Dr. Landlord and the No-Paying Tenants

Jonathan Forisha:

Welcome to Adventures in Landlording. Each episode we pack our bags and hit the trail to answer some of the many questions plaguing landlords across America. My name is Jonathan and I’m here with Krista. Hello. Krista, how are you doing? I am so pumped to be here today. How are you?

I’m doing great. You ready to jump in? Let’s go. Okay.

Our first adventure comes from Reddit. User name is MyGoodFriend96 and the headline is, Have you ever had tenants you never raised the rent for because they’re excellent tenants? We’re in our second year of renting out our second house. Tenants have been great. I did not raise their rent and basically have no plans to. Our mortgage on this house is low and I feel like we want these people to stay. They’ve given us zero issues, knock on wood, always pay on time and are good tenants. I mean we could raise it but it’s not a necessity on our end. Has anyone else done this? What are your first thoughts?

Krista Reuther:

Well, shoot, a good tenant is worth keeping around. If you don’t have a pressing business need to raise the rent, I personally would not. What about you?

Jonathan Forisha:

Yeah, a weird question. I’m just going to say it’s a weird question because if all of your expenses are covered, then why? Why raise the rent? Who is pressuring you to raise the rent? Other landlords who want to increase their bottom line, I guess?

Krista Reuther:

Yeah, I do think that there is significant pressure or at least a preconceived notion that you should be looking to raise rent whatever possible. And so if you are not raising rent, are you being like a bad landlord? I would say no, you’re being a good landlord, especially if you’re keeping in mind that this is someone you’re having a great professional time with, they are paying on time. The rates in your area haven’t increased too much, you haven’t done too much additional work to the actual rental. Why increase? Why create a friction point in this relationship that’s already going really well? Absolutely.

Jonathan Forisha:

Yeah. The news has been covered the last few years about rent prices going up almost everywhere. We’re here in Denver. It’s definitely gone up in Denver. But if your tenant knows that that is the story in a lot of the country and they know that their rent is not going up, guess what? They love you even more. That’s awesome. I think something else in this is my good friend 96 says that they’re renting out their second house. So it sounds like they have multiple properties, maybe they want to expand to other properties. It makes it a lot easier to fill those other properties with great tenants if your current great tenants can give you a referral. Absolutely.

Krista Reuther:

I’d say play the long game. If it’s not necessary for your business, if you’re not struggling, keep the rent where it’s at. Even thank them for being a good tenant. You don’t have to go in there with your chest all puffed to be like, don’t you worry, I’m not raising rent, I’m such a good landlord.

Instead, really treat it as something like, hey, you have been wonderful. I’m so excited to have you in the rental hopefully for another year. Let’s schedule that lease renewal date.

There you go. If you’re really feeling like you want to go above and beyond, maybe give them a little gift or send them a little card. It really goes a long way.

Jonathan Forisha:

Absolutely. So the sort of the underlying question to me in this is how do you determine your rent price? And we actually have a tool on our website totally free. You can plug in your address, your property, details, and it will tell you a range.

It’ll say on the low end, here’s this on the high end, there’s this. So you can pick your price in there. And I think something to keep in mind when determining your rent is what are your expenses? Do you have a mortgage?

How much is that? How much money are you setting aside for repairs or maintenance or I don’t know, yard work, cleaning, all these kinds of things. Hopefully you are setting aside some money for that. And then if the rent covers all that, that’s great.

Krista Reuther:

Exactly. If your bases are covered, you have money in the bank to fall back on just in case something happens, you’re in a healthy spot. You really don’t have to fall into the trap that we often see landlords start to stumble into where they’re thinking, I need to keep raising rent. I need to treat this as 100% of business without any thought of the human aspect. Like I just need to be jacking up that price.

And truly you don’t. If you are getting all of your needs met, you have a cushion just in case things go awry, then I’d say keep rent consistent. You can always use our calculator to make sure it’s in a healthy range. And I will say too, if you do find down the road that you need to increase rent, that’s typically a conversation had at a lease renewal time. And that’s a little bit easier to swallow than like mid lease or anything of that nature. So use the tools at your disposal, but it sounds like you’re in a good spot. You don’t need to rock the boat.

Jonathan Forisha:

Absolutely. Keep those great tenants. Are you accepting rent payments through Zell, Venmo, bags of coins or supercharged crystals? Stop it! TurboTenant makes it simple to accept rent on time, automate late fees, and we even send reminder emails so you’re not the bad guy. Sign up at landlordpod.com.

Krista Reuther:

So your landlord was really excited to keep their tenants. My story comes hot off the presses from someone desperate to get rid of their tenants. Excellent.

Speaker 3: So at the end of August, we decided to put our house of nine years up for rent. A 62 year old woman and her 85 year old mother moved in and the first month’s rent, security deposit, and all those fees were paid for by their previous landlord. And I will not name names at this time, but the name will come out. He is a very rich doctor. He’s building a house on the side of Camelback Mountain in Scottsdale. He made sure to tell us that with his blonde girlfriend in his sports car when he rolled up, he said that he was selling the house that he was renting to them. He felt bad to kick them out, so he paid for it. Okay, fair enough. That’s very nice of you.

Too nice. Anyway, they move in within a couple weeks or within a couple days after they move in, they tell us, oh, our Chihuahua got underneath the gate, the RV gate. Can you fix the RV gate? Okay, that’s fine. We own the house. It’s our responsibility for the maintenance.

Sure, we will pay. $800 later, within three days we had that fixed. From when they called, we had it done within three days. As landlords should do, we did that.

Anyway, September goes by September 30th. The property management calls them just giving a heads up, say, hey, tomorrow’s the first. Rents due, yada, yada, yada. They don’t pay on the first, they don’t pay on the second.

Finally get a hold of them on the third, and they say, oh, we were sick. All the days were in together. I forgot. I’ll pay today. The fourth comes.

The fifth comes. They don’t pay. My husband physically hands them the legal five-day notice that says they have five days to pay the rent. If they don’t, we’re going to go forward with eviction proceedings.

From that time on, until the 19th, so almost three weeks into October, we get a call from the older lady. Oh, you know, we don’t have the money for it. My social security checks are being cashed by somebody else. On their paperwork, they said that they make a combined $9,000 a month, and they said that 2,000 of that was social security. 9,000 minus 2,000 is 7,000, so your daughter makes $7,000.

That should be enough to cover rent. And why is three weeks into October when you tell us about it? Your financial hardships. When initially you were sick, and you forgot. And then they tell my husband at that same phone call that they hadn’t been paying rent for two years at the doctor’s.

No rent for two years. And my husband says, well, unless you pay rent with the late fees, we’re going to go forward with the eviction. And then she goes, oh, so you’re not going to help us? We’re not going to let you to continue to live for free. Not on our dime.

Moving on. So that was the 19th. The hearing was on the 23rd. The judge said that we were granted the eviction judgment so we can legally evict them. They were supposed to be out of our house by the 30th, which was two days ago.

They’re still there. So now that they were supposed to be out of our house and they’re not, now we have to go forward with a writ of restitution. So with the writ of restitution, we have to file more paperwork, more money to the lawyers, more money to the court, more money. We get to file paperwork, which we did on Monday. And then today is when the judge signed off on it.

We have to meet the constable at our home with the locksmith to have them leave the home and then we physically change the locks so they can’t get back in. Cool. Great. This could happen, you know, end of the week, early next week.

No. They’re backed up two weeks, two more weeks that they get to stay in our house for free. Two weeks. And then after they are physically removed from the house, the locks are changed. We are liable to store their property for up to 14 days after they leave. So till the end of November, we just act as a storage facility for their stuff.

I love it. I’m sympathetic to a point. I understand housing insecurity is a real thing. However, you just moved into this place. If you didn’t think you could afford it, it’s not like I upped the rent. It’s not like you didn’t know what the rent was. You signed a paper that said that you would pay it every month by the first. Not to mention, you know, they didn’t contact us or say anything about financial hardship until almost three weeks into October. There’s lots of financial assistance out there.

I even looked into it myself. There’s a lot, but they did not do anything about it. They easily probably could have gotten some financial assistance in regards to rent, but nothing, nothing. If they were to communicate with us and say, hey, you know, I know rent is due tomorrow. We’re having a little bit of trouble. You know, is there any way, you know, we’re willing to work with them, but just straight up disregard. Done.

Done with it. I don’t relish the fact that we’re having to remove two women from our house, but it seems that there’s a pattern of them not wanting to pay for housing. And I wish we had so much money that we could just let people live for free in there, but that’s not the case. We’re just not the ones, not the ones. And all of this is just too much. We’ll see what happens in two weeks.

Krista Reuther:

It’s just absolutely wild to look at how this played out when you had people who it seems never intended to pay rent at all, because they hadn’t been for years. The comments were largely on the landlord’s side saying, this is ridiculous.

How did these people get in there? And it’s such a sticky situation. Even the original landlord, our friend Linda, said, hey, I understand affordable housing is a real need, but I’m at my wit’s end because I’ve done everything I could. And yet here I am unable to reclaim my property. And she finally did. But it was in December. And she had lost out on not only two months worth of rent, but also all of the costs that go into an eviction.

Jonathan Forisha:

And also the frustration, the sleepless nights.

Krista Reuther:

Yeah, and the general confusion at Dr. Landlord, because why did you have people living in your property for two years without making a payment? And why did you feel like it was okay to just push them off onto a different landlord by paying their way in basically and not being completely transparent?

Jonathan Forisha:

Yeah. Well, okay, so my first question is what’s the deal with Dr. Landlord? Did we ever find out, was Dr. Landlord just off into the night and used a burner phone and a fake name?

Krista Reuther:

Yeah, you know, Linda said she wasn’t naming names.

Speaker 3: I will not name names at this time, but the name will come out.

Krista Reuther:

So I don’t know, we need to watch the headlines in Arizona, especially Scottsdale, because apparently things are just really boiling up, you’re hotter than the temperatures. So I think that they’re just kind of gone. I don’t know that Linda the landlord is going to pursue anything with Dr. Landlord, because I don’t really know if there’s legal grounds to do so. It’s shady business, but I don’t think it’s specifically illegal to do this. Okay. But man, is that a hard situation. It really is.

Jonathan Forisha:

I mean, this is what, you know, landlords are terrified of these things happening. And I rightfully so, because this, you know, we always say, do your tenant screening, sounds like she did some tenant screening, and then to speak to previous landlords, which of course she did, because she had Dr. Landlord vouching for these people, even paying everything for some reason. And so then, you know, we get asked this all the time, like what happens, how do I know that the previous landlord is the previous landlord? How do I know they’re not a crazy person? In this situation, this is really difficult.

Krista Reuther:

Yeah. You know, to me, again, first of all, hearts out to Linda, that’s a lot of strife and trouble trying to fill your property sometimes. It doesn’t have to be though, especially if you have a really comprehensive tenant screening process, right? So I would never just rely on self-reported income.

It leaves you exposed and vulnerable in these kinds of cases, and equally, not to put any blame on Linda, because I think she did everything that she could. But when I look at the situation, I would say, what were the questions that you asked that landlord? What did you ask Dr. Landlord about their tenancy and about how often they paid rent? Was it more of just an informal, here’s the check and I’m just sharing some tidbits about my rich doctor life? Or could you have a very formal sit down and say, okay, these are the things I’m trying to work out? I would try and opt for the latter. I would also make sure that I’m requesting specific documentation to really gain insights into the tenant’s financial health.

You can also, if you’re a premium TurboTenant user, leverage something like income insights, which takes the self-reported income from the tenant and it verifies it against trans-Union’s data to give you a range if it’s being under-reported, over-reported, correctly reported, kind of like a three-bear situation. But use everything at your disposal, because if you don’t, you can get a situation like this where it seems like, hey, this is great. I have these tenants who are just going to come right in. Their old landlord is paying the bill. That’s so nice of them. But if stuff kind of seems too nice, too good to be true.

Jonathan Forisha:

It is. It is. It is. This story also just shows that evictions should not be your answer. I mean, it is a last resort, absolutely. Sometimes things come to eviction proceedings, but you really shouldn’t count on it, because as this shows, it takes a while. This is two months that she’s not received rent.

She’s had to deal with this headache. From everything we’ve seen across the country, two months is actually kind of fast. Evictions take a long time. They’re bad for the landlord. They’re bad for the renter. As you noted, even after getting the eviction from the court itself, once it was finalized, they’re still, they can’t, their belongings have to stay in the property. So it’s not like you can just turn over that property immediately. And what’s the deal with the court being backed up?

Krista Reuther:

I think a lot of courts across the nation are still feeling the impacts of the moratorium. As on set by COVID, we know that California was the last one to drop all of the moratoriums across their counties.

And I believe November of last year, of 2023, September to November. So I’m not surprised to hear that the courts were backed up, but that is a real factor when just trying to decide what to do. Maybe she could have offered a cash for keys situation where, and it would not feel good, but to go to these tenants and say, hey, I will pay you $300 to vacate, to find somewhere else to go. I would say if you do that, maybe tell the next landlord, like if you’re physically handing a check to the next landlord, maybe don’t play it like Dr. Landlord did and just ride off into the night.

Maybe you don’t want to even get that involved. You just want to give the tenants some money and have them take care of it and do whatever. But that is one way to mitigate the cost of an eviction while still reclaiming your property.

Jonathan Forisha:

Yeah, and it pays to do a cost analysis there. We talk about cash for keys a lot when evictions come up and often people say, there’s no way I would pay my awful tenant, even if it is to leave the property. But the point is, that’s actually going to be cheaper for you in the long run doing that than an eviction in most cases.

So do a cost analysis, figure out if I give them X amount of money and they just leave tomorrow, would that be better than sitting around for two months with them freeloading it in my rental? Probably yes. So at the end of the day, this could have been solved with a more stringent screening process, right?

Krista Reuther:

I would say so. Again, make it as comprehensive as possible. You want to know confidently who’s moving in. And that means looking at all of these different aspects in conjunction, so you get a full picture of who they are. From finding your new favorite tenant to automating rent collection, TerpaTenant has the tools you need to thrive as a landlord. Get started for free at landlordpod.com today. Tell them the podcast sent you.

Jonathan Forisha:

We firmly believe that landlords can be a positive force in their community and in the world at large. However, there are of course some bad ones. So we like to highlight them in hopes that you don’t repeat their mistakes. This is what we call the Landlord Special. Landlord Special. Okay, this is a story from the Riverfront Times entitled, Illegal Rooming House Operation, Prayed on Hundreds of Desperate St. Louisians. And this was a really long article because this is just bonkers, okay?

It’s bonkers bananas. In St. Louis, there’s a lawsuit against six Missourians who ran illegal rentals with 39 properties across the city. So anyone with 39 properties, you got a pretty good portfolio. But these people were doing basically none of it legally. So they were condemned properties. They had each resident paying between $500 and $1,000 in cash per month. Most of the rooms they were renting out didn’t have heat, water, or electricity.

No. So the city was like, these are condemned properties. Nobody should be here and they would board them up. And then the landlords would come over and be like, let’s get these pesky boards out of here so that our renters can get back in to the rooms that don’t have heat, water, or electricity that they’re paying for. So this went on for a long time.

And they could not legally rent these out, but they still sued some of the tenants for non-payment of rent, which is just so ballsy to go to the legal system to enforce something that you have no legal right to do.

Krista Reuther:

It’s next level. That’s next level bad. It’s next level.

Jonathan Forisha:

All right. So it’s noted in the article that the properties were the site of all kinds of activity that you don’t want around your rentals, like stabbings and shootings and drug activity.

And so not great properties. I think we’ve established that. One of the six running this, she was the only one named in this. So I don’t know if she was the ringleader or what. But Dara Darity had 38 warrants for her arrest.

And when she was arrested, she said it was all worth it because she was making $40,000 a month. Oh, my blood is boiling. All right. Give me your first thoughts.

Krista Reuther:

What the hell, Dara? What? Okay, first of all, I’ve been so curious about where people find the audacity. Apparently it’s just in Missouri. It’s just in St. Louis. Well, hang on. I think this happens everywhere.

Jonathan Forisha:

Okay, but this one’s in St. Louis. This is quite… No, this is pretty wild.

Krista Reuther:

Yeah. There’s just shipping audacity from St. Louis. Wow. I mean, every part of this just got worse as you kept going on. I wanted to stop you three sentences in just because it already sounded so bad. And then it got to, no, I like doing this because I made so much money per month. Worth it?

Worth it. Yeah. How?

What do you mean? How do you sleep at night? Where do you sleep at night? Is there heat there because your tenants deserve that too?

40K a month. I mean… That’s… Oh my gosh. Yeah. Yeah. So this is the definition of a slumlord. Yes. To the T. I mean, genuinely, the fact that the properties are condemned, there’s no running water, no electricity, no heat. These are fundamental things that you are obligated to provide for tenants if you are a landlord. Yeah. So what the hell, Dara? Yeah.

Jonathan Forisha:

Yeah. So I mean, even using landlord or property owner here doesn’t feel correct. I mean, first of all, they don’t own the property. I don’t know who does own these properties, but they’re condemned there. It sounds like a known nuisance in the city of St. Louis that they’re being boarded up because authorities are like, nobody needs to go in there. It’s unsafe.

Krista Reuther:

I mean, well, here’s where I… So first, I still feel righteous anger toward Dara. Sure. But also, I feel so bad for people who are maybe down on their luck, who got lumped in as tenants and are somewhere that is not only unsafe on a structural level, but is unsafe socially because of all of these crimes that are happening. And I get from your retelling that there’s not a lot of empathy and compassion coming from Dara, just audacity. Oh, no. Oh, no. Yeah.

So that is so unfortunate, and everyone deserves to have a safe place to live. Yes. Point blank, in my opinion. And it’s so sad that Dara is sullying the name of landlords everywhere by taking this kind of very bold, brash stance and just saying, well, it was worth it because I need so much money. Yeah. Like, okay, is your money going to keep you out of hell? I don’t know.

That’s none of my business. We don’t need to get into the religious track, but there are genuine consequences for these kinds of actions, both within the legal system and just, I don’t know, when you try and sleep at night because I can’t fathom knowing that I am facilitating the suffering of so many people and then actively chasing after them for nonpayment of rent for a place that is content.

Jonathan Forisha:

That is honestly the craziest part to me because these kinds of things, unfortunately, happen. But to basically ignore everything about the legal system and how being a landlord should function, ignore all of that stuff.

But then when you are slighted, when you have a nonpayment of rent, then you go to the courts. Yeah. Absolutely wild. Absolutely wild. That is bold. That is some bold slum lording. Don’t do that. Don’t do that. Don’t do that. Don’t do

Krista Reuther:

that. Don’t do that. Don’t do that. At bare minimum, make sure that you are providing heat, electricity, and running water to your tenants and I am saying bare minimum. You cannot have a rental property where you do not provide those things. It violates the warrant of habitability.

Jonathan Forisha:

Yes. Yeah. And that’s a thing. That is a thing. Everyone who owns and rents out property to anyone has to have the warrant of habitability. This is obviously an extreme example. If you are Dara, you know and you don’t care, apparently. But for the rest of you, great landlords, make sure your lease agreement is in place. Make sure you’re following it. Make sure you’re being good to your tenants. Don’t be Dara.

Don’t be Dara. Well, that is it for this episode of Adventures in Landlording. Make sure to subscribe on your podcast player of choice and on YouTube. If you have any feedback or you want to share your own adventure in landlording, check us out at landlordpod.com.