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I'm going to be a bit vague telling my story because my username is recognizable enough to anyone who has ever met me that it would be possible to take what I say here and use it to figure out who I'm talking about. In short, I want to respect the privacy of people who are not me.

I'm a landlord. It's not my only income -- I also have a full-time job -- but it is a significant part of my income. I own multiple rental houses, and for the most part, it's been a rewarding endeavor.

However, an important component of my story is that I'm temporarily skint right now. This is partially a result of having three houses come up for re-inspection by the city in the past 45 days -- all requiring some repairs that cost quite a bit. I say "temporarily" because I have every reason to believe that my financial situation is going to resolve itself pretty quickly. I'm in a pretty tight situation right now, but I don't think that's going to go on forever. My personal situation isn't bad at all.

So what's my problem? One of the realities you learn as a landlord is that even the best tenants are late with the rent sometimes. If you choose your tenants well, it all works out after a few weeks.

A good tenant is a combination of qualities. First, they need to have a steady income. Second, they need to be interested in maintaining their home -- that is, they fix the little things that wear out or break down without bothering the landlord (if the repair is cheap, or if they know something broke because of something they did). But they also need to be the kind who aren't shy about calling the landlord if something breaks that the landlord is responsible for (appliances that came with the house, electrical and plumbing systems, furnaces, roof leaks).

Not being afraid to call the landlord when something needs fixing is an important component of the relationship.

Unfortunately, I have a couple of tenants who, for whatever reason, seem reluctant to "bother" me when things need fixing.

The normal wear and tear of living in a house is going to cause things to break or wear out. I know this, and I'm not going to kick a tenant out because the dishwasher or refrigerator broke down.

In my town, the city inspects and recertifies rental properties every two years. So, with three inspections falling quite close together (because when I first got into this business, I quickly renovated and rented out three houses), it was a bit of a financial blow to me to have to do a laundry list of repairs in the past few weeks, that I could have handled easily if they'd been reported as they happened.

(To anyone who is a renter who reads this: Take note, your landlord will probably thank you for reporting problems quickly. It keeps them from getting worse, and it allows him/her to do these things one at a time rather than all at once.)

But that's just background.

I have a tenant who is substantially behind in rent. This also puts pressure on my finances. The tenant is not a deadbeat. It's a difficult situation -- under-employment, not enough money coming in. Section 8 isn't taking new families at the moment (nor have they for the two years I've been managing rentals).

I don't attempt to manage my tenants' finances or lives. I tell them when they sign the lease: You won't see me unless you call me with a problem. This is YOUR house while you're renting it from me. I don't care about your politics, your marital status, your sexual orientation or your ethnicity, your religion or lack thereof. I care that you pay your rent and do routine maintenance on your home. I will not peek through your windows or drive by to see how you keep your yard. If the city calls me saying you're in violation of some part of the code, I'll call you and we'll discuss mitigation.

The tenant I'm talking about got behind gradually. The situation has been building for about six months. They are trying to catch up, but failing. They keep giving me what they can, but it doesn't come up to the full rent -- let alone catching up.

I try to work with tenants when they get behind. I don't charge late fees, because I think it makes little sense to make people owe more when they can't make the normal rent. I don't get angry or threaten people when they're behind. I simply ask them to do their best to catch up. It usually works.

But I fear, with this tenant, we're going nowhere good. They aren't going to have more money in the foreseeable future. They simply can't afford my house.

It's bothering me a great deal that I may have to ask them to leave. There are less expensive houses to be had, but I wonder who is going to rent to people whose financial situation is as bad as what I'm seeing.

In short, I'm afraid that if I evict this tenant, a family will become homeless. I'm also afraid that if I let them stay, I'm committing to losing money on this property after my costs for taxes, insurance, maintenance and service to the debt incurred when I renovated the house. And it will be long-term, because I don't think they have any intention of leaving if they can avoid it.

I'm cruising toward retirement from my regular job these days. It's not imminent, but it's coming (in about 6 years). I'm on a fairly strict financial plan to get my situation in order before retirement comes, so I can live comfortably (not lavishly) on my social security and the income from my properties.

So losing money on one of my houses would be a fairly bad thing for my future. My currently sinking cash flow will start righting itself as soon as I get a vacant house I've been working on rented. But I'm not going to make my long-term financial goals unless I've got full rent coming in from all my properties.

And that is the landlord's dilemma. I'm not Snidely Whiplash. I got into this because I thought I could do some good, while building a retirement income. I wanted to provide good, comfortable homes for families who can't afford to buy a place, at a reasonable price. I wanted to rehab dilapidated houses into good family homes.

So, here I am, stuck between compassion and financial realities.

 

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Comment Preferences

    •  Explain it to them, (13+ / 0-)

      like you did to us. See what the have to say but let them know that if they don't leave voluntarily you must start the eviction process. It takes time so they will have a chance to at least attempt to get caught up on the rent.  I've been a landlord for 30 years. I will take a loss temporarily after all we've all had hard times, but I will not willingly be taken advantage of either. The notice to vacate a property(or whatever the equivalent is in your state) works wonders.

      You want to complain ... look at these shoes ... I've only had them three weeks and the heels are worn right through. Eric Idle

      by irate on Fri Apr 22, 2011 at 09:17:44 AM PDT

      [ Parent ]

      •  Having been underemployed for 2 years (6+ / 0-)

        I understand your renters situation, but I also had a mortgage to pay.  Let me tell you, 300 a week does not go far.  

        But since you have all those repairs to make, maybe you can take it out in trade?  Draw up a list of what needs to be done, what materials you need.  Price them out at different suppliers, not just the box stores. Price out the work at a per hour rate.  Add that up and then pick out what he's capable of and deduct the materials and labor from what he owes you.  If he can spring for materials and just use his own sweat equity, you can both see some savings.

        Just my take.

    •  how'bout this: (1+ / 0-)
      Recommended by:
      elsaf

      Do some quick research to find out what other housing options they may have in the area that would probably be affordable for them.  Craig's List is a good place to start.

      For example if your place is renting for $2,000 and you think they can probably make the rent if it was $1,300:  a quick search of Craig's List with that as a target price will determine pretty quickly if there are some affordable options for them that aren't in the middle of gang war territory or something.

      Then you could say to them:  I can't afford to keep things going here this way, but I've found over a dozen listings on Craig's list in the range of $1,000 to $1,300: could you afford that?   If so, I'll work with you to help you move to some place you can afford.  

      And see what happens.  

  •  I used to be a landlord and i feel where you're (9+ / 0-)

    coming from. Have you brought up the possiblity of them taking in a boarder or roommate? Most of my former tenants were section 8, so i haven't had this problem.

    "Such is the irresistible nature of truth that all it asks, and all it wants, is the liberty of appearing." - Thomas Paine

    by blueoregon on Fri Apr 22, 2011 at 09:06:35 AM PDT

  •  I've never missed or been late with a rent payment (8+ / 0-)

    not for as long as I can remember anyway -- which is at least 15 years.

    I read your diary because I'm looking for a new place to live.  You sound like a reasonable and compassionate person.  Are you sure you're a landlord?  Heh.

    I actually find as I am looking for a house, most private landlords are quite UNreasonable.  Which I don't understand, really, given the market.

    I don't know what to tell you about your current situation.

    •  I can't speak to the market in Colorado (6+ / 0-)

      But I know a few other landlords around here. There are good people and bad in the business. There are plenty who are just interested in collecting money (and I think Scott McGillavry on HGTV does the business a disservice when he says landlording after the renovation is just "taking checks to the bank").

      But most of the landlords I know view their properties as investments, and are interested in keeping them up  (i.e., doing needed maintenance), and having a good relationship with their tenants.

      Like anything else, you can do it well or badly.

      •  Two major complaints for me are this new scam (5+ / 0-)

        called "discounted rent" and leases you can't get out of -- if people need to move they need to move and leases that shackle you are something I don't even understand why they're permitted by law ...

        Plus outrageously large security deposits that people don't pay you back unless you threaten take them to court (my old apartment that agreed they owed me but then never paid, heh), but that's another matter.

        The "discounted rent" is a new scam.  Basically it is something that has cropped up here to make the tenant pay a penalty if they don't pay exactly on the 1st of the month (most people have to wait for checks to clear, et. al.).

        I will never rent a place with so-called "discounted rent" because basically it means the landlord is just looking for reasons to fine me.

      •  I'm a landlord in Colorado (1+ / 0-)
        Recommended by:
        elsaf

        not on purpose, that's for sure.

        We bought a condo for our kids to live in with friends while going to college. And now they're up and gone, but since the crash I can't sell it. I'm pretty handy so I maintain it myself, including fixing appliances, plumbing repairs and stuff, but I'd rather be writing software.

        Replacing things that shouldn;t have to be replaced so quickly has cost a small fortune, though - a new furnace, A Garage door, carpets, dishwashers...

        Over the years we've had issues with certain people, Including one who died of a drug overdose in my master bedroom. Not pretty. Over the last couple of years we've had good luck with steady tenants, but the kicker is : even if you run a mostly positive cash flow, One missed month (one out of twelve) wrecks the cash. Two cripples it. Doesn't even matter if it's because a renter could make the payment, or not finding someone to pickup on schedule when the previous one leaves.

        I  keep myself busy enough just keeping my own home repaired, painted, cleaned and showplowed...

        And yes, I've had to evict a guy once after slowly using up his last month's rent and then the damage deposit. We gave him almost 90 days to figure out something, but he couldn't get it together.

        Speaking of Damage Deposits ....

        Here in Colorado there used to be, in the 1970s extensive abuse of damage deposits. I was renting a house at the time, and the owner told me I needed to get out in two months because he sold the property. Then after I made a deal on a house, and his broker informed me that I had to be out in three weeks.

        When I refused and continued with my deal, the landlord (counseled by his broker) withheld the damage deposit and said "so sue Me!" So I did.

        Turns out, two things: Not only did I not damage the house, my roommate and I had been doing maintenance on it for three years, including extending 220V to the Garage, cleaning and repairing the furnace, stuff like that. Not only didn't we damage the place, we made it better. So they were messing with the wrong guy.

         Second, it just so happened that a state rep. had just passed a bill in the Colorado Lege creating Triple damages plus attorney's fees  if a landlord abused the damage deposit rule.

         Well, guess who that legislator was? My Motorcycle riding buddy and eventual brother in law, lawyer and a fierce litigator. Turns out the Landlord, basically a nice guy, got  bad advice from his broker.

         I bought myself a very nice new guitar from that.judgment.

        Without geometry, life is pointless. And blues harmonica players suck.

        by blindcynic on Fri Apr 22, 2011 at 02:11:35 PM PDT

        [ Parent ]

  •  I admire your compassion.... (6+ / 0-)

    but I don't think you have to accept this on a long-term basis. And it isn't probably helping this family IF they never get back to paying off their debt. Keep it on the books but if it racks up, there comes a time when you have to take action for your own sake and you shouldn't feel guilty for doing that. Seems to me you are doing far more than most landlords ever would.

  •  Not reporting issues to the landlord (9+ / 0-)

    Not the heart of the question, but I feel for you on that one.  I once owned a house I rented out (not on purpose, used to live there, got divorced and moved to a smaller place).  I went there routinely one day and found they had a bucket in the middle of a room to catch the rain water that was leaking through the roof.  Why didn't they call?  Because they didn't want to bother me!  I think that was the day I decided to sell the house and not own a rental place again.

    If you are a tenant in anything resembling a reasonable rental situation - please report stuff like this when it happens!

  •  I've owned rentals for the last 15 years. (3+ / 0-)
    Recommended by:
    Catte Nappe, elsaf, AndyS In Colorado

    Something that I do to avoid the "don't bother the landlord" problem is buy a house warranty from Fidelity Home Warranty.  It costs about $300 per year (tax deductible) and covers all major components of the house.  The tenants just have to call an 800 number to get set up with a repairer.  Fidelity charges $30 to my credit card for the service call.  They let me know that the tenant has made the service call either by text or through a phone call.  

    I keep a policy on my on residence too.

    It's a great service.

    "Life is not measured by the number of breaths you take...But rather by the number of moments that take your breath away" ~George Carlin~

    by DMiller on Fri Apr 22, 2011 at 09:30:29 AM PDT

  •  As a landlord and a tenant (5+ / 0-)

    (complicated, what?)  I think you are doing what you need to do.  Perhaps you could meet with the adults in the family and work out a repayment plan in writing with a 3 month window for the back rent.  Sometimes when things are written down people will comply when otherwise it is too difficult to set priorities.  It sounds like they were making payments in a reasonably timely fashion before they ran into trouble.  Otherwise you probably do not have an option other than displacing them.  Sad.

    Democrats give you the Bill of Rights; Republicans sell you a bill of goods!

    by barbwires on Fri Apr 22, 2011 at 09:30:43 AM PDT

  •  Do your tenants have (5+ / 0-)

    any skills that you can utilize?

    I have one tenant that often can't make his rent, but he's a handyman/stonemason, so I use him to make repairs on the other houses and at my own house and give him an offset for his rent.

    "Life is not measured by the number of breaths you take...But rather by the number of moments that take your breath away" ~George Carlin~

    by DMiller on Fri Apr 22, 2011 at 09:35:51 AM PDT

  •  You have two choices... (5+ / 0-)

    1) live with what you can get after renegotiating the rent to a level your tenant can pay every month on time or 2) serve them and get them out. I have managed rental property for some time now and this situation cannot be resolved without some pain. If this is truly a threat to your long term survival, then they have to go.

    If you're feeling guilty about this than I would recommend that you turn the management of your properties over to a professional management company and get out of the day to day. You can't afford a non-standard approach to these situations, especially with families involved. By establishing a pattern of unequal treatment you could be setting yourself up for significant civil and possibly criminal liability, especially if any of your other tenants learn of preferential treatment given to others that wasn't available to them. This is a one way ticket to disaster for you and in the long run will not end up helping the tenants either.

    Being a landlord can be quite heartbreaking if you become personally involved with your tenants, it is best to keep them at arms length. I know this sounds cold, but your survival financially, emotionally and physically can be severely impacted in this situation if it is handled improperly.

    "Intelligence is quickness in seeing things as they are..." George Santayana

    by KJG52 on Fri Apr 22, 2011 at 09:38:14 AM PDT

  •  Well ... (2+ / 0-)
    Recommended by:
    elsaf, tardis10

    I've been doing a for sale by owner for a couple of years now. I love the people I'm selling to, but I knew when we first began this "venture" together that they weren't the most financially responsible people. Not necessarily for bad reasons, just lots of kids, a lifestyle that people from rural areas in Indian Country would certainly understand, but virtually everyone else would tsk tsk.

    They're very behind on their payments. They make them but they're behind. Months and months ago, I made a decision that I simply wouldn't count on that income at all, that I really like these people and I think I've done the right thing by selling to them, especially because there's no way they could get financing.

    Two weeks ago, I asked them if they wanted to change their payment arrangements because they're having an especially hard time right now.

    They're thinking about it, which is good. Part of me hopes they don't, the other part of me hopes for their own good they do.

    So ... yea. I understand. But I'm in a better position because I stopped counting on the payments as income a long time ago. I'm in a huge financial crush right now...but so are they. So ...yea.

    It's tough, really tough, isn't it, much more so than many realize.

    •  You mean Seller Financed (0+ / 0-)
      I've been doing a for sale by owner for a couple of years now.
      You mean seller financing.  I've sold-by-owner where I didn't use a real estate agent, but required the buyer to find the money, a mortgage loan or whatever, but I didn't play banker.

      You can be as charitable as you want.  Your choice.  Just hope that when the family moves out before you're paid off, that they haven't trashed the place, and you're out both payments and repair cost.  If the place is neat, clean, and in good repair with the insurance paid up, you might be OK deferring prompt payment.  If they let the place run down and don't keep the insurance in force, you are really sticking your financial neck out.  In that case, I'd boot them out.  They are putting your finances at risk.

      •  Well (0+ / 0-)

        Not sure whether you've priced fencing for 5 acres lately, but they're re-fencing as we speak and have been since the beginning.

        That's a pricetag of around $10,000.

        And not sure whether you've priced tearing down old sheds and buildings, but they've already done that.

        They recarpeted, as well.

        Etc.

        In all, I'd estimate they've done at least $30,000 worth of work to the place. They've recruited friends with heavy equipment to loan them frontloaders and similar, they've trimmed and taken out trees, fixed the well, I'm not sure what all.

        I could throw them out, and I'm sure the law would be on my side, but that would be profoundly unethical as far as I'm concerned because they've added tremendous value to the property and have been busy making it their own in the process.

  •  Totally feel for you. (1+ / 0-)
    Recommended by:
    elsaf

    Agree with a few others that is time for a sitdown and formally working out a plan.  Note I did not say,"re-payment plan". It sounds like that isn't going to happen and that these folks can not now or in the forseeable future pay the rent on this property. Maybe all you can do is work with them on a leaving date. You are going to take a hit so maybe it is time to work with the tenant to make the moving out process as smooth as possible for both sides.

    You mention Sec.8,what about any other income supports that these folks might qualify for? There is a program here that will help pay rent(briefly) in an emergency situation for some folks. Anything like that in Michigan? Sometimes Salvation Army can help to keep families from becoming homeless. Other charities? I am so sorry this is happening to all of you.

    Hope you keep us posted on the situation.

    "George RR Martin is not your bitch" ~~ Neil Gaiman

    by tardis10 on Fri Apr 22, 2011 at 10:06:35 AM PDT

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