late payment

House1: Turnover – Original Tenant

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I don’t usually spend much time on the tenant themselves, but there are a lot of lessons to share with this one.

We had to turn this house over last year when the two ladies who lived there moved to Georgia. They had been there a couple of years. We were busy when their lease ended, so when they asked for another month, I had agreed. But then we were on an awkward schedule for leasing. Our candidate pool was pretty low. We ended up settling on this lady who said she needed to find a place fast because her landlord was selling the property she was living in. She had told us that she needed to wait for him to return her security deposit to get us our security deposit. She told us this after we had already started the process of getting her into the house, so we just had to accept it. It took her 3 payments to get us the security deposit. That was the first red flag. She continued to be an issue for her entire tenure.

She was the type of person who wanted to hide behind her faith while continuing to treat us terribly. I can’t standing living through something like that.

The second red flag came when she kept saying her mail key wouldn’t work. She would take a week to respond to Mr. ODA with information on how it didn’t work. Finally, after several weeks of back and forth, Mr. ODA drove over there. He put the key in the mailbox number he told her and it worked fine. This doesn’t seem like a big deal, but coupled with everything else we went through, it was telling.

LATE RENT

The third red flag was everything about rent. In February, she paid $1000 on the 5th. Since she paid the majority of rent up front, we didn’t charge her a late fee. She paid $350 on the 15th. Not bad. She paid when she said she would. Then it just keeps getting worse.

She let us know that she was going to be late for March. There wasn’t great communication, but we received half of rent on the 7th. After much follow up, she paid the second half of rent and $50 towards the late fee on the 28th. When people pay that late in the month, I know it’s going to cause the next month to be late. So April comes along and she barely tells us what’s happening. She just keeps saying she needs more time and eventually pays on the 25th with $50 of a late fee. No partial payments. Mr. ODA expresses the need for partial payments and to communicate what is going on. She acted like we were out of line for expecting rent. Then comes May. More bad communication. Mr. ODA finally expresses that the late fee is actually $135 and that’s written in the lease agreement (she’s surprised by that). We get rent and the full late fee on May 30th.

We’re in trouble now. I serve her notice that she’s to vacate the premises at the end of her lease term, June 30. Now, please note that as of the 6th of each month, we are well within our rights to serve her a notice that says she has 5 calendar days to make payment or we’ll file for eviction. We don’t do that. We keep hoping she’ll figure it out and get back on track like she tells us she’s working on.

In mid-June, we’re camping, and she calls Mr. ODA. She says she’s been praying on it, and Jesus wants her to stay in our house instead of finding somewhere else. Mr. ODA tells her that she needs to make payment to us for that to be considered. She says she’s going to look into her finances and she can probably get us some money that Friday (it was Wednesday). On Sunday, Mr. ODA texts her to ask what’s going on and she says she can’t pay anything towards rent because she “just” paid rent and her last pay check needed to go to other bills. Mr. ODA says we’ll give her until the end of July since now she’ll have less time to find a place, but she needs to get out. Again, our attempt to treat someone like a human instead of us protecting our business 100%.

She paid June rent on July 5. She told us it would be on July 3. On the 4th she hadn’t paid. Mr. ODA asked where payment was and she said “it’s coming.” She paid rent and the late fee that Sunday morning after more follow up.

She told us we’d have rent on July 31 before she moved out. On the 31st, she said she needed more time. She handed me cash on August 1st.

The person who owns the house has bills to pay. If I don’t pay my bills, the bank could take the house away. So you not paying your rent affects what I can pay. Now, I’m a good person and am always trying to be reasonable. We’ve set up our business so that we can pay our bills even if someone doesn’t have the money to pay their rent perfectly on time. But paying your rent a full month (or longer) after it’s due, with very little communication, and hardly ever following through on the payment date you gave us is taking advantage of us. There was no appreciation for us being understanding. There were hardly any apologies. We were always the bad guy for following up when payment wasn’t being made (while the payment date was actually the date she established and we never forced anything).

THE MOVE OUT

I sent multiple emails letting her know that if she was not out by July 31 at 5 pm there would be fees incurred. She would claim to understand, but then at 3:20, she told Mr. ODA she wasn’t going to make it. Mr. ODA said to move everything to the garage so we could start working on the house to get it re-rented. Well, there’s no lock on the door between the garage and the house, so that plan didn’t exactly work to get us a secured house while she finished moving out.

I will say that she kept the house in great condition. There were chew marks on molding, which says she may have had a dog that wasn’t authorized, but she had the carpets cleaned by Stanley Steamer and the house was cleaned up when she vacated. It’s always a risk when you’re telling someone to get out because they haven’t paid rent that they’re going to destroy something or leave trash behind.

She kept trying to tell Mr. ODA that she’d be done by 8, then 10, then midnight. She really expected us to meet her to get the keys at midnight. Then around 9:30, she texted Mr. ODA saying she was really just too tired to continue and would need to finish it the next day. I met her out there at 9 am. She said she couldn’t get a u-haul and needed more time, but her truck reservation was for 5:30 pm. I literally said that the goal post keeps moving so how was I to know that she’d actually be out of there that night. She tried to give me the keys to the house at that point, but I had to explain that if she gives me the keys, then it’s on me to drop everything and be available when she got the u-haul, and it wasn’t fair to me to keep having to show up to be told she wasn’t done.

Well, she ended up getting the u-haul a bit earlier and was able to text Mr. ODA that she was ready to turn over the keys. She did eventually get everything out (well, except for two cabinets in the kitchen).

But that wasn’t it. Mr. ODA decided to offer to get her the mail that was in the box. It was really because she wanted to check on the 1st one final time, but Mr. ODA didn’t head out there with the mail key. So after multiple back and forths, they finally decide to meet at a park in town. She then shows up a half hour before the agreed upon time because she was able to get out of work early. Well, that’s not how meet ups work. I just can’t comprehend the number of times that this lady thought that we just sit around waiting for her to decide to need us and that we were just going to magically appear when she rubbed her genie lamp. So Mr. ODA went out of his way to get her the mail, and she was bothered that she had to wait – even though he was 8 minutes earlier than the agreed upon time.

SECURITY DEPOSIT

In the end, it wasn’t bad. She got 80% of her security deposit back. I charged her for a broken stove burner, trash removal from the kitchen, and a stained toilet seat that needed replaced. The house was very clean, so I didn’t need to put much time into that.

SUMMARY

She lived there for less than a year, but she was one of the hardest people to manage. I try really hard to establish a relationship with my tenants that says I’ll treat them with respect and understanding if they treat me with respect. I get praised and thanked up and down from my other tenants. This one wasn’t like that. She thought our bar of understanding needed to be way too high and was completely unreasonable. We were as gracious and patient as we could be.

Rental Work

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Every once in a while, I’m juggling a few rental property items, and I like to share the effort being put in. While it may be taking some of my energy now, it’s not something that happens often. Usually, Spring is our busy time because we have to manage leases ending or renewing. We have upticks in maintenance requests at the change of seasons each Fall and Spring (usually a plumbing or HVAC issue). For most months though, we don’t have to do much. I’m currently in a season (somewhat self-imposed) where we are busy and the rentals are requiring more-than-usual attention. Here’s that story.

RENT COLLECTION

One of the houses that I took over management for didn’t pay rent. I had to reach out to her on the morning of the 6th. She then asked to have until the end of the day. I told her that was fine, but if she didn’t pay by the end of the day, she’d have to pay a late fee (which is technically required after the 5th); she paid a few minutes after that message.

Another tenant let me know that they were sick last month, so they needed more time for rent. I let them know that was fine, and not to worry about the late fee. They paid a day earlier than when they expected to be able to pay.

LEASE ACTIVITY

Interestingly, several lease-related actions have been taken. I had to get 3 leases executed because I took over management of those properties (more on that below).

I had one tenant let me know that she won’t be renewing. She has been in that house since July 15, 2018. She sent me a text letting me know that she’ll be moving out on April 30th. Funny because her lease goes through June 30th of each year. But since she’s been there for so long, gave us ample notice, and so politely picked the end of a month, we’ll just go with it. It’s a 2 bedroom house, so we were surprised she spent as long as she did there. The first tenant we had in this house put us in contact with the current tenant. Ironically, the first tenant had recently asked if we had any 2 bedrooms coming available. At the time, I didn’t. But now we have the same house coming available, so I let her know. The person she knows looking for a house is interested in living there, so we’re going through the application process now!

I had another tenant tell me that they want to renew for another year. It’s for a house that I just took over management for. Since I don’t know them at this point, I didn’t want to agree immediately. Their notification deadline is March 31st, so we’ll revisit that renewal next month.

Then I had another tenant ask if they could renew. Their lease term isn’t up until April 30th, and their notification deadline is the end of February. Every year, they let me know their status some time in January. We reviewed their lease terms and decided to keep their rent at the same rate for another year. We typically increase $50 every two years, and their increase was at the beginning of this current term. She did play their hand and tell me they wanted to stay because rent is so expensive elsewhere, but we’re nice people. 🙂

WATER HEATER ISSUE

At the beginning of January, we received notice from a tenant in VA that their hot water wasn’t working. Being that it was really cold, it wasn’t surprising. However, the unit was installed in August 2021, so we weren’t happy to hear that. We called the company that installed the unit. They scheduled an appointment for the next morning. When the tech didn’t show, our property manager called them and was told they suspended all plumbing jobs and the scheduler shouldn’t have scheduled the job. So our manager got another guy out there that afternoon and discovered that the wires weren’t installed correctly. His report stated: Dispatched to home due to home not having hot water. Found burnt wires in electrical access due to improper installation. Two unlike wire materials, not joined together correctly. Cut and removed burnt wires and reinstalled the correct way.

Now I’m trying to get in touch with someone at the installation company to address this. We’d like our $200 reimbursed for having to call a different plumber out. I called to complain on 1/20. I was told that a service manager would have to call me back. No one did. I called this morning and was told I’d get a call back in a half hour. No one called this morning. At 1:15, I got a call from some guy who poorly introduced himself and wanted into the property right now. Um, no. I politely told him that I didn’t appreciate the way he was talking to me and that I’d speak with someone else. I called someone back in the office, and she had a different guy call me. I emailed him the paperwork from the other plumber. He agreed to process the reimbursement, and am now waiting on that confirmation.

PROPERTY MANAGEMENT

We’ve had some issues with our property manager in KY. Perhaps their actions are completely normal, but they haven’t met our expectations. We were asked to reimburse a tenant for a high water bill because they dragged their feet on timely fixing it, and then took two attempts to even fix it. Our contract deleted the automatic 10% uncharge on all contracted services (meaning, if they hired a plumber, and the plumber charged them $100, then they’d charge me $110). We argued at contract negotiation that their hiring of a plumber is covered in their monthly management fee and removed it from the contract. Their system automatically adds the 10%, which is understandable, but I would have to review every single invoice and ask for the 10% to be returned. That’s a lot of managing-the-property-manager.

Then we had a huge issue with them last May. I covered the first part of the issue through the Tenant Abandonment post. The second part of the issue was how their accounting manager handled the rest of the conversation. They took their management fee off of the security deposit. I had questioned this on the last property turnover, and they agreed to give me that money back. I thought it was the same across the board – that it was an accident in their system, with it counting as “income” so they took their share. The conversation disintegrated from there. They claimed that since the security deposit was being applied as rent for the month the tenant abandoned, so they could take their share. I said that a security deposit’s purpose is to cover damages, and there was A LOT of damage that I need to pay for, so I shouldn’t be at their whim to decide how the security deposit is going to be applied (not to mention it was their lack of management and effort that created the vacancy). He then started to claim that their level of effort was more than the $90 I was arguing over (1. false. 2. that’s not how my paying you works… what about all those months I paid you $90 for you to do literally nothing). It turns out that I put all my effort to respond to this person’s initial statement of “This security deposit for the tenant has been applied toward rent.” While he said that, that wasn’t actually the reason they took a fee from it, and in actuality, our agreement would have allowed them to take their commission out of the security deposit. But where the relationship really went sour was when this accounting manager started looking through all our charges and decided to hit us with two $500 charges, that we had already paid. We got the owner involved, stating we didn’t appreciate this “desk audit” to try to “get us” on something, even though we had already paid it. Mr. ODA went to meet with them, and everyone apologized for this one person’s brash actions, but that was the last straw for me.

We now live here, so I can take on management of the houses instead of paying people who I have to argue with every time a charge comes in. Unfortunate for the timing, we then purchased a house that we put a lot of work into over the summer, and then I was very pregnant, so we didn’t terminate the agreement immediately. Mr. ODA decided that the beginning of the new year would be a clean break, but by the time I got the letter out, it didn’t terminate until January 31st. They’ve been great about turning over all the finances and information thus far.

So as of February 1st, I took on 3 more properties to manage. I had to establish my own KY lease agreements, which meant referring to the leases currently in place through the property manager and my own templates from VA. I then had to meet the tenants for their signatures. I went to each of the houses, which was a reason to see their living conditions. I didn’t call it an inspection, and I didn’t require a tour of the house. I simply used the initial experience as a gauge on how they’re treating the property. For one, we turned it over after the tenant abandonment, so we didn’t expect it to be too bad. But we hadn’t seen the other two houses since 2019.

Over two days, I met with the tenants and executed the new leases. Two of the meetings were a half hour each, and one was a while longer because we were talking about some of the issues they had with the management company’s maintenance. Of course, meeting with tenants in person usually ends with a to-do list on my end. So once I got home, I put together their leases and the to-do lists for me. I now need to schedule going out there to do their fixes.

BURST PIPE

On December 27th, I received a call from one of my tenants letting me know that water was pouring out of the house next door (that’s also ours). The tenants had turned off the heat… when it was 6 degrees for 3 days straight. The water heater is in the attic and a pipe cracked during the freeze. When it started to thaw, the constant water running filled up the house. Our property manager went to the house and found two inches of water throughout the entire house, along with a collapsed ceiling in the master bathroom. Over the next two days, the ceiling in the adjacent laundry room and the master bedroom also collapsed.

The tenant’s renters insurance was responsible for removing their belongings. They created quite the speed bump, and the tenant’s items weren’t removed for 5 weeks. We finally got their things out, and now we’ve been working with contractors to get the house put back together. We agreed to a contractor who worked with our insurance to get their full amount of work covered (there was about a $6k difference between the insurance adjuster’s estimate and the contractor’s estimate). The insurance company agreed to the new estimate.

We’re now working on the contract with the company who will put the house together. The initial contract required 50% payment up front, which we didn’t feel comfortable doing. Now we’re waiting on an updated contract with a new pay schedule that will split the payment into thirds.

Our next step once the contract is executed is to pick out all the replacement things. On top of them fixing the bottom 2′ of drywall throughout the entire house and all the ceilings that collapsed, along with replacing insulation, fixing the crawl space, etc., we have to make selections for new bottom cabinetry in the kitchen, new vanities in the bathrooms, and new flooring throughout the whole house. I’m hoping that once these selections are made, it’ll be smooth sailing. The contractor is 3 weeks out to begin, and the contract says it’ll take 40 days to complete.

While there’s a lot of things being juggled right now, it’s still not equivalent to a full time job. Since insurance is paying for the replacement of damaged items in the one house, it’s not a high spending month. It’s just requiring more brain power than usual.