Long post but valuable story…
Quite recently, I had the scare of my life. I thought I was going to get beaten out of my rental property due to the actions of a “career tenant”, “professional tenant” or simply a “con-man and con-woman”.
What is a “career tenant”? It is someone that plays the system in order to live rent free for as many months as possible.
IT IS A LANDLORD’S WORST NIGHTMARE!
This couple had actually lived 9 of the past 13 months rent free due to bugs in the Landlord and Tenant system.
Talk about frustration! Here I am, the one guy that should have caught this, the one Landlord likely within a thousand mile radius that should know how to mitigate the losses of a bad tenant…
AND MY HANDS WERE LITERALLY TIED.
No matter how hard I tried, I knew these tenants were going to ruin what it took me 3 years to build.
“How is this even possible”, you ask?
What happened that had my spouse asking me with tears, “Can you promise me we will NEVER rent a house again?”
And why did I answer without hesitation, “I can’t promise you that.”
What happened was my sister was supposed to move into my hometown all the way from Las Vegas and was to rent my house (I had an extra house I bought earlier). However, the tenant I placed 7 months earlier simply stopped paying rent and refused to leave.
I was pretty sure when I put them in my house this was going to happen eventually because when I placed them, I knew they were coming from bad financial circumstances (typical in this economy). But I relied on the fact that I have always been able to get someone out before a loss incurred (because I collected a last month’s deposit and the system USE TO take one month to get someone out). And under normal circumstances (in a normal economy) it would have been true.
So here I am sitting with a $200K house with no way to pay the bills and a tenant that completely refuses to leave and a sister in need of a rental house making $60K/year in a very steady job.
Again, talk about FRUSTRATION!
LUCKILY I BEGAN THE EVICTION PROCESS THE DAY AFTER HE WAS LATE ON RENT.
I served him the Notice of Eviction for Non-Payment of Rent, just as I always do IMMEDIATELY upon non-payment.
The time came and went and I immediately filed an Application for Eviction of Non-Payment of rent. It cost us $170.00.
But here is where things were different. I’ve only had to file twice ever out of 150 tenants I have placed for Landlords. And the first guy left before the court date and nothing was lost.
What happened was, I had to mail the application and wait several weeks to serve the tenant. Previously I was able to do this the same day.
So this delayed the eviction action by almost a month because not only could I not serve him the eviction application, the court date was about 2 weeks past what it should have been due to too many applications and the pending holidays (all this the tenant knew was going to happen, by the way).
So by the time I got him in front of a Judge (called an “Adjudicator” in my area), I was already in the hole.
We tried mediation. Completely useless! The Mediator and the tenants’ Lawyer suggested I let them remain in the property until the New Year.
THIS WOULD HAVE EQUATED TO FOUR MONTHS OF FREE RENT.
I said “no way” and the Mediator asked me, “Don’t you want all this to go away to be able to sleep at night?”
My answer was, “if the tenant did not leave, we would not have to worry as the bank would eventually take the house over…they would be the ones without a place to sleep at night.”
HELPLESSNESS KEPT ME UP AT NIGHT…EVERY NIGHT!
His lawyer then played a dishonest legal trick to delay the action over a week which he was later reprimanded by the Judge for doing (be sure you keep good records of EVERYTHING, especially maintenance and all communication with your tenants).
So I began a real investigation of these two individuals and found out they did the EXACT same thing to the previous Landlords.
This bold couple was actually occupying two $200,000 homes at the same time WHILE ON WELFARE!
CAN YOU BELIEVE IT! AND WELFARE WOULD NOT DO A THING ABOUT IT!
The other Landlords had almost been financially ruined and had two children (we have three girls) to support. They had actually been taken for 6 months rent before they fell for the Mediator’s tricks and caved (be strong people!).
What was worst is they even tried to help him find another place by giving him a good reference letter (this is the reason I say check two Landlords back, but in their case they had papers that showed they owned previously and I later found out their home was repossessed).
THE TENANTS’ PREVIOUS LANDLORDS WERE WILLING TO HELP ME IN COURT! YES!
So here I have a huge stack of papers, going up against a dishonest couple that would not leave my house and let me put in a paying proven tenant immediately. (By the way, I would advise against putting a family member into a rental but my sister had rented another place of mine in Las Vegas for 12 years).
What happened was they went onto welfare the last week before the court date and retained a legal aid lawyer (same modus operandi they used before). The welfare office actually told me to kick them out as they could not even afford a hamburger, let alone an $1100/mn house.
AND THEN IT GOT WORSE!
They began causing problems where the police had to be called out several times to my property as they were baring access to my property so repairs can be performed (that they had caused and had their lawyer say I was not repairing).
Each turn I took I was being stopped. Legal, moral, anything. It was my worst nightmare! Here I am supposed to be the expert on rentals and I could not do a thing.
So I sat down with my spouse and we came up with a plan.
We were going to play this guy just like he played us, except honestly. We began to collect tons of evidence that would show what he was doing and have him out in a little over a week.
The day of the second court date, I was ready and CONFIDENT.
The night before I told the tenants’ lawyer I had the ace up my sleeve and to tell his clients word for word, “I DO NOT BLUFF!” (the tenants are known gamblers, by the way).
The tenants’ lawyer tried to negotiate one last deal that night and the next day.
I REFUSED. I WAS WILLING TO GO DOWN WITH THE SHIP.
Question was, “Where they?”
So here we are sitting in court. I had a terrible cough that day and sounded sick. Several cases went by and we were nearly the last ones. Luckily I had sat in on many of the procedures earlier to know what to expect.
On the top of my stack of evidence I placed a photo of the last house they lived in for 6 months rent free from scamming the Landlords. The tenants had to stare at this for about an hour. At one point the tenants stepped outside to confer with their lawyer. I knew I had them.
IT WAS NOW MY TURN!
My spouse was a witness and was asked to leave the room. She later told me she had her ear to the wall to listen in as she saw me so calm and wanted to be there for support and help.
The tenants had 4 legal aid lawyers with him (3 student lawyers and the professor of the University Law School!).
So here I am, one Landlord going up against 4 lawyers and 2 tenants whispering back and forth.
I didn’t need ANY of the evidence (just the content in my head).
Their lawyers told the judge they didn’t deny the money owed to me. They just needed time to move out as the man had medical issues and they had to go onto welfare to survive (which was his defense on the last Landlord he scammed).
I told the judge I had someone to rent the place today (my sister had given me a “Letter of Rental Intent”). The tenants are on social assistance which will pay for their moving expenses and a place for them to move to today! I repeated that welfare told me they should not have even rented it in the first place.
I also told the judge they had did this same thing to the last Landlord…at which point she stopped me cold and said it has no bearing on this case.
I then said I have medical issues of my own, three kids and a new spouse to support and there was no way I could do this if these tenants were allowed to continue to live rent free in my house, preventing me from making income.
I also asked she consider the delay that the legal aid lawyers had already created unnecessarily and include that in her decision.
She decided they would be evicted in the standard manor minus one week for the unnecessary delays (caused by the Lawyer).
I HAD FACED MY WORST NIGHTMARE (A BAD TENANT)…AND WON WITH HONESTY!
I put the house up for sale that same day and it sold very quickly for $100 less than I had paid for it (this was great considering most houses were losing 25 to 50% of their value in that same time frame.
My sister ended up having to rent another place because of timeframes of her starting her new job. Helping her find a place was another story to itself…
So, what did I learn and why did I tell my wonderfully patient spouse why I could not promise her to never rent a house out again?
I learned buying and renting houses in a bad economy WITHOUT FEAR is the only way to become a real estate millionaire. Facing the worst fear of rentals — bad tenants — is the only thing that is going to let me become that millionaire.
SOME OF THE GREATEST FORTUNES IN HISTORY WILL BE STARTED IN THE NEXT FEW YEARS.
You see, 99 of 100 people out there will not touch rentals because they are so scared of that monster. That is why 5% of the population holds 90% of the wealth. Conquering that fear of mine has put me well onto the path of wealth.
Wealth is ultimately created with real estate.
I know that with certainty.
This is why I told my spouse I would not promise her to not rent houses anymore. Because I fully intend to make it to the top 5%…and I now have the soldier’s experience to get there…
…Just like you will.
Best, John (a bad tenant survivor)
P.S. The other thing I learned was that I should have had another month’s rent in reserve to be able to holdout longer for the broken Landlord and Tenant system. More on this in future emails/blog posts.
You may want to check out the rest of this blog or specifically this post:
…or stop by my main site here to have a look at many many more rental secrets and stories I have gathered by renting 150 places.
John J. Adams, Rental Sytstem Expert.
