turnover

August Financial Update

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This month was unbelievably painful financially. And yet, I appreciate that we’ve set ourselves up that we can handle these things without stress, even though the balances on credit cards made me feel like I was drowning. At one point, we had over $30k on credit cards. I’m still juggling life as a mom, financial consultant, part time worker, and volunteer on the HOA board. Oh, and managing two vacant rental turnovers, throw in 2 trips away from home, and school starting.

RENTALS

We had one house pay late, with little notice and communication (if you’ve been here, you know this is a pet peeve of mine). They paid the late fee at least. I had another house pay partial on the 3rd and then true up on the 6th. Again, no communication, and she beat me to asking what the deal is. I also had a tenant who already pays twice per month be late on both of this month’s payments, so that also brought in late fees.

In a story for another time, we have two vacant rentals. 11 of 13 houses renewed. Two houses each actually moved out of state, and unfortunately, my kind heart scheduled both of them to end their leases on July 31st. We’ve been spending all our time at these two houses. The one had smokers in it (against the lease) and we’re struggling with that. We’ve replaced the carpet and painted all the walls (except 2 closets and a powder bathroom) and it still smells funky when you walk in. Then there’s just the routine type turnover things like scrubbing and wiping dirty hand marks off the door frames. All of these things will be detailed in separate posts. The other vacant one was quite the story, so that’ll be multiple posts. Our attention isn’t as heavily on that one because we’re going to likely sell it instead of re-rent it.

We replaced a roof ($5500), replaced an HVAC ($8300, but split with a partner), evicted bats ($1480), and made decisions on flooring replacement in another house with extensive termite damage. Seriously. Financially painful. Coming this next month, we will also be paying for termite repairs at another house where we tore out carpet and laid LVP.

HEALTH COSTS

I tend to focus heavily on this topic in this blog. It’s surprising because it’s not really the niche of making money, but insurance and doctor bill processing seem to be wrong more than they’re right. Therefore, it falls more into “protect your money” than anything else.

This is a longer story for another post yet again, but the gist is that the insurance company took 6 months to process a claim. They sent me the bill in June. I called 3 weeks after the bill arrived to find out they had sent my balance to collections because their system flagged it as a January overdue balance…even though this was my first invoice on the matter. Love it.

The end result here is that we needed to add $1600 to the credit card.

PERSONAL

I don’t know that there’s much personal life happening with all those other things we’re managing. We took 2 trips. One didn’t cost us much because the grandparents take care of a lot of the cost, another one cost us more than usual because I put a lot of effort into food that we usually don’t do when we travel there. Overall, the trips were fairly inexpensive financially, but they took a toll on me due to the time commitment and what we had to give up by doing these trips.

Otherwise, we’ve just been wrapping up summer and starting school. We’re about to get back into baseball season with lots of practices.

NET WORTH

The market had a big jump last week and my update of financials occurred Thursday morning. Unfortunately, life put a blog post on the back burner while we were turning over a rental, so I’m only getting around to posting this now. The market is in a fairly similar spot as of yesterday’s close, and I’m thinking we’d even be over $5 million if I were to fully update our financial status right now. We’ll just hope for the best for next month.

In October, we’ll pay off our $15k credit card that we’re carrying, so that will be a big swing in our credit card balance two months from now. We need new windows at our house (the seal keeping in the gas between the panes is going on quite a few windows (or went years ago), and it creates this streaky dirty look to them), but I think I’ll appreciate not carrying this large credit card balance month to month while we utilize the $0 interest for a while.

House 4 Turnover

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We had a long term tenant in this house, who moved out last Spring. We luckily had someone lined up looking for a place to live. There were a few red flags from the beginning, but I went with him because he was a friend of an old tenant of ours. Rent was always paid on time, and everything went fine. Unfortunately, there was a public incident at work in the Fall and he was let go. He asked if he could be released from the lease so he could move back home.

I wasn’t interested in making anything more difficult for them. I didn’t ask for a lease break fee; I just asked that they continue to pay rent until we found someone who could take over the property. It was winter and holiday time, which is least favorable time of year to be finding a renter. They gave notice at the end of November and we listed to house right away. We did our due diligence to get someone in there as best we could, considering it was Christmas time and the middle of winter. The tenant paid January rent on the 1st, as required. Luckily, we were able to get someone moved in on January 5th. The tenant didn’t do anything wrong to the property, so I gave back his security deposit and the January rent they had paid.

TURNOVER

The original tenant had essentially vacated the property, so we were able to get in and do some work to it. The entire place was painted and had extensive maintenance needs met over last summer (after the long term tenant), so this was an easy task to get it ready for a new tenant.

We received a notice from the city that the yard needed to be cleaned up, so we had the tenant go over there and do the work. There was a tree limb that had fallen (and wasn’t reported), so we had someone go clean that up and the rest of the yard for $100.

Several years ago, we had replaced most of the windows in the house. There were 3 windows that were either fine or oddly shaped, so we didn’t replace them. That was a mistake. We ended up spending the same amount on 3 windows this year that we did several years ago for 6 windows.

The front porch of the house is seldom used. The driveway is in the back of the house and leads straight to the kitchen door. The entire front of the house is fenced in too (the house has a huge front yard and small back yard). Due to the age of the house, that it’s a rental, and that the front porch is rarely used, it wasn’t in great condition. It was finally time to replace it. We had our handyman rip out the stairs, banisters, and floorboards to replace it all; it cost us $1,640.

The kitchen faucet wasn’t working right, so we had our plumber replace it. He also tried to flush the water heater to extend the life, but it was broken enough to replace it. We needed a special size because it fits under the counter in the kitchen, so that was $1500.

Other than a clean from our cleaner, that was all that we needed to do.

TENANT SCREENING

We had 4 sets of people show interest in the property. One withdrew her interest form after checking the sex offender registry (understandable, but it is a city home, so that’s not surprising). I was interested in another guy who was retired and seemed handy, but as time wore on, there were several red flags. Another person tried to convince us that his day-trading of stocks qualified him to pay us rent each month, so he was disqualified for not meeting income requirements. Finally, a couple showed interest, and my property manager said they seemed like a decent option in person, so we went with them. At the time, I didn’t really comprehend that one of the tenants was only 20 years old. That comes into play when he shows his age and inability to handle a mature conversation about rent payments a couple of months later.

Due to the unexpected timing of turning over this house, we ended up with an 18 month lease. We didn’t want a 12 month lease, leaving us with another winter turnover. Even though their lease started January 5th, I counted the full month and ended the lease on June 30, 2025. I like a May 31 or June 30 lease ending the best because it seems to be when the most people are looking to move. Once you get to July 31st, most people (in the southern states, at least) are looking to have already been settled in the school district they wanted.

TENANTS THUS FAR

Well, since I had plenty of posts teed up, I’m only getting to post this now, months since they’ve moved in. That means I have a sample size of their tenancy to share, and it’s not good. They’ve had a lot of complaints, which is interesting to me since the previous tenants didn’t seem to have many issues with the house. It’s a 1943 house. It’s not perfect. It’s not spacious. But I assure you, the house is exactly what you see when you first tour it. It’s a cute, little, old house.

The tenants used Venmo to send the first sets of payments when moving in. For some reason, they decided to switch to Zelle; in doing so, they didn’t follow the instructions I gave them, and are sending them to an account I’d prefer them not to, but oh well. In March, rent arrived on the 6th. I was bothered by it, but I let it go. Then for May’s payment, we hadn’t received it by the 5th in the evening. Our property manager reached out to them to ask if they planned on paying that night. They said they had already paid on the 2nd. We explained that we hadn’t received it, and we still see no indication of it arriving electronically. He sent a screenshot of his bank’s information, which did confirm a payment on the 2nd. We said ok, thanks, and we’ll check in the morning.

He then went off the deep end. He attacked us, as if we just sit around pretending we don’t receive money so they’ll send more money. At no point did he stop, think, logically read our messages, and respond politely. He continued to berate us and the property manager over this, where we carefully explained that sometimes there’s an additional verification step required so that this 3-5 day hold doesn’t affect when rent is due. He kept saying he was completely verified and that it’s our bank not accepting the money. That’s not how banks work, but ok.

He eventually agreed to use Venmo. I went back to his January payments, liked them, and ‘friended’ him on the platform so that he’d have the right account in front of him. He did pay June’s rent on time and via Venmo.

In his berating of the house, he talked about how the house was awful. The house that they walked through and agreed to rent. The house that is very small and very old, but is clean and operational. The house is nothing special, but it’s a house with rent under $1000 in 2024 and decent access to the activities in the city.

They complained that the light in the oven was stuck on. They didn’t want to pay to run that electricity in a house that already had a high electric bill. It’s an 800 sf house; if you’re paying $350 per month for electricity, I’d say you’re doing something wrong. All systems in the house have been serviced and/or replaced recently. All the windows in the house are no more than 5 years old. We had our plumber lined up to handle this for us (he’s a good guy!), but they figured out what to do differently to get the light to turn off. What frustrated me the most about this complaint was that they acted like I purposely broke their oven 3 months after they moved in (and I live in a different state), and yet I’ve been very responsive to all their requests for maintenance.

SUMMARY

Overall, everything is fine. They have a lot of growing up to do. I hope at some point they learn that you catch more bees with honey. For now, they’re there until the end of April. We’ll see how the next several months go, but at this point, I’m interested in finding someone else. Based on their hatred of the house, I expect they’ll move out on their own accord regardless.

House 7 Turnover

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Our turnover this year has been higher than usual. However, it’s been for good reasons, and not just because someone is looking to rent from a different landlord, so I’ll take that win. In this case, the tenant was house hunting. We knew that a year ago, and we had set up our lease to allow them to break it. Since April was their last month in this current lease term, there was no “lease break fee” associated with their notice. They gave us notice at the end of February, which requires 30 days worth of payment. March rent was paid.

They had moved out of the house early though, which ended up being very helpful. The house needed a lot of work. There was a lot of deferred maintenance on this house. We bought the house as a flip. It looked fine on the surface, but we knew it wasn’t going to hold up. Our last couple of turnovers happened really quickly, so we didn’t put much effort into the turnover process. With the extra time, we knew we needed to address some issues.

PAINT: $2,750

First, we finally got the flat roof addition fixed on this house last summer. The flippers before us had added a laundry room to the back of the house. They used the existing covered deck infrastructure, and it was horrible. They didn’t tie it into the house correctly, so we endured several leaks into the laundry room. We struggled for years to get a roofer who would address it for us. We even hired a roofer, highlighted the flat roof issue, and missed that his contract didn’t do anything except replace the shingles on the main house roof. There was plenty of saga once we finally found someone to rebuild it, but it’s done. We hadn’t fixed the drywall from the leaks, so that needed to be done now (a.k.a. deferred maintenance).

We found a painter who repaired the drywall, repainted the ceiling, and painted the walls. He also painted most of the trim in the house to white (there was some damage on the baseboards that needed fixed) and all the walls Green Tint by Benjamin Moore.

Two tenants ago, we had given an offer that if she wanted to paint any of the rooms, we’d offer a rent concession. That was part of the deferred maintenance; most of the house was dingy white that took a beating over the years, but we never had the time between tenants already lined up to paint everything. She took us up on that offer. She even painted the bathroom vanity and medicine cabinet. It was a beautiful robins egg blue, but we didn’t have the paint to do a few touchups on the side of the vanity that were needed. Our painter added that to the work at no cost. He absolutely didn’t need to do that! But everything has a fresh coat of paint now, and I’m so happy at the facelift it gave.

FLOORING: $6,613

When we first bought this house, the bedrooms on the first floor had dingy carpet in it. The prospective tenant we had requested we replace the carpet. I can’t remember the series of events, but we determined it was better to refinish the hardwoods underneath the carpet than to continuously replace the carpets every 3-6 years. They’ve held up pretty well, but they are starting to show wear at 7 years in.

Regardless, we didn’t touch the carpet on the stairs or on the second floor of the house. It’s blue indoor/outdoor carpet. I truly can’t believe we’ve been able to house renters in this place with this carpet still in place. We’ve put it off because re-carpeting stairs is just so expensive relative to doing a whole room. One of the bedrooms on the second floor even has wood paneling, which just made it even more amazing that anybody wanted this house. It was not the most aesthetically pleasing place.

We replaced all the carpet. With the fresh carpet and fresh paint, it’s looking so much more inviting.

Then we move on to the kitchens and bathrooms. The first floor bathroom and kitchen floor were clearly just lipstick-on-a-pig situations by the flippers. The subfloor was clearly bowing and making all the cheap tile crack. The humidity issues in the bathroom (I’ll touch more on in a moment) weren’t helping matters in there.

Here you can see the kitchen (and its pink knobs!) with the tile floor. The tile had all cracked by this time.

The upstairs bathroom was original 1970s linoleum. Here’s a snip of it in its glory.

Trying to match/add the hardwood was not an option. We considered ‘luxury vinyl tile,’ but that was more expensive than I wanted to put in a rental property. I didn’t want to retile it because I just personally don’t find tile floors to be warm and cozy for a house. The only reasonable option left is ‘luxury vinyl plank.’

We requested a quote from Home Depot. Their quote was cheaper than the one we ended up going with, but we didn’t use them for good reason. We had a subfloor issue in another house. Home Depot was extremely difficult to work with. Not only were they doing questionable work, they also just threw their hands up at the subfloor issue. Luckily, we had a friend that was able to help us repair it (because we didn’t live there). We know for a fact that there’s subfloor issues here (we can see the bow in the floor at the sliding door), so we wanted to go with a contractor who could handle everything.

We picked a local company. They did both the carpet and the LVP. They were so easy to work with. I didn’t love that they wanted me to pay for the entire job up front, but it ended up being great. They had to come back to finish a few tasks, and they did it all perfectly. I’m really happy with the process and their product.

Another miscellaneous flooring issue was that the vent covers were rotting. The finish on them were peeling. This could be explained by humidity in the bathroom, but that doesn’t really explain the issues in the kitchen and living room also. Our handyman was able to pop those out and get new, clean looking ones in for us.

RANDOM WORK

We had to call on our handyman for random jobs. He had to tighten the front porch banister. It’s likely the original banister and has just corroded at the connections. He also had to tighten up the screen door (which, if it were to break would be removed; having to maintain non-essential pieces of a rental is no fun). Some light fixtures needed major TLC. We replaced the light fixtures in both second floor bedrooms, the sconce type light fixture in the half bath upstairs, and the main bathroom’s vanity light (it was all corroded and looked bad).

The upstairs half bathroom had a brown accordion door. The pieces were falling off and it just generally looked bad. The space is tight, and an accordion door style was definitely the best solution for the area, so we had a white one put in. It’s still less than ideal, but it looks much better.

The previous tenant didn’t clean up the yard as they were supposed to, so we had to hire out that work. We also asked him to clear the gutters, which was very necessary because it looked like trees were growing out of them with how many twigs were stuck. He charged me $250 to rake the leaves from the yard and flower beds, mow the yard, and trim the bushes. Then he added on $50 for the gutter clean out. We also did a final mowing before the new tenants moved in, and he charged me $60 for that.

I’m not exactly sure what the issue is, but for some reason we had water damage in the main bathroom. It wasn’t water damage in the sense of standing water. It was just too much moisture. The mirror was corroded; the tub faucet handles were corroded; the caulk was all moldy (and we knew it was fine a year ago); the walls had water streaks on it. I don’t know how it was fine for years and now it’s not, but I’m guessing the only answer is that last tenant just liked really hot showers and didn’t use the vent or window. The tub knobs were so corroded that they had to be sawed off and new valves and such installed. Luckily our plumber was able to handle it timely and it looks better now, but that was a minor inconvenience.

The back sliding door had always been questionable. No one ever pushed us on it though, so we didn’t know just how bad it was. I don’t know that the door ever fully locked. There was a block used to hold it shut for security measures (although I feel like everyone who has a sliding door uses something like that). I finally wanted it replaced. It was likely the original door (think nickel type finish), and it was overdue. We did this through Home Depot because I knew their prices were reasonable and it should be an in/out job. It was $1063.

NEW TENANT

Our property manager showed the property to several candidates. Only two provided their interest form timely. An interest form is a way to gather background documentation on the potential tenant without the tenant having to spend any money. It’s a way for the prospect to divulge any negative remarks on their credit or background check. It’s a good gesture that we allow them to fill this out before spending money on an application fee that will identify disqualifying information. We have found that some people don’t tell us anything, and then they’ve spend $43 for us to say they don’t qualify.

Both prospects submitted their interest forms on April 18. Unfortunately, both of them were interested in a mid-May lease start date. They both offered to do a 2 year lease as a compensating factor though, which was a nice gesture. I also appreciated that both of them were well spoken and up front with a lot of information.

We chose someone and ran her background check. Several “unlawful detainers” (a.k.a. evictions) came through, which hadn’t been disclosed. We told her that her credit score was slightly below 600 and the unlawful detainers would disqualify her. She then wrote back a very nice note explaining all the data that we found and asked us to reconsider. We agreed to rent to her and to take a higher security deposit as a compensating factor. She agreed to the 1.5 times a month’s rent as a security deposit.

Unfortunately, the house was vacant for a month and a half. Luckily, during that time we were able to get a lot of work done in the house. I hope that this tenant takes good care of the home and that we’re pleasantly surprised with her tenancy regardless of her history of late payments and court filings.

Lack of Rental Payment

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I was going to include this in a financial update post, but it was too long and complicated to include there. I really want this to be a lesson for anyone reading this – mostly on the renter end, but perhaps for a budding landlord as well. We tried really hard to work with the tenant, but we can’t work with someone who doesn’t communicate up front and doesn’t keep her word constantly. When using statements like “I need to keep the water and electricity on for my kids,” understand that the roof over their head isn’t a given. I’m a private landlord and be lenient, but an apartment complex type situation isn’t going to allow you to not pay for months on end; they’re going to file for eviction on the first day 6.

THE DETAILS

After this house was flooded by a tenant, we got it fixed up and on the market. The options at the time were limited; plenty of people were interested, but they weren’t qualified. The area called for $2,200, but I wanted it to move quickly, so we listed at $1600. The previous tenant was paying $1200, so this felt like a huge jump. No one qualified for the property. We had two options that were close enough to our requirements.

We chose a single mom who worked two jobs herself to be able to afford this place. Honestly, kudos to her for her effort. She lost both those jobs (we knew about one, but not both) and ran into some other troubles. She has worked hard to get herself back on track. I commend all that. She’s wonderful like that. Her communication (or lack thereof) was infuriating.

At the beginning of October, she said she’s back on track now with a steady income (replacing both jobs), but with all the outstanding bills, she’s going to need time to catch up. I’m a very understanding person and work with my tenants as long as they work with me. Instead of telling me WHEN I should expect to see payments, she left it open ended with “sometime in October.” I gave her the benefit of doubt. Then two Fridays passed with $0 paid. I asked for an update through our property manager.

On the 16th, she sent over $300 (after we had to ask for payment), and wrote, “I will be sending another payment this upcoming Friday and typically Fridays going forward.” Typically. She reiterated that October would be paid before the end of the month, and then she’d need about two weeks to pay November’s after that. She did pay $500 that following Friday, and then missed the next Friday.

My property manager had to follow up with her 3 times before she actually received an answer. The tenant claimed she had been too busy to respond. Excuse me, but keeping a roof over your head should be a priority in your life (this will be a theme). I asked for a payment plan instead of this open-ended concept of payment. On November 1st, she finally responded that she was going to pay $400-700 every Friday, going forward, unless she needed to pay other bills. Again. “I’ll pay you when I pay you, unless I don’t pay you.” This isn’t appropriate.

She paid $700, as goods and services, on November 3rd. All fees are the tenant’s responsibility, so now she owed another $15. She ended up sending $50 over that same day. At this point, it’s November 3rd, and she’s still $60+ short on October’s rent and $0 towards November. As expected, Friday November 10th came and went with no communication and no payment. She ended up sending an email in the early morning hours of the 11th stating she’s waiting on a deposit to clear, so she’ll pay something on Monday. She did pay that Monday. However, she had said she’d pay every Friday, and the 17th came and went with no payment. Again.

On the morning of the November 18th, I sent the notice of default. It said she had 5 days to pay the entire balance or we’d file for eviction. She threw a little tantrum, claiming she wanted to end her lease. It doesn’t work like that. My property manager had a good idea and was able to articulate our frustration sternly, yet professionally. The property manager said that “forgetting” and “life” getting in the way were not acceptable responses, and it was time to be responsible for herself and her bills, perhaps by setting alarms or utilizing her calendar for reminders. The offer included our waiving of December and January late fees ($160 each) if the tenant continued to pay every Friday without us having to follow up. I thought the incentive was great. The tenant then paid $700 on the 24th and $600 on 12/1. At that point, she was caught up on October and November (sans late fees though), while paying into December’s rent owed.

She paid the first two Fridays in December, missed the 22nd, and paid on the 29th. At the end of December, she had a balance owed of just over $500, which included all late fees, so that was a decent position. Then things went downhill again. She paid nothing until January 17th, and it was only $100 that day. She claimed an issue with the amount she was able to send over, but stopped trying. When we asked why she mentioned $400 in $50 increments, but only sent over $100, she acted like we did something wrong. Over the next week, she ended up sending $300. At the end of January, she owed $1,863.40.

TENANT VACATES THE PROPERTY

In mid-January, seeing that communication was getting worse, and payments weren’t even being made, we asked her to leave. I was really trying to get through February so that we’d have a more favorable market time to list it. She said she didn’t want to leave. That’s a bold statement from someone who owes a lot. On January 25th, we sent her the 5 day notice until eviction document, which showed her balance due. We offered her the ability to leave the house by the end of the month with minimal damages, and we’d just keep her security deposit. Her initial response was that she wants to finish interviews she has scheduled, and she didn’t want to leave.

Within 24 hours, she decided she did want to leave. For the first time in all of this, she fully explained her situation. She gave good reason to have until February 4th to leave (instead of the end of January). We allowed it, but she’d be responsible for those days of rent in February.

As a final goodbye, she told us she would be able “to make another payment that first week of February.” As I suspected, she meant the week of February 5th, and not the 1st or 2nd. She didn’t pay. On February 9th, she “kindly” asked for an extension for the final payment, since she was expecting her tax refund in the next two weeks.

I don’t need to tell you at this point – two weeks came and went. She did end up paying over $500 on 2/29 though. That was more than I ever expected. I don’t know how she arrived at her number (she did email an explanation, but the numbers didn’t add up), but I’m accepting it.

TURNOVER

She actually left the house in great condition. She had sticking LED light strips in a bedroom that said they were easily removed. However, when she removed them, paint came with it. I had to have someone touch that up. She bought blinds, but didn’t hang them, for ones that were damaged (she had asked us to pay for them when she first moved in, so that was a nice gesture to uphold the integrity of the request), so I had to have someone do that. Then I paid someone to clean the house, which is normal. Overall, she was difficult to communicate with, but I do believe she meant well.

BACKGROUND & EXPECTATIONS

I have a track record of being very lenient and very understanding. I promise. I can provide lots of examples where I’ve let people know to take their time, prioritize back to school necessities, waive the late fee, etc. I can not work with you if you don’t talk to me. I don’t know what you need. I don’t know you as a person and whether you’re “good for it.” I need to know your expectations, needs, and plan. Talk to me without me hunting you down for information. I don’t know where I’ve said this before in this blog, but I’m positive you can find that or a very similar statement made throughout. Understand that in nearly all other scenarios, a landlord is not going to be patient for 4 full months to try to get you to pay rent owed.

She said phrases to me that were generally that she has kids so keeping the water and electricity current is her priority (isn’t keeping a roof over their heads equally important?), or that she asked for grace and patience (what have I been doing? I could have issued you the first step of the eviction process on October 6th, and I didn’t, even though you didn’t pay a penny towards rent until the 16th). It’s things like that get under my skin and make my efforts feel unappreciated, making not want to work with you going forward. Take the time to acknowledge how gracious I HAVE been, that I have bills to pay in addition to you having bills to pay, that I deserve to be given regular updates and information without having to follow up and beg for information.

My property manager says “she’s young” and “she’s learning.” There have been learning opportunities, but it’s also not my role to mentor a tenant on how to be an upstanding citizen and uphold your commitments. There were two other late rent moments this summer where my property manager said that if there’s any issues with rental payment, we need to know ASAP, without us having to make phone calls or send emails. My property manager reiterated this expectation on October 31st over the phone – don’t miss a Friday rent payment, assume we know you’re not paying anything, and leave it at that (I already played the “benefit of doubt” game through October when we received $0 for half the month).

LESSON

Communicate with the landlord. Don’t put the landlord in a position where they’re having to keep track of your financials and whether you’re paying timely. Pay regularly or communicate up front. All of my leases state that rent is due without demand. My having to regularly ask for an update or why you haven’t paid a single penny halfway through a month is not in any realm an acceptable way of doing business.

Renters need to understand that landlords have bills to pay. Those bills (that mortgage) are not as lenient as I’m trying to be with you. If I don’t pay my mortgage, there’s a late fee and it’s immediately reported on my credit. They also don’t accept partial payments. If I don’t pay for long enough, it becomes a foreclosure. As a tenant, you don’t know if I have funds to cover that payment. Assume I don’t. If I don’t pay my mortgage, the house is foreclosed, and you’re kicked out anyway. You’re getting by without any credit hits, as you’re now two to four months behind on rent. I’m floating mortgage payments on your behalf. Lucky for you, I’m on top of my credit and paying these bills even if you’re not paying me, but that isn’t an assumption you should make.

Your actions have consequences. You can mitigate those consequences by upholding your word and keeping in regular communication on what’s happening (again, up front, not after the deadline passes).

April Financial Update

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I had this post mostly written by Wednesday, but we traveled earlier this week, and I haven’t kept track of the day very well. This is the first I’ve been able to update our net worth and get this done. Ironic, considering how I started this post when I expected it to be on time. And now..

This past month has been exhausting on me. I knew March was going to be busy. We had a bunch of sports schedules to manage, lots of kids birthday parties, hosting my dad for a long weekend that coincided with 3 family birthdays and the first anniversary of my mom’s passing, an assortment of Easter activities, a trip, and random other events. On top of managing these day-to-day things for our family, our deck replacement started, and we had to work on a massive turnover of a rental property. I’m in a perpetual state of tired these last few weeks.

DECK REPLACEMENT

On July 2nd of last year, a storm blew threw that destroyed our neighborhood. Honestly, we’re surprised by how little actual structure damage there was for our neighborhood because it looked like a war zone with the amount of trees down. A couple of houses had a tree fall on their roof, but only cause minimal damage that resulted in shingle replacement. We appeared to bear the brunt of the worst, which was a tree falling on our deck, crushing our furniture, moving all the supports, and cracking the concrete blow it. Another tree missed falling on one of our cars by centimeters, but that limb ended up cracking our driveway apron. We struggled communicating the extent of the damage with our insurance company, and they eventually realized what was needed and paid out on it five months after the incident. Our construction started on March 18th.

It hasn’t been an easy process. It’s emotionally draining on me because there were communication issues with our contractor that he wasn’t taking responsibility for. Then there were minor issues, but issues nonetheless. For instance, they installed waterproofing so the patio would be a dry area, but they cut through one of the barriers. Instead of realizing that was going to be an issue and fixing it themselves, I had to point it out. Then we went out there while it was raining to check it, only to see that there are 3 spots where water is just pouring through the seams. That just takes a lot out of me to have that conversation. They cracked off the top of our sewer cleanout, which not only made a mess in the yard, also caused a backup into our basement tub and toilet once it was glued back on because of a pressurizing issue (we think).

Then there are those hidden things that take energy, such as managing how to move money out of savings (while not exceeding the maximum of six transfers) and keeping track of all the bills, while ensuring the checking account has the right amount of money to cover the bills paid.

RENTAL PROPERTIES

Everyone paid rent on time! I had two technically pay on the 6th, but I sat waiting to see if it showed up before reaching out that morning. One of our tenants bought a house and vacated as of March 31st. They actually had left the house a little early, which was really helpful to us because the house needed a lot of work. The house had been flipped before we bought it. We knew everything was going to eventually need attention, but we hung on as long as possible. The neighborhood is really nice, so it was time to bring the state of the house up to a better standard. It had been “good enough” all these years, but there were definitely some items that should be replaced. This ended up being a huge overhaul, costing us over $10k. I’ll go into all the details in a future post.

NET WORTH

We’ve made a few substantial payments on the deck. We had been investing the money from the insurance company, while we waited for them to finish their estimates and then while waiting for the contractor to begin. Our taxable investment accounts have decreased a bit from that, and they’ll continue to decrease as this project finishes up in the next 2-3 weeks. The market is lower than it was a month ago, but our house values are starting their upward Spring trend, offsetting some of that loss. Overall, our net worth increased over the last month, but only by about $4,500 instead of the drastic increases we had been seeing month-to-month.

House 9 Turnover

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I recently posted “Lease Break Agreement,” where I went into the concepts we used to determine a lease break clause in our renewal with a tenant. The purpose of our fee structure was directly correlated to the time of year and probability of turning over the unit quickly. As I suspected, it took us an entire month to find a tenant. The lease break fee was one month’s rent, so we didn’t go without income during that time, but we also didn’t net a positive.

The tenant gave us notice on November 24th. Our property manager listed the property on November 26th at $1700. The higher price points are worrying me. While the market may claim that this is a fair rate, it doesn’t mean that we have a large pool of qualified candidates for this amount per month.

TURNOVER WORK

The house was painted before the current tenant moved in a few years prior. Unfortunately, some of the rooms were addressed, but not all of them. And the ware of time hit the walls all differently, so it looked like different colors of paint. I asked our property manager to get her painter over there and give all the walls a fresh coat. It looks great. That was $2,000.

I had a carpet cleaner come out and a cleaning company come out. The cleaners forgot about the refrigerator and had to come back. But otherwise everything looked great for less than $500 together.

The front porch was starting to sink. So while this wasn’t an activity done before someone moved in, we do have our handyman working on replacing the back deck, the trim around the back door, and the front porch (he jacked up the supports and is replacing the railing and stairs). I don’t even know what this final cost is yet, but it’s a lot.

APPLICANT #1

We had a lot of interest; hardly anyone qualified. After getting through some of the weeds, we did have a couple interested that appeared to be a good fit. They viewed the property twice over a week to be sure it was a good fit. The application was received on December 13, but it only listed one of the two adults who would be living there. We require all residents 18 years and older to complete a background check. We didn’t expect an issue with that since she works at a school, but it didn’t go well. Due to the holidays, their applications weren’t received until December 26th. She had several collections on her history. However, since he qualified on his own without her income, we agreed to overlook her lower credit score and collections history. I set up the lease with their names and sent them over.

We were excited because they wanted a January 1st rental, which meant we wouldn’t have any loss of income and would be able to put the lease break fee back into the house easily. They asked us if we would clean the carpets and clean the outside of the house. We agreed to the carpets and said that they outside of the house (mildew) would have to wait until warmer weather, but that we would address it.

Technically, all my tenants are supposed to clean the carpets and provide a receipt upon departure. However, I don’t hold this to anyone unless they were a real pain. A couple of hundred dollars out of my pocket and a happy ex-tenant is how I’d prefer to keep it (you’d be surprised at how many ex-tenant referrals we’ve had).

Suspiciously, they then withdrew their interest. I wish I knew why. I don’t know if their circumstances changed, if they were hiding information we hadn’t found on our own that caught up to them, or if something in the lease spooked them. If it was the lease, I wish they would have asked questions because we’re so easy going. I could have either explained why it’s there to protect them/us, or changed it.

So while we were a month ahead of schedule with being able to list the house, we now have a vacant house with no prospects. The goal is always to have the house ready to re-rent with little down time.

LISTING CHANGE

The market for the area called for $1600-1800 in rent. We originally listed it at $1700. It made me nervous. When the initial applicant backed out, I immediately adjusted the rent to $1650. We had plenty of interest at the $1700 amount, but it wasn’t worth weeding a few people out because they didn’t want to go that high. I decided to risk it with only a $50 decrease, since people would be able to see the decrease (and I try really hard to list it at the right price so I don’t have to do a price adjustment, but a December listing is hard to nail on the head). Again, we had a lot of interest, but few qualified.

APPLICANT #2

Two twenty-something men saw the property and asked to apply on January 11th. Neither of them had a job. Seriously. Neither had a single dime of true income, but wanted to commit to $1650/month in rent. Noteworthy was that they wanted us to consider that he had the potential to make $40k per year day trading stocks. We asked a few questions. They said they thought it better to find housing and then find a job. We suggested they try to find work and then live where they find a job (they had just moved ‘home’ from about an hour away).

APPLICANT #3

A woman showed interest who appeared to qualify on the surface. My broken record is to tell me things up front and be open with communication. I can’t help you if you don’t help me. Her information on paper looked fine. I’ve learned over the years to check the local jurisdiction court records myself, instead of relying on the background check. I’ve also tried to look things up before they submit their application; this way if there’s anything out there, they haven’t given us money for the application to not be used. During my search, I found several garnishment cases. Like a lot. An unreasonable amount of court records for a single person. We denied her interest form and did not pursue an application.

But on January 16, she asked for us to reconsider and explained the garnishment. There was one point deducted because the woman’s email asked if “he” as the landlord would reconsider her application (why can’t a friendly, reasonable woman be the landlord? 🙂 ). I didn’t appreciate that the garnishment wasn’t disclosed up front. However, she did explain what happened. It sounded like she was told that there was nothing due, made no payments, and then this debt showed up that she didn’t know she owed, but she’s been working a second job to pay it off. Honestly, the documentation didn’t clearly support the story, but my gut reaction was to believe her.

She also had three evictions recorded on top of this garnishment. The evictions appeared to be filed immediately upon unpaid rent by an apartment complex management company, and then the rent paid before the court date, thereby clearing the debt. I expect to have future issues with rent payments, but I suspect it won’t be anything more than I’m used to handling (e.g., where a tenant needs an extra week or so to make rent).

Our property manager appreciated the in-person interaction with this person, she was well written and well spoken when making her case to be accepted to apply, and overall it seemed worth giving her a chance. I’m also a sucker for giving borderline qualified individuals a chance. I think I’m 50/50 on it working out for me.

The lease was signed on January 18th. We agreed that she would pay the security deposit, first month’s rent, and last month’s rent. The last month’s rent was an additional way for us to hedge our bets with her unqualified application background. This is a “compensating factor.” Since she did not qualify according to our list of requirements, we’re taking an extra fee as insurance to our business interests in this property. We typically will work with someone on compensating factors so that they get a place to rent and we don’t lose out on too much in case our olive branch doesn’t work out.

She paid the security deposit with the lease agreement signature and paid first month’s rent on February 1st. We agreed to give her until February 17th for the last month’s rent. She was asking for a later move in date because she didn’t have all the money up front, but I didn’t want to cause extra stress on her moving plan/date over that.

FINAL THOUGHTS

I don’t even know how many people actually saw the property, since my property manager handled that. However, I know it was a good amount. I typically handle it where I set up an “open house” style visit window for people to come through (so many people claim they’ll show up to a scheduled appointment, and they don’t). I believe she tried to do this at the beginning, but it was taking so long to find a qualified applicant, that she ended up having to do one-on-one meetings.

She has them fill out an “initial interest” form after the showing. For the most part, I do that after the showings as well. However, it does help if you’re scheduling individual appointments to have people fill this out before hand. You want to know ahead of time if there’s even a chance of them qualifying. You don’t want to take time driving to/from an appointment and letting them looking around the house, only to find out they have a criminal background and/or less than favorable credit history.

THERE IS NO CHARGE FOR AN INTEREST FORM. If you are a tenant looking for a place to live, do not pay anyone anything until you’ve seen the property. There are a lot of scams out there where “landlords” are claiming they need an application before allowing you to see the property. They’re listing places “for rent,” that they have no vested interest in. People who recently sold their house, so pictures are available to use, are the ones finding out that people are driving by and looking around their house because someone claiming to be a landlord collected an “application fee,” with no intention of showing you the house or renting it to you.

So while this person didn’t expressly qualify based on our list of requirements to rent one of our properties, I felt like she deserved the chance. I feel bad when someone’s previous life choices immediately disqualify them, and I enjoy giving people a moment to voice their side of the story. Sometimes, their story is enough to solidify a denial from us. But sometimes, it appears worth giving them this opportunity to right their wrongs. I also feel good that I didn’t feel pressured into making a decision just to recoup vacant days on market, but that I made a logical decision. Now let’s see where we end up with this property in 18 months, and whether I still think it was a good decision!

Property 2 Turnover

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BACKGROUND

Unlike the other property we turned over this year, we knew this one was coming. The tenant living at this house moved in back in 2017. A few years ago, there was a domestic violence incident that led to a restraining order against one tenant from the other. Legally, we had to let the one tenant out of the lease. At the time, we didn’t have an immediate reason to release the second tenant from the lease, so we offered her a new lease in just her name. That was our downfall.

Since January 1, 2020, she paid rent on time in only 3 instances. I can think of only one instance where she told us up front that rent would be late. Every single month, I was stuck chasing her down. She’d say she would pay on the 17th, and then on the 18th, I’m asking where rent is again with another lie coming my way. She had quite the array of excuses. They were always elaborate. After getting stuck in Costa Rica for half a month in September because of a positive c-19 test, she didn’t even bother letting us know when she was back in the states or when we’d see rent. She applied for rent assistance. They paid 3 months of her rent for her (which was of course was significantly late from the state), and yet the month she had to pay, she still couldn’t.

Her lease was expiring June 30th this year. We provided her notice that we would not be continuing the lease and she was to vacate by 5 pm on the 30th and no later. Since we live 500 miles away, and I don’t trust her one bit, I hired my property manager that we use on other properties to take this one over. I wanted her to be the one to check that the tenant turns over keys and has the house empty before I drove 8 hours out there to find out the tenant is squatting.

THE LAST DAY

Sure enough, the tenant had a few more games to play. At 3 pm on the last day, she texted my property manager that she needed a bit more time, and asked if they could meet at 5:30 instead of 5. At 5:15, my property manager texted her saying she hit unexpected traffic, so she wouldn’t be there until about 5:35. My property manager pulled up to no people at the house, but there was at least one dog (not on the lease). The tenant didn’t show up until 6:50 pm.

My property manager means well, but she always seems to be advocating for the tenant while I’m the one paying her for services. The tenant asked if she could stay for a little while longer and remove the rest of her stuff. Well, based on the pictures, this wasn’t a “one more load” type situation; there were hours and hours of removing clothes and crap. All her furniture was out, but there was still garbage, dog feces, clothes, and some decor items left behind. My property manager was trying to say that she should be allowed to stay to remove her things and then she’d lock up on her way out. Nope. She absolutely didn’t have a place to stay that night, and it wasn’t my responsibility to keep catering to her. There was nothing that showed me allowing her access any longer was going to leave me in a position that was any different than I was currently in (meaning, hiring a junk removal company and having to pay someone for extra cleaning services).

Burned counter top
All of the cabinets still had things in them.
Just one of the rooms
Carpet eaten and ripped through the pad and to the subfloor.
Just part of the post destruction.

Oh, let’s not forget that she didn’t pay a dime of June rent. She claimed it was to be able to secure another place to live. However, she left her mail as garbage laying in the living room where we found she had been rejected due to her record. Sometimes I wish I could say, “we were giving you a chance; perhaps you should have paid your rent and communicated issues timely so you still had a place to live.”

I stuck to my guns and said get the keys. My husband was more compassionate and said that she could come back over the weekend to get her stuff while someone was there working on the house and supervising her actions.

TURNOVER WEEKEND

Her last day was a Thursday. She couldn’t come back on Friday because she was working the whole day. She said she’d be there first thing Saturday morning. At 9:20 am, nothing. She said she couldn’t get her trailer until 10:30 or something like that. At lunch time, still nothing. When questioned on her whereabouts, she made a list of things that she wanted us to put outside for her so she could grab on her own time. HAHAHA. She showed up at 1:10 claiming her dad was right behind her. Mr. ODA let her in the house, she grabbed a handful of things, and then left. That’s the last we’ve communicated with her.

TURNOVER ACTIONS

Mr. ODA and his dad went to Virginia to handle the turnover. I was going to go by myself, but being pregnant and alone inched out over my desire to make sure things were handled correctly. They arrived Friday evening and left Sunday evening. I was quite impressed with how much they got done.

All the stuff left behind had to be moved out of the way to get to work. Mr. ODA and his dad put it all in the living room so they could start painting. We paid a junk removal company $625 to get rid of her stuff and the old carpet.

The front porch post had been torn off the brick porch. Our untrained assessment seemed like someone had backed into the post. Mr. ODA was able to raise the porch roof back up to get the post back in place. He replaced the post tops and it looked good as new, surprisingly. There are still broken bricks, but that’s not a structural concern like the post itself was.

The entire interior of the house got a new coat of paint.

Mr. ODA had to replace missing and broken nuts in the bathroom faucet (how does this happen?!).

Blinds had to be replaced, as usual.

All the carpet had to be replaced. We didn’t have time to lay luxury vinyl planks (LVP) like we’d have preferred, so we settled on new carpet. While we were telling our handyman this, he said he’d lay the LVP for us, so we jumped on that. It’s more expensive up front, but we won’t have to do a full floor replacement in 3-5 years like we’d have to do with carpet or have to replace everything for a section damaged beyond repair. Mr. ODA and his dad pulled up the carpet, pad, and most tack strips.

We paid a cleaning company to clean the kitchen and bathrooms. She was supposedly there for 5 hours. That was $250.

We had to pay our handyman $100 to “paint” our countertops because there was a huge burn mark in the counter. They paired nicely in the multiple burn holes in the kitchen floor vinyl, which got covered by LVP.

We also had to pay someone $45 to mow the lawn. That seemed like an astronomical price, but we don’t have a lawn mower there, and it was easier to just let this guy do it when he asked.

After the new tenant moved in, they let us know the washer and dryer weren’t working. A diagnostic test of the washer seemed to say it wasn’t a user error and just coincidental timing, but then finding out that the dryer didn’t work right after that was interesting. The new tenant had their own washer in storage. We offered them the ability to buy their own dryer for $20 per month off the rent, which they accepted.

After we subtract out her security deposit, we’ll go to court for just under $10k worth of expenses. About $2,250 of that is unpaid late fees, so I don’t expect that to actually go anywhere once it gets to court. The first step is to send her a letter outlining all these details. Since the balance owed is so high, I preemptively offered a payment plan over 6 months. While $1650 per month is high for someone who couldn’t pay me $1150 each month, I don’t want to drag this out for a whole year. She’s not reliable, and I don’t want to be tracking and fighting her for a year to come. I also expect no response or resolution via this letter, and that we’ll have to go to court eventually anyway. Once it goes to court, she becomes responsible for court filing fees, and the judge will award interest on the balance, which adds up quickly.

SILVER LININGS

We bought the house with renters at $1050. We had worked on raising it $50 every two years (approximately), but rent was only at $1150. We recently refinanced the house, and the rental appraisal on it came in at $1600! If we don’t count that the tenant never actually paid June rent, we only dealt with a vacant house for 21 days and got it rented at $1,450. We probably could have pushed higher, but we were happy to get movement on it as soon as it was listed. To only be vacant for 21 days with the extensive damage and work to get it turned over is impressive to me.

While it was $6,000, the whole house got new flooring. Instead of trying to patch the vinyl in the kitchen and get new carpet installed for it to only last a few years, we were able to get LVP throughout the house. LVP will last much longer, and if there are damaged boards, they can be replaced individually instead of having to replace rooms and rooms worth of carpet.

CONCLUSION

This could be a horror story. However, we have 13 houses that help float expenses on the one or two where someone doesn’t pay rent timely or we have higher expenses. While we had to manage her month-to-month to track down rent, she did eventually pay all but that last month. In the end, for it to be a few things to address and it to take less than 21 days is great. This doesn’t go down as a reason to not hold rentals!

June Financial Update

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We ramped up our travel this month, which has actually led to us canceling a few trips that were planned for this next month. I went to visit my family for my sister’s baby shower, we went on a family trip for a long weekend, and then Mr. ODA was gone all week for work. We’ve done a few local activities, but several of our plans have been cancelled or postponed due to the current gas prices, which are about $4.75. Even Sam’s Club and Costco, which were holding strong in the low 4s, are both at $4.69 right now.

We’re working towards closing on a new house next Wednesday, so that’s been the stressor right now. We had a month and a half for closing, which is literally the longest we’ve ever had, and then yesterday I got asked for tax information. Seriously, what have you been doing for the last month since I signed off on the initial disclosures? We went with an online bank, so that’s been an extra factor in uncertainty through this process.

RENTALS

I served a notice of non-renewal to one of my tenants. Her lease ends on 6/30, and we want her out. It’s the first time in 6 years that we’re so fed up with a tenant that we actually said it’s time to leave. We’ve had issues with tenants in the past, but we’ve just increased their rent as a means of giving them the option to leave, or compensating us for our frustrations associated with them living there. She, of course, didn’t pay rent by the 5th. When I asked her where rent was, along with the balance of outstanding late fees and the current late fee, she said she was trying to secure a place to live, so she wouldn’t be able to “pay towards that” until the 17th. Pay your rent timely OR communicate a need for more time without the landlord having to hunt you down. That will keep a roof over your head so you don’t have to move when you don’t want to, and it’ll also put you in a position where your current landlord can actually provide a referral at a new place.

My other usual suspect, who I told needed to start getting their act together and pay rent before the last Friday of every month, paid half of rent on the 3rd and sent an email saying we won’t get the rest until the last Friday of the month. Progress, I guess.

We had a massive issue with our property manager in Kentucky. The accountant felt he had a little too much power and ran with it. Mr. ODA went to meet with them, where the accountant had to admit his mistake in charging us $900 in front of the owner. As a means of making amends, the owner credited us the management fee they took out of our security deposit. While I understand their thought process that our contract says “10% of income,” and a security deposit gets counted as income for tax purposes, I disagree with them taking a commission out of it. If that’s the case, our security deposits under them should be 10% higher than a month’s worth of rent. A security deposit’s purpose is to reimburse us for our costs to fix a unit that has been unreasonable mangled by a tenant before their departure. In this case, we have $4000 worth of costs. The security deposit was $895. Them taking $89.50 was insult to injury in this case, especially after they took 18 days before taking any action to confirm the place was abandoned. Moving on.

That house that was abandoned ended up getting rented for June 1st. We’re netting about $250 more per month with the higher rent there.

One of our mortgages was going to be paid off in May, which I mentioned last month. I scrambled to find out how to pay the taxes, which wasn’t easy (it’s a different jurisdiction than most of our houses… being in the county instead of the city). I finally got that figured out and paid the taxes at the beginning of the month.

PERSONAL FINANCES

This month we actually had a few “receivables” to expect. We learned that our lender wasn’t requiring an appraisal (we don’t get it), so they were going to refund us the appraisal fee of $525. We had a major issue with Home Depot and getting an appliance delivered, which ended with us going to the store, buying the appliance, putting it in our car, and driving it to the rental. We had to wait for the terrible delivery company to “scan” the not-delivered appliance back into their warehouse, and then we got $600 back. When I registered my kids for preschool, the system glitched and charged an extra $100, so we got that back. I had already registered my oldest at the same school as this year before we learned we’d be moving, and they were kind enough to return my registration fees, so that was $300.

All that to say, stay on top of your finances. Know what you owe so that you know when you’re overcharged. When someone says you’re owed a refund, pay attention that you receive it; we had to follow up on the refund, and it turned out she hadn’t processed it. Don’t be afraid to ask if there’s an option for a refund in some cases. Just those transactions are $1525 worth of money back in our pockets in a month’s time.

SUMMARY

We have work on a rental that’s still outstanding. I don’t expect her to actually be out on June 30th at 5 pm like she’s been instructed. I have our property manager handling the move out (even though she doesn’t manage that property). This way, if she’s not out on the 30th, I haven’t driven 8 hours to find out I can’t do any work on the property.

We plan on doing a lot of work on our new house after close next week. That’ll take up a lot of our free time over the next few months.

The stock market has somewhat rebounded. It’s not back to levels it was once at, but it’s nice to see balances go up instead of down. Our credit cards are down significantly because I am purposely keeping a low balance right before we close on a house (down by paying it off, not down by not spending…). Our funds for closing are coming from our HELOC, so it hasn’t been a stressor to keep a cash balance to go towards our cash-to-close.

Property 1 Turnover

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Building off of my last post about tenant abandonment, here’s what it took to turn over that unit. We rarely have units to turn over in our portfolio. Last year we had 1. This year we expected to have 1, but this abandonment made it 2. To have continued renewals over 13 properties is a blessing.

Usually, we need to clean and paint. Every once in a while, we have more work to do, but it’s rarely a massive undertaking. This one was a massive undertaking.

Our property manager walked through the house and saw that junk was left behind and it was filthy. There should be another word worse than filthy. I’m always surprised at how much damage someone can do to a place they have to eat and sleep in for two years.

This is a 3-story townhouse. The entry level is the garage and a den-type room; then there is a flight of stairs to the main living area of a kitchen, dining area, powder room, and living room; finally, there’s a flight of stairs to two nearly-identical bedrooms, each with their own bathroom. The two masters concept and a garage are benefits, but the two flights of stairs is a downside.

TURNOVER ACTIONS

The property manager had her maintenance staff remove everything left behind. I thought she was going to hire something like Junk Luggers, so I was pleased to see that this cost us less by her using in-house staff. They wiped down the baseboards, but didn’t clean. I was under the impression that it was going to be cleaned before I got there. I was also under the impression that the carpets were going to be cleaned on the 25th.

I was working weekends at the time, so I couldn’t get to the house until the 27th. I didn’t find the need to rush down there because I thought my property manager had action happening. Plus, I’m pregnant, so I didn’t want to be in someone else’s filth for extended periods of time, and I expected it cleaned up before I was scooting along the floors and in tight spaces. Well, I walked in and was so upset. The carpet was disgusting. It looked like someone made lines in the carpet with the steamer tool, but didn’t actually clean anything. Not a single thing was actually cleaned. The kitchen and bathrooms were horrendous. I’ll spare you pictures of what the bathrooms looked like. You can see “steamer” lines in the carpet, as someone had been there, but there was zero effort put into actually cleaning the stains.

I called the property manager, and she agreed to come meet me at the house. She agreed that the carpet cleaning was unacceptable, and I wouldn’t be charged for that. She explained that her guy didn’t have time to clean the place except for wiping baseboards, and they had decided to clean it once at the end. I said that would be fine if the house wasn’t this bad, but there should have been an initial cleaning. She showed me pictures, and even though the baseboards were gross, they had actually been wiped down because they had been even worse.

The property manager called her typically cleaner, and he agreed to get there the next morning. I showed up the next morning to find he was still there working. He said the house was in much worse condition than he was told, and they’d have to leave to go to another job and come back to this house. I wasn’t surprised, but I was very happy to see that everything was cleaned, and that I wasn’t completed grossed out by being there.

DECISION MAKING FOR TURNOVER WORK

There are costs that you just have to deal with in the turnover – junk removal, cleaning, carpet cleaning. Then there are costs that you don’t expect to be on your radar, but are necessary – replace broken floor vents, replace missing outlet covers. Then there are decisions that require more thought. For instance, we haven’t enjoyed this property in our portfolio, and we’re considering selling it. We’d like to recoup some of the costs we’re having to put into it now, but selling it is on our radar for the future. So do we want to clean the carpet, or start replacing the carpet with hard surface flooring to increase our property value for a future sale?

We recently received an updated assessment for our taxes on this property. I happened to look up their comps given. We bought this house for $86k. I noticed that the houses with no updates to it were selling around $110k, while houses with nicer flooring and fixtures were selling up to $130k. My goal was to start preparing for a sale in the future, and we’d have a few steps done instead of having to redo the entire house in a year or so.

The biggest actions I took while looking into the future were:
1) I painted the main floor baseboards white. The baseboards, walls, trim, and doors were originally all painted the same color – an off-white or beige. Over time, we kept the trend going because it made it easier and quicker to turn over the house. While I didn’t paint all the baseboards white, I did it in the main living area and in the stairwells. I painted the interior doors of the main living area (main entry door at the top of the stairs, the laundry room door, and the powder room door) and all their trim white.
2) Repaint all the main walls. At the last turnover, Mr. ODA went into the house and touched up the walls. The paint had gone bad, so the touch ups were very noticeable. I painted everything except one bathroom, half the laundry room, the powder room, and the two bedroom closets. Every other wall surface (including two stairwells…gosh) got painted a gray.
3) We did get a carpet cleaning company to come out and rotovac, which is an incredible process that brings a carpet in rough condition almost completely back to new. It’s truly impressive. They also charged us $159 for this more intense process, while the original company that just made lines in the carpet was going to charge $244 for nothing.
4) Instead of cleaning the main living area carpet, I wanted to replace it with hard surface flooring. We’ve had this house, with the same carpet, since 2016. That’s 6 years of carpeting that has been beat up (understatement) by 3 different tenants. The carpet could even be older than that because it’s what we inherited when we purchased the property. I explained in a recent post all the reasons why we laid LVP and how we accomplished it ourselves.

COSTS OF TURNOVER

I had to supply my property manager with specific costs associated with the work I did, so here’s that, along with the charges they had on our account. Not all of this gets billed to the tenant. For example, the dishwasher and refrigerator were at its useful life and needed replacement, due to no fault of the tenant’s.

While it was hard to get started, seeing the mountain in front of me when I first walked into this house, I do appreciate having done most of the work myself. We spent over 28 hours at the house. I did about half of that by myself. Mr. ODA and his dad helped get some progress on the painting one day, and then Mr. ODA and I worked together on the flooring.

We also have the months of lost rent that were unexpected. With notice, we could have listed and shown the house before the current tenant vacated. We were caught on our heels, and we lost 2 full months of rent. Unfortunately, we truly lost 18 days of progress in those 2 months because our property manager didn’t enter the house to confirm abandonment timely.

LIGHT AT THE END OF THE TUNNEL

We ended up listing the house on May 6th. They had several showings, but the layout is hard to get rented. One couple submitted an application on a Thursday. When our property manager reached out to them, they never responded. Our property manager had pushed to list the house at $1250. Once that couple ghosted us, I told her to lower it to $1200. Just as I was about to give up and have it lowered, she was able to get another application and a signed lease. Luckily, being that it was May 25th, these people wanted a June 1st rental. We increased our rent by $275/month and only lost 2 months of rent, which is mostly made up by the drastic increase in rental income.

Another silver lining is that we paid off this property’s mortgage multiple years ago. Therefore, we didn’t have the extra “bleeding” of money by having to make two mortgage payments without having the cashflow to offset it.

We don’t expect to see a dime from the old tenant of what we spent to turnover the unit. We didn’t have any issues with him while he lived there, and his abandonment and lack of communication was surprising. Someone who leaves like that, and leaves the house in such poor condition, isn’t going to put forth effort to pay a $3k bill he receives in the mail. It’s in the hands of our property manager at this point and will likely move to collections. We’re just happy to have new renters in the unit and have this one behind us.

Tenant Abandonment

mrsonedollarallowance2 Comments

Most lease agreements state that you’re responsible for the entirety of the lease term, even if you try to leave early. Most landlords are willing to work out an agreement if you have a reason to leave the house early. We’ve let several people out of their leases early to either move out of the area or buy a new home (those are just the reasons we’ve dealt with, not saying those are the only reasons we’d let you out of a lease).

We usually default to two-months worth of rent as a “lease break fee.” You leaving early has increased our projected expenses for the house because turning over a house is expensive and you’re asking us to have more time without rental income. With that said, we’ve also left it at “you pay rent up until we get a new tenant in the house.” I’ve never taken more than a week to get a new tenant set up in a house, but my property managers (through companies, not the individual person we use in Virginia) consistently take 2 months to get a unit rented (I don’t get it!).

Then there are some people who just leave. No notice. No request. They abandon the property and stop communicating. Surprisingly, we’ve dealt with this twice in the last 6 years.

The positive, they’re mostly out of the house, and we can take action to get it re-rented, which is better than them living in the house while not paying rent. The negative, we’ve had no warning of their intent to stop paying rent. Plus, if a tenant is willing to just walk away from a house, s/he may not be leaving it in pristine condition.

ABANDONMENT #1

The first tenant abandonment ended well. In Virginia, if the house is abandoned for 7 days, it automatically returns to the landlord’s possession without the court getting involved.

I received a call from the public school system. They asked me if I was the owner and if so-and-so was living at this address. I truly could not answer. My property manager did the background check and set up the lease. I basically look at the lease to ensure the dates are correct and that all the initials and signatures are in place, but I certainly don’t commit names to memory. I gave the person my property manager’s contact. Connecting the dots, she must have confirmed the name of the tenant and the address because the tenant received notice that his children were no longer allowed to attend a school they were not districted for. This happened years ago. I always thought it was odd that they called in April to verify such a thing, when there was 4-5 weeks of school left. But then I was just telling this story last night, and someone said that if the kids are not causing trouble, they typically look the other way. So perhaps there was an underlying reason for the school system to go digging.

Well anyway, in true logical decision making, he blamed us for getting his kids kicked out of school. If I didn’t know his name, I certainly didn’t know how many kids he had or where he was sending them.

He let us know he was moving out, but he wasn’t cooperative. He said he’d be out by a certain date in May 2017, but he didn’t have everything cleared out. We finally got stern with him. By the end of May, he hadn’t paid what he agreed to, so we filed with the court.

We worked to get the house turned over in the last week of May, and we had new tenants move in on June 1st. We were only out 1 month worth of rent along with the costs of turnover. His security deposit covered a majority of the balance owed, so it wasn’t an immediate hit to our finances.

The court granted us the judgement. The total he owed was $1,074.76. Unfortunately, the judgement just writes the amount owed and whether interest is owed, but it doesn’t give a deadline for payment. The system expects the two parties to work together to make a payment plan. If he doesn’t live up to the payment plan, then we can go to the court and file for another judgement. We received $200 immediately from him, and then agreed to $200 every other Friday for the remaining $875.

He missed the second payment. We sent an email explaining that if he doesn’t reach out, our property manager will go to the court to file, which will then lead to a credit report hit and collections. He eventually started making a few payments, but I should have stuck to my guns and required 4-5 payments. In mid-November, he still had a balance owed of $685, plus 6% interest from the date on the judgement. We eventually got all the money he owed, but it took a year, and it was frustrating to constantly have to track him down and push him to finish the payment plan.

ABANDONMENT #2

The second abandonment just happened. In March, our property manager was tipped off by a neighbor that our tenant was moving out. Our property manager asked if he was moving out, and he denied it. Then he didn’t pay April’s rent, so she continued to follow up, but received no responses. I am not clear why it took until April 12 to decide to post notice to enter the property, and then why she didn’t actually enter the property until April 18, but that’s what happened. That’s 18 days of lost rent and lost productivity for us to turnover the unit. That’s $555 worth of rent that is just lost. We could have been working on cleaning out the house during that time.

Our property manager entered the unit and took pictures. She found that the tenant had left some furniture and garbage behind, but it was clear enough that he left and wasn’t returning. The house was also in bad shape. All the walls required a new coat of paint. The floors were filthy, as if things were spilled all over, never cleaned up, never vacuumed, and he left all the windows open for water to leak in. The kitchen was covered in fruit fly type bugs. The bathrooms were so horrendous that I refused to even be in the house until they got cleaned. It was impressively dirty. I always wonder how people live in such conditions. This is YOUR toilet. Why would you enter this room and think “yes, this is where I want to sit!”

The property management company had their staff remove the pieces of furniture and garbage from the house. Then they wiped down baseboards so that I could start painting. It was so bad when I entered that I had them get a professional cleaner in there before I’d spend much time there. I painted all 3 levels (including two stairwells), except for 1 bathroom and 3 closets. Then we got carpet cleaners in there and some maintenance items taken care of.

It was an extra 3 weeks worth of work that we did ourselves and coordination with contractors to get the house turned over. We lost April’s rent, and then we were set up to lose May’s rent. We didn’t get the house listed until May 6th, and then we didn’t get a confirmed renter until May 25th, for them to start a June 1st lease.

The silver linings here are that we improved the condition of the property over those 3 weeks; we could have lost even more weeks of rent, but we were lucky to find someone that wanted it nearly immediately; we have the unit rented $275 more per month than we had it leased for. Had we kept it rented through the end of the lease, we would have brought in about the same amount for the year that we’re bringing in now with the increase in rent, even though we lose 2 months worth of rent.

The tenant’s final cost, being billed for April, May, and June rent (I don’t know why the management company chose to include June), is $3,868.12. That’s after applying his security deposit to the balance owed. We probably won’t see a dime of that. If a tenant is willing to lie that they’re moving out, and then not respond to anything being sent after that, they’re not willing to work with us on a payment plan. We didn’t have any maintenance issues with the house, and we didn’t think he was unhappy with anything. Granted, I don’t know if our property manager was not responding to issues, but we weren’t aware of any. This house is in Kentucky, so we don’t have a grasp on how the court system works like we do in Virginia.

While it’s stressful and frustrating, eventually you move on. Once the house is re-rented, you start to feel better about the situation. Each day that you’re working on the house and each day there’s no application received for the property, you just keep building anxiety. While the first situation ended well in that we eventually received all our lost money, I don’t expect this second abandonment to end as well. Our long term (or more like 1-2 year short term) plan is to sell this property, so we’ll recoup that in the equity made over the last 6+ years with the house.