$11,428.32 Judgement Against Tenant
I have two rental properties in the mid-west. They were supposed to be cash-cows but with lousy tenants that keep moving out, I’m not cash-flowing at all. The last tenant was terrible.
Despite having a decent job as a nurse, she stopped paying the rent. I had to pay $500 to get her evicted and another $800 to get a judgment against her. Not only did she live rent-free for 3 months, but she trashed the place. I had to spend $3,000 on new carpeting and paint. The good news is that I now have a judgment for $11, 428.32 against her.
The bad news is that its going to cost another $500 to get her to pay. I have to file a petition that she hasn’t paid the judgment amount and issue a bench warrant against her. If she has a job, then I get to garnish her wages. Of course, if she’s changed employers and I can’t locate her, that means I can’t serve her. And if I can’t serve her, the judge won’t issue a warrant or garnish her wages. Even if I do locate her and she doesn’t have a job, there’s nothing to garnish against, so I’m back to square one.
If I get her to pay her $11,428.32, I not only get to cover my losses, I only stand to make about $4,500.
Is it worth the additional expense? When do you come to the point of diminishing returns and cut your losses? I probably will fight it out because she has a job. I let the last tenant walk away because he developed cancer and diabetes and didn’t have a job.
Why don’t they have a debtor’s prison like they used to in England prior to 1867?
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March 7th, 2008 at 1:49 pm
I don’t care how well real estate does, I have no desire to be a landlord … ever.
March 7th, 2008 at 6:07 pm
I’m with you 100%. For me, after paying all the legal fees – they still didn’t have to pay. Courts decided they didn’t have enough money.
Well, I say – make them work.
March 8th, 2008 at 4:21 am
I’m a landlord also. Owning real estate can be a good investment but people getting into it have to understand there are a lot of headaches that go along with it. On top of that people don’t put enough down on the apartments to really ensure good cash flow even when times (or tenants) are bad.
I went through an eviction process with a lawyer. My tenants got a FREE lawyer from a legal service for poor people. My well paid lawyer messed up the paper work. (which I could have done on my own a lot better though I paid him a total fo $500) forcing me to reach an agreed settlement where the tenants willingly left at the end of the following month. This cost me an additional month’s rent in losses.
The irony is I paid my own legal service and my taxes paid for their’s.
March 8th, 2008 at 1:25 pm
Given that 750,000+ people declare bankruptcy every year (over 10% of the US prison population of 7m – already the highest in the world), imprisonment for private debt would quickly overwhelm the prison system.
The UK (and US) debtors prisons were abolished as they created a vicious circle from which it was impossible to escape – you can’t get out until you pay your debt, and you can’t work off your debt as you’re locked up.
There’s a damn good reason we don’t have such institutions any more – if your rotten tenant in this instance could be sent to prison then you may feel better, but you’d be just as (un)likely to ever get your money back.
As someone who’s likely to become a landlord at some point, I’d be interested in knowing what would you do differently in the future to avoid the situation occurring again? Do you check references/credit? When did you first realise the tenant was bad – how did you notice?
March 8th, 2008 at 2:22 pm
get a good property manager. thats the best advice I can give you.
March 8th, 2008 at 3:05 pm
After reading this i have no desire to ever become a landlord. I think that you should somehow screen your tennant. MDJ has some articles on that issue on his blog.
Good luck!
http://www.milliondollarjourney.com/landlording-and-screening-tenants.htm
March 8th, 2008 at 8:09 pm
In my old neighborhood a renter got caught running a meth lab in the rental. According to city by-laws properties used as meth-labs have to be almost entired demolised and rebuilt before anyone is allowed to live in them again.
And guess who has to pay for that? The owner–not the convicted meth-lab operator.
Good luck collecting on that judgement against the now imprisoned junkie.
March 9th, 2008 at 8:54 am
#1 mistake was renting to a nurse, they are crazy and wild. I dated one and know 1st hand. Although making good money they love to drink and get crazy. All the stuff they see in the ER makes them loonie.
March 9th, 2008 at 5:43 pm
Once you have a good renter, look for them to give you referrals to others that are looking to rent. You can give them $200 or something to show your appreciation. The referral system is a good thing to have.
There are lots of little tricks to the game. Rental companies almost always take the monthly profit you would be making. Though rent is not the only way to make money off of houses.
March 11th, 2008 at 2:47 am
We still have a debtors prison but nowadays it’s called The Homeless.
March 11th, 2008 at 7:53 am
Gareth said what I was gonna say. What’s the point of putting someone in prison if it means they will never pay you back?
Tenants aren’t angels, but landlords aren’t either. For every tenant you can point out to me that cost you $10k, I can show you a landlord who thinks all they have to do is collect the rent and replace the roof and they don’t have to worry about anything else, too bad if your sink drainpipe’s been leaking for three years (and they’ve had three incompetent repair attempts on it) or if the neighbor downstairs might be selling dope or if the security gates they installed are not worth a darn because a trespasser can just reach over the top of the gate and turn the knob to get in.
Neighbor downstairs has got a broken window that’s been busted for weeks now. Nothing. The landlord’s been here at least once since then.
Graffiti on the side of the building that’s been there since 2005. The city’s anti-tagger initiative ain’t worth squat if the property owners don’t live up to it.
And don’t get me started about the squatters. I don’t mean the homeless people who break into empty houses (they’re a problem too), I mean the “property owners” (speculators, carpetbaggers, scallywags, pick a term) who buy a house and sit on it for thirteen years and counting without even attempting to rent it out. This kind of thing is why my neighborhood’s gone to Hades to begin with. Fewer residents equals fewer eyes looking out for bad apples.
I wish there were some kind of nice, happy medium between owning a house and having to rent it from someone else, because finding a good landlord is about as much of a crap shoot as finding a good tenant is. I mind my own business, don’t bother anybody and don’t trash the place. Last rental I lived in, I got a letter of recommendation from the landlady. This is what I get for my trouble. I’m just waiting for the bathroom floor to cave in.
Some neighbor broke one of my windows last year too. It got replaced with plexiglass. *Plexiglass.*
March 11th, 2008 at 9:17 am
Where are your homes in the Midwest? Are you on-site?
March 11th, 2008 at 10:05 am
Shauna, I live 2,500 miles away. I have a property manager that is supposed to be screening the tenants.
Dana, sorry to hear about your renting troubles. But if its a bad neighborhood I can understand why the landlady would do that. You could just move if its getting that bad. Unlike tenants, property owners don’t have that luxury. Of the $11,000 judgement, $3,500 was for repairs that I had to perform on the house. As far as I see it, thats a dead investment that I can never recoup unless I she pays on the judgment.
Jonathan, how come all your gf’s are crazy???
March 11th, 2008 at 12:46 pm
Bummer story – my former landlord had a similar problem. Tenant has no *official* job and lives with the bf -nothing in her name. He calls the judgment “toilet paper”.
What tactics do you use to get tenants? Do you have a different approach on these properties as your other ones? Be interested in hearing what approaches have consistently led to good tenants (recognizing that no approach is a sure thing)
April 10th, 2008 at 6:37 pm
Here’s a brilliant idea for all the whining landlords:
Pay your own mortage, and if you can’t afford it, and must rent, sell it.
There are certain situations where tenants can’t pay, but let’s face it, if you could, you wouldn’t be renting it out.
If you want to rent, you do so knowing that the good comes with the bad, and nothing is written in stone, and if you don’t wish to have problems, then get a second job and pay your own mortgage, or better yet, sell the other homes you have and expect others to pay for, and quit whining. perhaps then, the horribly, overpriced, housing costs would go down, and no one would need to rent anymore.
April 10th, 2008 at 8:06 pm
Adrianna,
spoken like a true tenant!
you sound like you’re bitter because you can’t afford to buy a house in an expensive neighborhood although you “think” you should be able to afford living there.
this is a $90k house in blue collar neighborhood in the midwest. The tenant is a nurse who makes decent money. If she had her act together she’d be owning a house in a better neighborhood.
So would you.
Home prices have not gone up because people with excess cash buy homes to rent out. They’ve gone up because of easily available loans with interest rates lower than the true price of inflation. Because anyone with a heartbeat could get a 125% loan. Deadbeats and speculators went out and bought homes they shouldn’t be able to afford and drove up the price of housing.
And yet somehow you still couldn’t make it work for you.
Quit whining and displaying your ignorance.