post if you're interested: Finally collected on a small claims judgment against an ex-tenant)

Good luck!

Hi @Nic Daigle and welcome to BP.  A few thoughts.  First, not sure why you're mentioning "mortgage" and "interest" as separate expenses, but you should know that principle payback isn't a tax deductible expense.

Second, I'm not even sure your $3400 new flooring expense is tax deductible.  You mention you installed it "before new tenants moved in".  Does that mean it was done before the property was placed "in service" (ready and available for rent)?  If so, that expense will need to be capitalized and depreciated.  

Also, improvements to the property, unlike repairs, also need to be capitalized and depreciated.  

Basically when something is capitalized/depreciated, instead of claiming the entire expense all at once, you claim a small portion of those expenses in the current tax year and in future tax years.  

I'm not a tax professional, and I don't know your entire tax situation, but I'd recommend you consult someone who is and can offer advice specific to your circumstances.

@Sam Albury  My wife and I saw this story when it came out and we both agreed that it was a terrible situation and we felt bad for the couple who bought the home.  However, the first thing I said was that there was one thing that they obviously didn't do that could have completely prevented it from ever happening.  And that was to do a walk-thru immediately before closing. 

Had they done that in this case, they would have seen that the seller was still there (and so were all of his belongings), and obviously he had no intention of moving out.  They could have then refused to close and the title/escrow company would never have transferred their money to the seller. 

They may not have known to do that.  However, I was surprised the attorney interviewed for this story (who stated that he's handled 7-8 of these exact types of cases this year alone) didn't mention the need to do that as sort of a "public service announcement" to help others avoid falling into a similar predicament.  

@D.j. Wischmeyer That’s crazy. There’s nothing about a typical underwriter’s training/job that would qualify them to dispute the appraised value determined by a qualified independent appraiser that was chosen by the lender.

Hopefully you can get the cost of the appraisal refunded to you, and you have better luck with your next lender. 

You weren't wrong.  The first federal eviction moratorium under the CARES Act did cover all rentals with federally-backed mortgages. (You can read about that here if you're interested: The CARES Act Eviction Moratorium Covers All Federally Financed Rentals.)   

However, the newer/broader federal eviction moratorium from the CDC that's in effect now, doesn't have any requirement for the mortgage to be federally-backed (or for the property to even have a mortgage).  (You can read the CDC order here: CDC Order.)

The CDC order is currently set to expire at the end of this month (March 31st).  However, there's already discussion about extending it.  Some sources are reporting it could be extended all the way into July!  Hopefully that doesn't happen, but I guess we'll find out soon enough.

@Ben M.  I agree with everything @Julie Hartman said.  First, does the tenant have a history of their payments bouncing or getting reversed?  Second, check the wording of the lease to see if this is addressed in there.

For example, in my lease it states that if any form of payment is returned for non-sufficient funds or because the tenant stops payment, then after that point I can require the tenant to pay by cash, money order, or cashier's check.

Plus, like Julie pointed out, if they end up making the payment good after the date when late fees kick in, it'd also be appropriate to charge a late fee (even if the original payment came in before that date).  The reason is, since the original payment wasn't honored, the rent payment wasn't technically made on/before that date and was therefore late. 

Personally, I would not shut down an entire form of payment after just one single bounced/reversed payment.  I would talk to the tenant and try to understand WHY it bounced or was reversed, and make sure it doesn't happen again.  (I would charge them any NSF fees that I was charged and appropriate late fees though.) 

Then if it happened a second time I would probably shut it down and require payment via certified funds that my lease allows for, because we likely have a bigger issue in which the tenant is no longer able to appropriately manage their money and I need to make sure I get paid via a method that I can be confident in (and won't get reversed).

@Mia G.  I have the opposite opinion of everyone above. 

If I'm doing the preliminary screening on an applicant (which for me does include looking at their social media page), and I see things like you described (i.e. them trying to acquire fake paycheck stubs, hateful comments about a class of people, etc), then we don't need to go any further in the application process.  Period.

There's no legitimate/good reason for them to be making those posts, and I already know enough to know I don't want that person as my tenant.  (Those sort of things tell a lot about their character.)  So why waste my time or their money having them formally apply or go any further in the application process?

Seems pointless to me, and personally I would not do it.  I don't want someone like that as my tenant, and I get to make that decision as the landlord.