The other side of bankruptcy
This article is part of the “reader stories” feature at Get Rich Slowly. Some stories contain general advice; others are examples of how a GRS reader achieved financial success — or failure. These stories feature folks from all levels of financial maturity and with all sorts of incomes.
J.D.’s note: Over the past couple of months, I’ve shared a couple of reader stories that involve bankruptcy or otherwise walking away from debts. Though these options are all “part of the game”, they don’t sit well with many GRS readers. In response, Shara offered to share her story, which shows the other side of bankruptcy — what it’s like for the creditor.
After college, my husband and I bought a house in a normal middle-class neighborhood. Two years later, we decided we wanted to move out of the city, and instead of selling the house, we decided to rent it out.
We did a lot of math and research, and decided we could both trade up the house we were living in and support a rental, even if the rental wound up vacant for an extended period of time. We didn’t feel like we knew everything, but we were comfortable getting started. We signed up with a landlord service to check credit and background, and then took in our first tenant.
We made a number of mistakes the first couple years. We were young and expected people to be honest. I believed that, on the whole, people want to do the right thing. I still think that’s true, but watching the mental gymnastics some people go through, I now believe they have an endless capacity for making “the right thing” happen to be whatever is best for them.
Every tenant has done something that’s cost me money:
- Left major damage (stepped in the sprinkler box breaking every pipe).
- Taken off without notice (legally you still have to go through eviction if they didn’t give notice).
- Acquired pets that weren’t in their lease and caused damage (you have to decide: is it worth evicting over a dog?)
- Taken things from the property that weren’t theirs to take.
But that’s the name of the game. I wasn’t shocked to be left holding the bag on more than one occasion. It’s business. But this isn’t a story about landlording — it’s a story about bankruptcy.
Peter and Tara
In the summer and fall of 2008, the rental market started getting soft. I had a tenant leave without notice at the end of summer, and we couldn’t find a renter. We found a family who wanted the house, but they didn’t have good credit.
In hindsight, we shouldn’t have rented to them. Their credit was bad. There were red flags. But there are red flags with most people; renters rarely have clean records or most of them wouldn’t be renters. No renter is perfect. Their references were very good, and they had supposedly never missed a rent payment. They claimed to be in the middle of bankruptcy caused by a business venture that had gone south. I knew the law that post-bankruptcy they would be on the hook for years until they could file again. We took a calculated risk because we thought the worst that was likely to happen was that they wouldn’t pay their rent and we’d have to evict them and support a house payment for up to two months.
Aside: Though I may seem harsh here at GRS, I’m actually a bit of a soft touch. In my short tenure as a landlord, I’ve extended rent payments for a variety of reasons. I also know I can’t squeeze money out of someone who is broke, and if they can’t pay I’ve offered to break a lease if they’ll nicely and quickly move to somewhere more affordable. But ultimately it is not my responsibility to house people; it’s my responsibility to house my family, and to protect my interests. Sometimes people need help. I know a number of people who have declared bankruptcy: My aunt, my mother in law, a cousin, a couple close friends. Therefore, I’m aware of the human side of bankruptcy.
Peter and Tara moved in with their kids (and undisclosed dogs) in September. As we were signing the lease, they explained that they only had about one-third of the deposit, but they were waiting to get their deposit back from their previous place. Though this raised a flag, we agreed they could pay it with the next month’s rent.
For each of the first couple months, they paid a couple of days late each time. They never made up the deposit, though each time it was promised next time, I understood that work was slow. Peter worked in low-level construction (landscape, re-stucco, that kind of stuff), and as it was getting to be late fall we let it slide.
In December, they didn’t pay. We got a story that his work for the month had been financed through a larger plumbing company and they hadn’t paid him yet. My husband and I decided we weren’t likely to find renters the week before Christmas, and we didn’t want to stress out the family with kids at the holiday, so we were going to give them until the last week of December to pay. They paid off December’s rent on the 24th. They dragged out January, finally paying 75% of it on the 28th. In my experience, once someone is a month behind they won’t make it back, and it’s actually kinder to cut them off than let them keep sinking: When they weren’t able to come up with the balance for January, we filed for eviction on the 8th of February.
We got a court hearing for February 27. The judge nicely heard our argument and asked Peter if he disputed it. He didn’t. The judge asked Peter if he had anything to add, and Peter said, “Yes. I filed for bankruptcy on the 11th.” (That was the day he was served with eviction papers.) With that, the judge looked at us and said there was nothing he could do. The next step for us was to go to the federal bankruptcy court down the block to attend the creditor meeting on the paperwork Peter provided.
Behind the Scenes With Bankruptcy
For those of you unfamiliar with bankruptcy, let me provide some basics.
When someone files bankruptcy, they get what is called an Automatic Stay. This means they have protection against collection of any debts accrued before the date of file, and includes any repossession or eviction proceedings. Peter and Tara had been living in our house rent-free for six weeks, and not only could we not collect the money, we couldn’t get our house back. But if Peter had turned to us and said, “By the way the toilet is leaking”, we’d have a legal obligation to go fix the toilet and couldn’t even ask when they were going to pay the rent. Had we done so, it would have been considered harassment, and we’d have been in violation of federal bankruptcy code and then they could have sued us. Not likely, but possible.
Here’s the general schedule of a bankruptcy:
-
- After a bankruptcy is filed, there’s also a meeting of creditors. This is set at least 30 days out from date-of-file to allow the debtor time to collect and submit their paperwork.
-
- After that, there’s a period where creditors can dispute the claims.
-
- And after that, the bankruptcy is typically discharged and the process is at a conclusion 7-10 weeks after date of file.
- Also, bankruptcy is in federal court while eviction is in county court. These courts don’t talk to each other; they don’t share information. They’re physically separated and are both “court” like an elementary and university are both “schools”.
When bankruptcy is filed ,the stay is for old debt, but since Peter and Tara were in the house, they still needed to pay current rent. So, a few days after March 1, when they were late on currently due rent, I sent them a late notice, and when they didn’t pay I petitioned the court for a rehearing.
In the meantime, we attended the creditor meeting on March 11. When we showed up, there was no one there for Peter and Tara’s bankruptcy — not even Peter and Tara. The lady who was running the hearings said that no paperwork had been submitted beyond the original filing. Furthermore, Peter and Tara were not eligible for bankruptcy. They still had five months to go before their last bankruptcy was old enough to allow for a new filing. It looked like they had filed for bankruptcy so they could intentionally steal rent from us. They spent $450 to file bankruptcy in order to stay in my house for free until it was dismissed (at least six weeks). The federal government had found nearly a dozen things wrong with Peter and Tara’s bankruptcy filing, so the court was moving to dismiss. The information was staggering, but we were happy because we could now get our house back.
Kafkaesque
We went to the scheduled eviction hearing on March 29. I read the bankruptcy law itself, which I interpreted to say that the automatic stay that barred us from evicting Peter and Tara was only for debt incurred before date of filing.
I told the judge: “Yes, Your Honor, there is nothing to the bankruptcy. The federal government is dismissing the filing. Plus, we have the documentation that they are late on their current rent and can be evicted for that alone.”
The judge replied: “I am not a bankruptcy judge, and I don’t have the documentation. Go back to the federal court and bring me the papers.”
At each point in this process, we learned more.
We didn’t know we could file for a Release of Stay, or we would have as soon as Peter and Tara’s rent was late in March. We asked the attorney about the dismissal, and he said he would call the courthouse to check on it. He called us back the next day. The movement for dismissal had been sitting on someone’s desk for a couple of weeks (since well before our eviction hearing). He was able to talk to the right person and get it stamped and put in the computer in ten minutes. We could now evict.
With copies of the paperwork in hand, we once again petitioned to have our eviction reheard. We finally got on the docket for the end of April.
The judge heard our case and ordered Peter and Tara out of the house. He gave them three days, the minimum allowed by law.
Three days passed — and they were still in the house.
At this point, Peter and Tara were in violation of the court order, but there was nothing we could do ourselves. We had to go back to the courthouse and file to “induce a Writ of Eviction”. In other words, we needed further court documentation that we were allowed to call the Sheriff for removal.
The clerks were horrified that we were kicking people out of their home. I think after the judge tells people to leave, most people actually do. But they were underestimating our tenants! With scandalized looks and a couple sidelong glances, the clerks did the paperwork and handed it back. Then the Writ of Eviction was taken across town again to be filed with the County Sheriff for a physical removal.
The Law Wins?
On May 14, we met the Sheriff at the house to find the tenants finally packing to move. The law said we had to give them a full work day to get their stuff moved. We agreed that May 14 was it, changed the locks, and asked the deputy to look around (in case they did malicious damage).
After the deputy left, Tara chewed me out for embarrassing her and said, because of it, she wouldn’t pay the water bill. When I informed her that after not having paid rent in four months, I didn’t exactly expect her to pay the water bill, her response was, “Peter didn’t pay the rent, not me.” Uh…what? This goes back to the mental gymnastics people go through to determine “the right thing”: She had been living in my house without paying rent since mid January, but since paying rent was her husband’s responsibility, she was entitled to righteous indignation (and now she could take the high road and not pay for half a year worth of water! How fortunate for her).
We returned to the house to find it unlocked, the garage door open, trash stacked six feet high in the garage, and everything of value we’d left for the house (paint, tools, replacement fixtures) gone.
Not surprised, we called the police, who said that since the door was left open, we had no way to prove who took our things. Therefore, they wouldn’t even call Peter and Tara to ask if they knew what happened to our stuff. (Yes, I know leaving stuff there was stupid, which I told my husband well before this. He finally learned his lesson, and now keeps things for the rental in our garage).
Four months, six days off work, $6000 in rent, $850 in water, $150 in court costs, two trips to the dump, a week of cleaning, and $300 of stolen stuff later, we finally had our house back. It took thirteen trips to a courthouse (either county or federal), which wound up costing us about a half day of vacation every ten days.
We turned the house over to a rental management company because we decided they earn their keep with one eviction. My husband chose one with a lot of units that we saw at court every time we were there. With jobs, a kid, and my husband in school, it wasn’t possible to be as responsive as we needed to be. And the time commitment of a bad eviction like this one is severely draining when you have other responsibilities.
Creditors Have a Face
I didn’t write this story to whine and complain. I know this is part of doing business. Peter and Tara weren’t stealing from me because they didn’t like me; they simply saw themselves as victims of the world, and they were taking from someone they saw as able to afford it — their own little story of Robin Hood. They had the need, and we had the means.
When people speak of bankruptcy, they usually speak of the debtor in human terms and the creditors in faceless terms. I have heard people essentially say “The debtors are just trying to get by and the creditors are mean [somehow forcing credit on people] and/or should know better [because they allowed people with bad credit to owe them money].”
But I am a creditor, and I’m just trying to get by and make a good life for myself and my family. By not paying their rent or allowing me to find new tenants, Peter and Tara forced us to cover all our expenses out of pocket. This had real and serious consequences for my family. (How many of you could afford $5000 in mortgage payments plus cleaning/repairs without feeling some pain?)
I grew up below the poverty line with divorced parents. My husband grew up in a trailer park. His father was (and likely still is) a drug abuser and dealer. We aren’t heirs to a fortune, and we certainly aren’t Chase or Citibank. We put ourselves through college for a better life than our families. We work really hard to get ahead. We live financially prudent lives. But I know other landlords who weren’t as prudent. They didn’t have a big enough emergency fund, and they were ruined by a large expense such as ours. In those cases, bankruptcy frequently begets bankruptcy.
When a dentist builds a crown, he is likely a creditor. When a propane tank is filled, the company is a creditor. When a house has any kind of upgrade or large repair, credit is usually at least partially involved. Just about anyone can be a creditor.
Part of the most recent bankruptcy reform bill is to weed out repeat filers and other people who abuse the system. Before reform, there was nothing to keep Peter and Tara from refiling as soon as their case was dismissed. Now there’s a mechanism in place to look at refilers more closely if they file twice within a year. Either way, it still bugs me that it took so long for such a blatantly bad filing to be dismissed. The fact that they weren’t eligible due to a previous bankruptcy should have meant that the court wouldn’t even let them file in the first place. That’s a big part of my problem with bankruptcy — not the people that file, but how easy it is to abuse once you understand the system. After an experience like this, I’m disillusioned.
Bankruptcy has a place, but please remember that creditors have a face too.
This article was written by Shara.
Ranch house photo by joguldi.
Become A Money Boss And Join 15,000 Others
Subscribe to the GRS Insider (FREE) and we’ll give you a copy of the Money Boss Manifesto (also FREE)
There are 213 comments to "The other side of bankruptcy".
Welcome also to the life a community banker…some of us have faces and responsibilities and are not a big bank thousands of miles away.
premeditated, calculated theft from you. they knew exactly what they were doing. wow.
sociopaths.
reminds me of the movie Pacific Heights.
I’m sorry that you had to go through all that. We rent single-family homes in central Canada and feel fortunate that we’ve only had one spectacularly bad tenant. Our lesson? Don’t exchange free rent for renovation work unless you’ve worked with the contractor several times before… and even then, don’t.
We moved away from our properties, which forced us to hire a property manager, and I couldn’t be happier with the results. I couldn’t imagine renting houses out without a property manager.
This mirrors our experience as “landlords” to a “T”. Previous poster was absolutely right. They knew what they were doing and I am sure they are continuing to do the same thing to each landlord unlucky enough to trust them.
We sold all of our rentals and made a nice profit. Haven’t bothered to look back since!
I like the idea of having rental property as a form of diversification. Let’s say you have a paid off house when you turn 65. You have an asset in the house itself and then recurring revenue with the rent.
However, stories like this are certainly the downside. Sounds like hiring a property management company is a good way to go.
I’m a renter at an apartment with my bf, but we’re not bad renters, not all people are bad renters. Anyway I’m glad that you’ve gotten rid of the nightmare couple, it sounds to me like renting is such a hassle, I’d never do it myself.
The clerks had no reason to give you a hard time either, you had your reasons, I’m sorry you had this experience and I hope you never have this situation again.
Good luck to you and your family.
Thanks for a fascinating post! I disagree with ladykemma2, who claims that the bad tenants are “sociopaths.” No, they are ordinary people with bad ethics, who feel that their own misfortune (and/or irresponsibility) justifies screwing over others. Sadly, such people are common.
As a owner of a single rental property (my former residence, as is the case with Shara), I keep rent attractively low and the house in great shape so that I can carefully screen the many applicants who want to rent it when it becomes available.
Not very lucrative in the short run, but this approach saves lots of hassles in the long.
“…renters rarely have clean records or most of them wouldn’t be renters.”
This is a little harsh. There are many good reasons to rent even if you are perfectly capable of obeying the law and honoring contracts you sign.
Wow, what a fantastic and well-written article. Thanks!
I agree with Peter. I have rented for the past 8 years, not because of bad credit but because I’ve moved around so much.
And while I agree to remember a creditor’s face in these stories, don’t forget that not all creditors are inherently good. My last rental company (a locally owned business with fewer than 100 units) intentionally tried to keep my deposit for no legitimate reason. After a letter written by an attorney friend threatening a law suit, accompanied with photos of my moveout, I finally got my money back.
“Renters rarely have clean records or most of them wouldn’t be renters. No renter is perfect.”
Well, no one is perfect! As a renter I have to stick up for those of us who are good tenants. Some of us leave places better than they were when we moved in. Some of us do the right thing and don’t steal from our landlords. It’s too bad the poster wasn’t able to have the expeience of a good tenant.
There are a number of reasons people rent rather than own besides poor credit. Some people simply don’t want to own a home and have all of the obligtions that go with it. My husband and I currently live in a state we do not want to remain in for the next ten or even five years. We are here for family reasons and so that I can finish grad school. We want to move in the next two years. It simply doesn’t make sense for us to buy, especially with the housing market being so unstable. We need to be able to move easily without losing money on a house that won’t sell or is sold too soon.
It is a common perception that renters are low quality people who will behave as the poster’s nightmare tenants did. As with any generalization or stereotype there are those who simply don’t fit the mold.
Agreed with comment #5.
The character of renters is firstly completely dependent on the LOCAL character of the real estate market. In cities with high housing costs MOST people are renters, lots of them “respectable” professionals. And not everyone has plans to root permanently where they are. We shouldn’t stereotype creditors, it’s true, but we also shouldn’t stereotype their payors.
Thanks for the post – Although I’m sad you had a bad experience with those tenants, I am really encouraged that in the end you did what was right, and were responsible enough to be prepared to take care of the situation (even though you had to pay $$ out of pocket to do so.)
I also appreciate your compassionate ear towards your tenants from time to time.
My wife and I are relocating to Chicago in January and sold our “dream home” in Nebraska in days (when we thought it would take months…) We find ourselves renting for 6 months, and have really appreciated our Landlord because of their willingness to understand our situation – allowing us to rent a great, clean townhome that otherwise wouldn’t have been available to us due to the contractual stipulations.
Moving from a house that was in the top 20% in value (where we live) to a place that rents for $800/month was a huge step down – however, it’s allowing us to pay off the remainder of our small debts and get to a debt-free lifestyle before moving on!
Thanks Again!
I can totally identify with the author. I had a house and when a new job moved me to another city I needed to sell. Unfortunately no one was buying so I rented. The first couple who lived in my house paid the rent on time for several years but when they got a divorce they moved out. After causing about $7000 in damage – new windows, new doors, a new roof on the porch, new carpet, cleaning and painting throughout the house. Apparently the split wasn’t amicable- lol. The next tenants didn’t pay their rent and it took forever to evict them. After again fixing the place up, new carpet(oil and grease throughout the house), repainting the rooms, landscaping, etc I put it on the market. I sold the house for $42000 and had to bring $10000 to the table just to pay off the mortgage.
Thank you for your story, it really is rare to hear the other side of it all.
How unfortuneate that you got a horrificly bad couple as tenants.
I’m pretty sure she was not painting all renters with the same brush, just highlighting her own past mistakes, signs to look for, and lessons learned.
As for “Renters rarely have clean records or most of them wouldn’t be renters. No renter is perfect.” I agree. There are people out there who have been careful with there money, and are renting because that suits them better, whatever their circumstances are. I’m sure the vast majority of those who read this site would fit that discription, but we are a group that is self-selected to be among the best in terms of personal finance. Unfortuneately, there are many many tenants out there who were not so prudent, or fell on hard times in this recession, their credit records marred through no fault of their own, as well as the con-artists who take advantage of the situation. I can see how it could be very hard to weed out the bad one from those who just need a chance.
That’s where the management company is worth it’s weight in gold.
Good luck in your future renting adventures, Shara!
Shara,
Thank you for writing this article. It was informative to see the bankruptcy/eviction process from an angle not normally discussed. I’m still in graduate school so I rent exclusively, and although I’ve always been a good tenant I’ve certainly seen my share of bad ones (many of whom were friends or classmates). It sounds like you’ve learned a lot from the process, but I’m sorry you had to get a lesson in such a hard way.
The moral of the story is bankruptcy sucks. The creditors get messed over (9x’s out of ten that is us- the general public with a savings account). The bankrupt people learn how easy it is (once your credit is ruined- why bother). And moral, overall, goes down the tubes.
But—what is the alternative? debtors’ prison. Isn’t that a huge reason our founding fathers came to this land to begin with- staying out of debtors’ prison?
One of my co-workers was practically forced into bankruptcy himself due to dealing with a string of bad residential renters. Being a residential landlord seems to be one of those things where even one “mistake” in the form of getting a bad renter can ruin years of investment.
As a bankruptcy attorney, I can say a large share of the author’s problems could have been avoided if you would have contacted a bankruptcy attorney at the beginning of the process. Bankruptcy is, unfortunately, a very complex area of law, and most state courts have no idea how it works, which causes a lot of problems related to landlord/tenant issues.
To Janette, bankruptcy is a great tool, if it is used right. It should be a last resort, used after all other options are exhausted (and I always explain those options to people, too).
I’ve filed nearly 100 bankruptcies for people, and I’ve only had a couple of people who I thought truly didn’t want to pay their debts.
I have a lot of people who have been making payments on cards for two or three years, at 30% interest, and haven’t made a dent. They’ve paid the principal off about 5 times over. I don’t feel bad filing bankruptcy on those cards. I also have a lot of debtors who voluntarily repay creditors (yes, you can do that) such as doctors, dentists, and other local people they know they’ll deal with again.
Just my two cents…
Wow, you got royally stiffed. Although I’ve been a renter as well, I do agree with you for the most part. There’s a desire for stability in people who are home owners that you don’t see in some renters.
Prior to my ex going through bankruptcy about a year ago, he also stopped making child support payments for more than a year. He didn’t realize that child support isn’t included in a bankruptcy so I won’t be stiffed as you have been. But he also owes his 80 yo mother over $75k, I’m sure she won’t live to see it.
It just appears to be the mentality of many people who choose – unless there are very unusual circumstances – to use bankruptcy as a way of getting out of paying for what they’ve received. I’ve only known half a dozen people that have declared bankruptcy, but every one of them racked up their debt as much as possible before filing. A couple of them quit their jobs as well. It’s mind boggling.
I guess the moral of the story is to do your due diligence and don’t assume that people are either responsible or ethical.
Thank you, Shara, for putting a human side to creditors. I come from an entrepreneurial family and growing up with a small business, I have seen this rationalization more times than I can count. Although I still believe that most people do the right thing, there are some bad apples that ruin it for everyone. Best of luck to you getting back on your feet.
I am disappointed that two people from such humble beginnings would make a blanket statement
“renters rarely have clean records or most of them wouldn’t be renters.” My inside voice is cursing your arrogance right now. You know why I rent? I make $32k (Canadian) a year and I can’t even buy a trailer 50 km away from the city for under 90K yet I have no debt, perfect credit and lots of savings. Despite all the problems you had with renters, you should thank your lucky stars that you are in a position to own not one, but two houses.
Excellent post about the consequences of bankruptcy for human creditors. However, I too found the statement about renters’ records to be unfair. Many of us who rent never wanted obligations like buying/repairing/replacing appliances, roofs, or paying property taxes. We’re perfectly willing to pay for someone else to worry about those things and we care for our apartments like we care for our own property. We have excellent credit, emergency savings, and retirement accounts. Just like choosing or not choosing marriage or children should not define the person, the choice to rent and not buy should not define me as a deadbeat.
I will stick up what she said about renters rarely having clean records. Part of it depends on the area you live in. I was discussing our investment property with my cousin, who also has units, but it a different area of the country. His criteria for renting to someone was far higher than mine because it makes more financial sense to rent in his high cost of housing state than mine. Sure there are people with great records, but in my area of the country they are greatly outnumbered by those that whose records are spotty, and you want to ask yourself how long you want to wait hoping for that better tenant. We have had our house for two years, and had two leases on it. Both sets of tenants had credit issues, the first set were 22 year old tattoo-covered kids, three had no credit to speak of, and one was paying off a mountain of debt that he said his father had incurred in his name. The next tenants had a divorce-related bankruptcy, some small unpaid bills that they said were fraudulent, and a few other red flags that we didn’t pick up on. The first set were great, we had a few pet issues, but they were pretty much model tenants and I wish they could have stayed for years and years. The second set stopped paying rent after 5 months, told me they would move out of their own accord after 6 months, finally left at 7 months and left an APPALLING amount of damage. Both sets of tenants were completely pleasant and friendly, but I realize now that one set lied to my face almost every time I spoke to them. It cost me a third of what it cost these people, and I am thankful for that. I agree that the common perception of renters as low quality people is unfair, and good or bad credit doesn’t always give you the complete picture. There are many people hammered by a divorce-initiated bankruptcy will make great tenants, or my poor tenant who I’m guessing is still paying the $10,000 of debt his father dumped on him while he is going to school and working part time. The problem is that for those people, the risk of renting to an unscrupulous tenant is far greater than the reward for taking a chance on the guy with poor credit that will be a great tenant.
“Renters rarely have clean records or most of them wouldn’t be renters. No renter is perfect.”
I’m a renter, but not by choice. I’m not perfect either, but I do take responsibility for my obligations and pay them on time.
After my divorce I wanted to file for bankruptcy because I felt overwhelmed by my obligations and being a single mom. (Consumer Credit Counselors wouldn’t help me either). I couldn’t file because I wasn’t behind on any of my obligations.
I moved into a “more affordable apartment”. I am still here after 8 yrs (only because I don’t like moving). The landlord is as cheap as this apartment complex. Getting him to replace a 30 yr old stove and refrigerator was like pulling teeth. I had to “break” them in order to get the antiques replaced.
“Renters rarely have clean records or most of them wouldn’t be renters. No renter is perfect.”
I would have said older renters or renters with families – there are exceptions, but it is a good rule of thumb.
“Renters rarely have clean records or most of them wouldn’t be renters. No renter is perfect.”
I disagree strongly with this as well. I’m sorry you had a bad experience but not every (or even most) renters are like that.
I rent because renting is much cheaper in my area than buying. I did the math, it would take *28 years* to come out ahead on a house if I never moved. Plus, the houses that I priced out, by the way, were in a neighborhood in Nashville that became a lake due to flooding in May. Yeah…not buying any time soon.
I’d rather leave the risk of flooding, tornadoes, termites, market downturn, a neighborhood just plain going downhill, etc to someone else. It doesn’t make sense in my mind to buy unless you have the resources to deal with those risks, ie, a you’re a REIT.
+1 here for the renter-by-choice-thank-you-very-much category.
My sister and brother-in-law thought it would be a good investment when they were first married to buy some trailers and rent out. Unsurprisingly, it turned out to be an awful decision, as many readers can imagine.
Thanks for sharing your story Shara, I think that’s why so many readers here have been annoyed by the casual attitude some people have towards bankruptcy. A bankruptcy doesn’t make a debt vanish into thin air, a bankruptcy means that someone else had to take the loss. If someone doesn’t pay a hospital bill for example, the hospital passes that cost onto all of the patients and insurance companies that DO pay their bills. If someone doesn’t pay a department store debt, the store might raise the cost of its goods. In this particular case, Shara took a big loss, otherwise we’re all paying for it in some way or another.
Another scary story of people gaming the system to stay in houses can be heard in Act II of this recent This American Life show, “Held Hostage”
http://www.thisamericanlife.org/radio-archives/episode/409/held-hostage
amazing and scary, makes me happy I’m a renter – Thanks for the great piece Shara!
I’m glad to see this article. It’s often hard to understand the process for a creditor, or think of them in human terms, even if you’ve met them face to face. I’m glad also that you kept referring to your renters with names (fake I hope) rather than something like “our renters.” It’s important in all situations to remember who you are dealing with in human terms. Even if you are trying to kick them out of the place in which they live. Too often people want to strip humanity from business, but you can’t do that. Your doing a horrible thing to someone by kicking them out of their home, but they are doing something horrible to you by staying there without paying their fair share. If everybody realizes the human side of their actions, then nobody gets emotionally hurt. The problem is when people start to demonize the people they do business with that aren’t being cooperative. In this case, that’s what Peter and Tara did with you. They saw you as the big bad landlord who just wanted their money, and thus, they had no problem taking from you what they wanted. It doesn’t appear from the article that you ever did that, and I’m glad to see that. You saw them as people, and even excused their actions at one point. This is a great piece not just on the human side of creditors, but also on how to handle a bad business situation with humility and respect.
I have to disagree like several others with the bad renters line. We are a military family and we have been moved 6 times in 9 years (most of the time distances over 1000 miles away each time). We need to rent for obvious reasons. We are both graduate school educated, I teach personal finance at local colleges, and we have 3 dogs (2 chihuahuas and 1 boxer lab mix). We have 700+ scores, we provide copies of 2 years of cancelled checks showing we pay rent on time, we provide photos and contact info for previous places we have been, and an asset list to show we have cash to pay our expenses for a year without working. We will be getting stationed over seas till retirement in about 2 years, at which point we will be living in military housing. So when we do come back to the states, we will have been renting from someone for almost 20 years. I don’t think that makes us bad people. I hate to think of moving, cleaning the house, throwing away junk, mowing the yard one last time, etc, AND then have to worry about staging for buyers, finding a realtor, deal with buyer inspections, offers, counter offers, etc etc. I am thankful I am a renter on move out days! We have always gotten our deposit back, and very often left the place better than we got it. We painted the inside (with lanlord permission) of one house a soft beige (because the bright orange in our bedroom was killing me). We routinely have the carpets cleaned both when we move in (if it had not already been done) and then when we leave. We hire someone to do a deep clean after we leave and after we have cleaned just to be sure. So there is a group of people out there who are good people but just alittle too “transient” shall we say to buy a home and put down roots. And after I have read so many stories on here, I may never buy a house at all because of the major debt and obligations involved. We enjoy our freedom and seeing various parts of the world and buying a house would definitely slow that down.
this could be my landlord story also.
– months and $100’s to get the order – in my state, you can’t get rid of people with certain age kids without a “waiting period”.
$1000’s for the police to supervise the eviction, the movers to move the stuff ( I can’t “touch” the renter’s stuff legally in my state) and the locksmith.
and several more thousnads to repair the weeks of nonflushed tiolets , the hundreds of nail holes in each wall and the quarts of motor oil poured on every available surface of the house. Oh and the lawn- where the renter came by the first night after the exiction to ride his motorcycle around for a while.
I would never recommand anyone but a landlord- one bad experience is enough to wipe out any profit you would make for several years.
Thank you for sharing another perspective. Very well-written.
Keep in mind that some people are renters by choice, not wanting the hassles that come with ownership, though the latter might make more sense financially. For many, like myself, we rent because we never stay on one area for a long enough time to warrant ownership, yet we pay our bills on time and keep the place nice (for the most part…). Choosing the right renters seems to be the hardest and yet most important part of the process..
“Renters rarely have clean records or most of them wouldn’t be renters. No renter is perfect.”
When you say something like that, you shouldn’t wonder why people hate creditors like yourself. Not everyone rents because they have to. A lot of people rent because they don’t want the responsibility of ownership, or they move around a lot because of their work. Don’t criminalize people simply because they rent.
Let’s not forget that there are a lot of young people who are recent college grads that don’t have the credit history to think about buying a place yet. It’s like the age old dilemma — you can’t get the job without the experience, but you can’t get the experience without the job. Painting all renters with the same brush is insulting. I bought a place just so I wouldn’t have to deal with landlords with that same mentality.
Like several other commenters, I take issue with Shara’s claim that “renters rarely have clean records or most of them wouldn’t be renters”. During the editing process, I warned her this statement would be controversial. 🙂
My own feeling is that there are many many reasons to rent, and while a large portion of renters may have problems, I doubt that “most” of them do.
Ditto #28 Alex.
In fact, it was our landlord who screwed us after our last move. He ignored our requests to fix things while we lived there (leaky toilet, etc) and then charged us for them after we moved out.
I’m very sorry you had to experience that.
I was a renter for 10yrs and a landlord for 8. Although I’ve had a few close calls with bad tenants I realize reading your story how lucky I’ve been. Yes, I believe it’s luck that I’ve not had a nightmare tenant.
I was one of those renters that left the place cleaner than I found it and had a couple landlords that kept the deposit anyways. I got smart and at the initial move-in took photos and did the same at move out. I never had a deposit held after that. I think just the fact the landlord saw me doing it gave him/her the message not to screw with me.
I do the same thing with my renters. We sign the lease at the unit and than I take photos and email them off a set so they can refer to them at move out. I also tell them that I DO NOT want there deposit so please clean the unit so I don’t have to hire someone to do it.
Good luck!
Thanks for sharing this story Shara! I did find your generalization about renters a little silly — there are lots of reasons why people with great credit rent:
– Frequent moves to new cities for career advancement (per alex above)
– A stable but unmarried couple not ready to commit to a joint investment
– People who recognized that the US was in a housing bubble and were smart enough to sit it out!
– People re-locating and (smartly) renting to know the area before buying
– People who lived in cost-prohibitive cities (NYC, SFO)
– The many people who don’t fit the recommended “Are you going to stay in this location for 5+ years?” test (and are smart enough not to over-extend themselves)
– People who simply don’t want the burden of a mortgage
Another amazing story of problems with owning real estate was Act II of the recent This American Life episode “Held Hostage” — highly recommended (and scary!)
“Renters rarely have clean records or most of them wouldn’t be renters. No renter is perfect.”
Another renter who has never been late on rent, has savings and good credit, and has always taken care of my residences. I’ve moved cross-country several times for my job in the 9 years since graduating college.
I think this attitude, that after some point being a renter means something is “wrong” with you, is a big part of why lots of people my age rushed to buy houses, some that they couldn’t afford, and now find themselves in an untenable position once the housing market crashed. Even if they can afford their house, I have friends who now want to move for a job opportunity or to a different area that better reflects their current lifestyle and they are stuck in houses that have lost a ton of value and that they can’t sell. Maybe if renting hadn’t been vilified there wouldn’t be so many foreclosures and bankruptcies today.
Yes, my husband and I eventually hope to settle in one place and purchase a home, but it certainly won’t be in our current city. And, “gasp”, this fall we’ll even begin to raise a child in a RENTAL house! The horror!
UGH! So sorry you had to deal with all that, and thank you for illuminating the “other side.” Not all creditors are corporations, for sure.
Holy cow – this is quite a post. Thank you for submitting this side of the story. I’m sorry, Shara, that you went through this – unbelievable.
I rented for 15 years throughout my 20s and part of my 30s and then became a home owner through marriage. Both renting and owning have been fine and each satisfying in their own ways – one offered freedom/mobility and the other has offered a deeper connection to an area/way of life. I never felt any social stigma for renting – heck, I was just proud to be making it on my own. I really don’t take much issue with the renter/clean record statement Shara made – I understand her point,and it’s probably coming from her personal experience. Let’s lighten up 🙂
What amazes me about people like the renters described in this story is that they likely wouldn’t THINK of shoplifting or holding up a liquor store! In my opinion, the behavior described is simply stealing from the landlord. Ditto using a credit card to purchase things for which one can’t pay. I am appalled by those who rationalize theft at any level.
Another +1 for the renter by choice category for me too.
I am a 25 year old single woman and all the tasks required for taking care of a house are not for me! Plus, I don’t see myself in this town 10 years from now so it isn’t worth buying.
I would like to say that I’ve run into more issues with bad landlords than I’ve seen landlords with crappy tenants. (Think 5+ days to call anyone to fix my refrigerator after I notified them…then it was 3 more before anyone could come).
Thanks so much for sharing this story. My husband and (until recently) I work for a financial institution and get so tired of hearing that it’s “okay” or “a smart decision” to not pay a bank back. The bank has real employees with faces as well who will get laid off or not receive well-deserved pay increases because too many people are walking away from their debts. Several of my friends have lost their jobs due to cutbacks as a direct result of this wave of people who have no sense of obligation. All creditors have faces, even those “big banks” have real employees who are impacted.
P.S. Well written article and a great read, but commas and periods go INSIDE quotation marks.
As someone who has entertained the idea of being a landlord – I have to wonder about renter horror stories. Isn’t it the landlord’s responsibility to screen potential tenants (ie check references, credit etc?). The landlord certainly has the right to say ‘no’. And if the a landlord is desperate enough to rent to anyone, then isn’t that a red flag that perhaps they should get out of the business of landlord-ing?
I appreciate this post – and how it highlights the human side (of creditors and debtors)… and it gives me a healthy fear of becoming a landlord. It is a business, and there should be a logical way to identify and market to your ‘dream tenant’ – just as you would identify and market to your target customer when you run a business.
We’re renting a house because we’re in a town temporarily. The folks we’re renting our house to have not given us any trouble (yet… there’s a month to go). They are also in that town temporarily. Buying makes no sense.
We did have offers from very sketchy people with no real income to speak of, but we turned them down. Thing is, lots of other landlords also turned them down. It isn’t that there are more of them, but that people who are great renters get their first choice rental and people who aren’t get turned down over and over.
We rented in Boston because when we started we didn’t have a down payment even though we had steady income and we were only going to be there at most 6 years. By the time we had enough for a down-payment we weren’t going to be there much longer and would far rather rent near work than buy and have to commute. (And even though 0% down adjusted rate mortgages were the thing to do back in the day, we were far too stable and old-fashioned to do such gambling.)
Out in Los Angeles, it seems like it’s the renters who are doing fine financially and the buyers who are the ones declaring bankruptcy and foreclosing, among the people we know (virtually… people don’t discuss this stuff IRL).
Like others said, *maybe* renters are no good on average in areas with a low cost to purchasing and no big universities. But that blanket statement doesn’t cover the places where most people rent.
Some story. Well told. Informative.
I was a renter for 4 years. I look on those days fondly as they were really nice places, well kept and inexpensive to live in.Owning a house now, I’m much more appreciative of the trust, money and work that went into managing those apartments.
I’m sorry this happened to you. Breach of contract in any situation is awkward, rentals more so I think. The whole multiple bankruptcy is a new twist.
Shara, thank you for sharing your story. For me reading it, I felt a sense of kinship for what you went through, as my husband and I have gone through the same, so it’s not as uncommon as people might think. I’m sure there are good renters out there, but we haven’t seen any. In the four brief years that we’ve owned our “flip gone bad,” we have had to put (and I am not exaggerating), thousands into the home to repair tenant damage (we’re on our third). Last year, our rental cost us almost $10,000 in repairs and lost rent, most of which was paid for on a credit card. We now have a Section 8 tenant and the state pays us pretty much 90% of market rent on time every month. We have another rental in Mobile, Alabama and our tenant pays less than market rate rent LATE every month, but we get it. Today is the 27th and we are owed half the rent from June (which is in the mail, I’m told). Both properties are fully mortgaged and under water, so there’s no getting out of it. If I had to do it again, THERE IS NO WAY I would ever be a landlord. It is not for the faint of heart, and definitely not for the soft-hearted. Shara, if you can get Section 8, it is well worth the hoops you have to jump through.
Thanks for the interesting story. My husband and I have thought about owning rental property many times, but it is stories like these that make us pause. Perhaps the solution is a good management company. I’m curious if anyone has experience with management companies, and whether such companies avoid these kinds of problems.
Sheesh. I really liked this article. It’s eye-opening. A lot of people think “Ah, well, if my house doesn’t sell I can just rent it out.” I appreciate seeing the other side of this. I also had a friend in a similar situation. She didn’t have the thousands of dollars (and was trying to deal with a property hundreds of miles away) and it ended up destroying her credit.
I think the renter comment has been blown out of proportion. Of *course* the people who choose to read GRS and rent (I’m one of them, by the way) aren’t typical renters. But I know a lot of landlords who would agree with this characterization. It also depends on where you choose to have your rental property. In a high-income, expensive housing area, renters are going to have better credit. In a low-income farm town or industrial town, many renters are going to be…well, scary. (I have lived in both types of areas and speak from personal experience)
Anyway, great post and it really makes you think about some of these “investment opportunities” that people tout so often. I’d love to see more stories on investments that didn’t work.
-Erica
I have a question: back in my younger teenage days, I signed a one-year lease on a house that I knew I wasn’t going to stay in for more than three months–a summer house. I know that I could have been taken to court for breaking my lease, although I did give out one month’s notice on my leaving, left the house respectably clean (cleaner than when we moved in!), and did not ask for my security deposit back.
My question is, how much financial harm am I likely to have caused the landlord? In a town like that one, there are ALWAYS renters, and I moved out early enough that there was plenty of time to find one. I even put up an ad on Craigslist. I don’t want to have been a jerk.
I think it’s important to remember that paying your debt isn’t just good for you, but for the people you owe money to as well. Most people realise it more easily when the peaople they owe money to are family or friends, but that’s pretty much always the case.
Even when you know the person, though… I remember lending money to a friend who really needed it. It was a thousand euros, which was a huge amount of money for me, and technically less for him since he earned so much more.
He never paid me back, and objected that since I could save up the money in the first place, I didn’t really need it.
While this is pushing the jerk level, a lot of people assume that if you have money in the bank, and they don’t, you’re that super-rich person… Even if you only earn a fifth of what they do and can only save due to sacrificing things. I think it’s important to keep things in perspective rather than always put yourself as the victim and the others as “meanies”.
For instance, it was foolish of me to lend so much to a friend rather than help him make smarter choices. He made the same mistakes again and regardless of how jerkishly he acted, he genuinely couldn’t pay me back without changing his habits. I did learn an important lesson there, while he’s likely still in debt (even if you exclude his debt to me). I’m in a better situation than he is.
I also serioulsy resent the line, “renters rarely have clean records or most of them wouldn’t be renters. No renter is perfect”. Have you seen housing prices in San Francisco? Even with a professional job and a credit score of 750+ buying is a daunting prospect leaving only renting. And you may be goof landlords but I have my share of shady ones. There was the one that lied about why someone needed access to our unit, he claimed it was for insurance but instead sold the place. Then there was the idiot property manager who couldn’t fix anything and flooded our bathroom when trying to replace the valve on the tank. Or the place where the floors were in bad shape and the landlord said they would refunahe before I moved in. They were, very cheaply and with cat hair embedded in them. Or the place the landlord refused to buy fire alarms for even though it is the law. Yes you made a financial mistake but outright condeming renters is in poor taste.
This guest post is my favorite so far. I’ve had similar issues (but not to Shara’s extent) with my tenants, whether they have good credit scores or not. I’m down to one rental property and as soon as the current mortgage term is up, I’m selling (I refuse to pay the mortgage penalty) and getting out of the landlord business.
However, I do have to disagree with “renters rarely have clean records or most of them wouldn’t be renters” statement. A number of new hires in my department can’t buy a home even though their starting salaries are in the $80k range because they have to be mobile in the first three years of their careers.
Being a landlord is very similar to owning a bar/restaurant in that many people think they can do it part-time, but to be financially successful you really need to make it a full-time job and have a constant eye on things.
@Avistew (#54) – I feel for you. I, too, learned the hard way to never lend money to friends. Especially, ones who call you cheap for brown-bagging your lunch, having people over for food and drinks instead of blowing your money at the bar, and annually repairing your 15-year-old sandals with Super Glue (actually, this is because I LOVE those sandals and they have molded perfectly to my feet), even though you explain to them those habits helped you pay off your home in less than four years and still indulge in the occasional Kal Gajoum or Burberry.
Of course there are plenty of people with clean records who rent. There are also people who look bad on paper who are great renters. But please, until you have rented a place and had to weed through a dozen applicants with varying stories of bankruptcies, evictions, lawsuits, or just plain low score please don’t tell me how great MOST renters are. As a landlord we see the other 19 out of 20 people who suck.
And for those of you who say you rent because you are mobile, that doesn’t mean you are a good renter, it just means you take care of the place. There is a typical vacancy term between tenants that the owner has to cover. If you rent for 12 months and then leave and it’s vacant for 1 month you just cut the average rent the landlord received by almost 10%. And a month in many areas is VERY optimistic after things are painted and cleaned.
Excellent post! Shara’s characterization of renters is completely accurate in my experience. Over the last 10 years I’ve owned as many as 6 rental properties (currently 4) and of the MANY credit checks I’ve run, 60-70% of the applicants have had bad credit. However, it is not surprising that GRS readers are not in this group! I suspect many of the readers questioning this statement have nothing more than their own rental history to base their opinion on. I too was a (good) renter at one point and had no idea what the pool of renters looked like overall or what people were capable of until I became a landlord.
Of course, this doesn’t mean all people with bad credit are destined to be bad tenants — many of my tenants have gone through a bad financial patch and are ready to turn over a new leaf! That’s why I base my decision on many things (I find a stable work history and good employment references to be a better indicator of responsibility), and I never hand over the keys without the first month’s rent and a full month’s security deposit (cleared by the bank).
I’ve had many bad tenant experiences (I once had to have the sheriff physically remove tenants also), but have learned (and made adjustments) from each. Unfortunately, there will always be people who will try to work the system or rationalize their bad behavior — like the reader above (#25 Kathy B) who rented a unit knowing the appliances were old, but broke perfectly good, working appliances because she felt she deserved new ones at the owner’s expense because he was “cheap” (I also don’t replace appliances that work well just because they are old). While I’d love to — I don’t have new appliances at my own house either!
Overall, my experiences have been more positive than negative and have proven to be good investments, which is why I’m still a landlord, but it is nice to know I’m not alone! Thanks Shara!
Are all renters bad? That would be impossible.
Are many undesirable for a variety of reasons? As a landlord of many years, I would have to say the answer is a resounding yes.
Which brings me to a big hole in this otherwise informative article: did this landlord have an functional screening process in place? The author indicates she used a professional screening service–obviously they failed her completely.
First rule: I always do my own screening which consists of a credit report, personal phone calls to former landlords, current employers and the major local utilities such as electric, water and phone. This process takes at least an hour or so, but tells the whole story on a potential–there is no way these people had a good record with the local electric or phone company; and their former landlord probably would have said it all with a simple: “no comment,” which is landlord speak for “run for the hills.” Note: if there is any excuse given why the above background check information cannot be provided by the prospective–run for the hills.
Second rule: have an substantial security deposit in place. I know they tried, but they took an excuse instead of money. If the money is not in your hand before the first day of tenancy–the place stays empty.
Sorry. But most renters are a rough crowd–they see the landlord as the enemy, and their viewpoint is always biased in their own favor–witness every comment to this article made by those who rent. If the renters in the article were just “hard-pressed folks” as some of the readers claim, how do you excuse the fact they were cheats, liars and outright thieves in more ways than one?
Those who rent can be good people, but they must be cherry-picked from the crowd, and I know from long experience that even the finest of tenants unfortunately seem incapable of ever seeing a given situation from a landlord’s point of view.
Shara,
This is a good lesson you’ve shared with us – sorry you had to go through it all though. I’ve been a real estate lender for 12 years and in finance for 25 and I absolutely agree that creditors get a bad rap when it comes to individuals filing for bankruptcy. We always feel sorry for the only the individual and forget the creditors, and I don’t mean the big banks per say, but small businesses and individuals such as yourselves.
Using a service such as a management company and letting the professional do the thing they do best, makes sense. You have to spend money to make money.
My husband and I rent partially because affording a home would be a stretch and partially because we like not having to worry about all the things that come with a house. We’ve got credit ratings over 800, have never been late with rent (usually early), and are very careful to leave a place as nice as we moved into it.
On the other hand, these renters sounded like there were red flags all over (doesn’t a credit check show previous bankrupts?). Bad renters suck for the rest of us, too, by giving a bad reputation to tenants, because who is going to remember the good ones when the ones that break things or steal or pay rent late (or never) leave such a terrible impression behind?
(Also, I have a few bad landlord stories… Not every landlord is perfect either, or timely about things, or honest. I far prefer to deal with rental companies than people because of a couple bad experiences).
I guess I was bothered by the blanket statement about Shara’s characterization of renters because it feels like an excuse. Its terrible what those people did to her, but there were HUGE red flags that she ignored. The fact that they told her they were “in bankruptcy” but she didn’t check the court records (something you can do for free) to determine if they had actually already filed, and she let them rent without paying a deposite despite knowing they were in bad financial straits. From the beginning it should have been clear that these people were not good renters.
I don’t know what area she lives in, but I know many good renters who have good credit, good references, and good work history (including myself).
Excellent post.
As a landlord, I had a similar experience with a tenant who left my house with a dog locked in one room and dog crap all over the floor… house wide open and appliances stolen after I sued him for the rent that he was several months behind on.
From now on, I rent to Section 8 tenants only, and I have a very good one in there right now. I have to keep an eye on the property to make sure they treat it well, but at least I don’t have to chase anyone for rent.
I have seen a lot of people with the attitude that a landlord must be rich, so it’s ok to rip them off… or they must be mean to evict someone for nonpayment of rent, unheeding the cries of the tenants’ hungry children.
Puhleeze. This is a business. If you don’t pay your electric bill, it gets cut off, no matter whether it’s Christmas or Labor Day. If you don’t pay your rent, you get kicked out of the house. As a landlord, you have to be hardnosed about this, because there are a million Peter and Taras out there…. and even more people who are not quite as sociopathic, but will put their rent bill at the bottom of their priority list, because they think you will be a nice guy. Uh-uh.
Great post – thanks for sharing this perspective.
I think it’s disgusting when people are casual about bankruptcy or act like they are entitled to it and maybe even doing something good. Bankruptcy should be reserved as the last option for truly desperate situation. And the person filing bankruptcy should feel the full regret of having left others with his/her debts.
Bankruptcy has victims. Most businesses in American (who are creditors) are small businesses. If you bankrupt on them, you’re legally stealing from members of your community. Most landlords are also individuals, and many of those are on the edge or middle class. And even if one files bankruptcy on debt owed to a large company, you’re still forcing others to pay what you owe for your poor choice (even if the institution did enable those choices).
My grandparents rent a house. The rent plus social security is all the money they have to meet their basic expenses. I would consider anyone going bankrupt on them as having stole from low-income 87 year old people, and that would be pathetic no matter the renter’s situation.
This was a great post. I appreciated hearing Shara’s side. We are moving to a new home, and will put the former on the market. If it does not sell, we plan to rent it. We were hesitant, for fear of a bad tenant, but Shara’s post really spells out a worst case scenario beyond what we feared.
We have a distant relative that bought a house, nearly went bankrupt but was bailed out by an Aunt. He walked away credit intact, and later the Aunt, who was not as secure as she should have been, filed bankruptcy. Of course other family members (not the guy) are now helping the Aunt. Meanwhile, the guy buys another house, and then short sells it. Supposedly that hurt his credit score, but starts to fade after a year. So he is ready to buy a new house! If he gets another mortgage my head may explode!
I am shocked at the lack of personal responsibility, both on my relative’s part and on the tenants in the story. There are people who truly need help and there are those that game the system and take all they can without worrying about who will pay. Sometimes those paying have a human face, like my relative’s Aunt or Shara. Sometimes it is a company, but then, in the end, those of us paying our mortgages, credit cards, doctor bills, etc pay. (of course, the Aunt in my story is on both sides- due to her kindness/generosity she was a victim of my relative’s debt, but that in turn led her to default, sending her debt onto others…no good deed as they say)
@Martin #63,
“I have seen a lot of people with the attitude that a landlord must be rich, so it’s ok to rip them off… ”
Yes, that’s the attitude that I see so much now. Like Shara, I did not grow up rich, I have no trust fund. My husband and I balance our budget and live below our means, as so many on GRS do. Because we sacrificed for so long, we now have some money (by no means rich in my mind, but we are on a good road for retirement). Others who overspent and are now broke, look at us like we “owe” them, or that its ok, we are rich because we can afford things like a rental property. Whereas, to us, the rental will be a part of our retirement plan and its costs are carefully calculated in our budget.
It’s funny how Shara took issue with Tara because of Tara’s passing the buck on the rent responsibility, then Shara blames her own husband for the loss of suppplies taken by the renters.
Still, this is GREAT information, a heck of a read, and I learned a ton from it. The last part about where Shara and her husband came from, her husband’s father being a drug dealer/user, etc….I think this could have been handled more deftly. It’s helpful for us to know you come from humble beginnings, but the defensive tone doesn’t seem necessary, and you don’t have to justify your actions. You were far more civil than most would be.
This article is especially interesting since we just bought a rental property out-of-state. This would be interesting to read more about as well. We are working with a very solid management company, we purchased from a very reputable group, and we feel confident that all will work out well. Yet, this reminds me that anything can–and will–happen.
Thanks for sharing your experience.
As a landlord with 17 years of ownership of small apartment buildings allow me to throw in my dime of knowledge. You think that now that you have turned over the managment of your property to a professional managment company you are in the safe zone. Wow. In my opinion you have just stepped into a big pile of …. I find that most managment companies will make the potiental tenant look and sound great just because they don’t want to have to do the work of showing a property to as many people as it takes to find a good tenant. They view their job as filling the place and moving on. There is a reason that you see them at the courthouse all of the time, it is called choosing tenants poorly.
I have found that I am a much better judge of the people that I want in my place and you knew when you put certain people in your property that they may be a problem, and sure enough they were. How about you screening the people until you find a proper match. When you do this the problems become much less of a problem.
Live is a series of choices and if you don’t want to make the hard, but good choces you will get the result of your poor choices.
Choose well to get well….
These renters are putting the Dunning-Kruger effect on display: they are too dumb to be aware of their own incompetence.
http://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect
Several commenters have stated that a management company would have eliminated Shara’s problems. This is not necessarily the case.
My parents rented out their property for 4 years while they were out of country, using a property management company that had come highly recommended. Two sets of tenants and a moderate amount of damage later, the property manager and 2nd set of tenants were pointing at each other (and sometimes blaming the 1st set of tenants). My parents had to sue the property manager to recoup repair expenses.
Most people who buy don’t stay more than 5 years either… that statistic is part of how so many people were convinced to take exploding ARMs.
In places with strong rental markets, one generally has to pay two out of three of realtor fees, deposit, and last month’s rent. Many places take the cost of paint etc. out of the deposit. Weaker rental markets won’t be able to charge as much, but that’s because they’re weaker markets and not as good a business decision for landlords.
The expected cost of vacancies is priced into rent. Long term tenants also tend to have rent below market price, precisely because the cost of vacancy is priced into rents. It’s ridiculous to say that someone who leaves after a year’s lease is up is a bad tenant. If it were a longer lease, the monthly rent would have to stay below market. (And when we were long-term renters we successfully negotiated no rent increases from our landlords every year that they tried to increase it.) It should be a wash.
It sounds like the only kind of tenant who isn’t a “bad tenant” is one who begs to pay higher rent than the risk-adjusted market rate and never asks for anything. Home owners aren’t exactly chomping at the bit to pay higher prices for their homes either.
On our rental we said no to a couple who offered to pay more than asking and 2 families that offered to pay asking price with no actual source of income. We instead went with someone who bargained for less than our expenses but had been checked out by the US government, had a fixed source of income for the year, a large amount in savings, and excellent recommendations from current and former employer. We also have a management company taking care of things. We were willing to take the cut in rent for that security, just like the people we are renting from were willing to accept $300/mo less than their asking price because we’re good risks. The risk is priced into the monthly rent.
“Renters rarely have clean records or most of them wouldn’t be renters.”
Wow, what incredibly discriminatory statement. My grandparents owned a 4-unit apartment complex when I was growing up so I am aware that there are plenty of bad renters out there. Having had my grandparents, parents, and myself having subsequently been renters for periods of time over the past 30 years, however, I know there are plenty of renters who have clean records and are still renters.
Reasons for this? Unsure how long you want to stay in the city you’re living in (or will be able to, if your job may require you to move), don’t want the time & hassle involved in keeping up an entire house and surrounding property, not being able to afford to purchase a property in the area you want to live in at this time (which does not equate to financial insolvency), not necessarily viewing home ownership as the best investment of your money.
What a moving, well-written and informative article. I’m sure a lot of us had given no thought to the plight of the creditors before (I am ashamed to say that I was always on the side of ‘the little guy’ without even knowing the full story).
@JD: thanks for making this guest post happen. Well done and very useful.
Thanks for the article! Quite eye-opening.
Shara,
Thank you SO much for sharing your experience! My husband and I have been landlords of 5 apartments in 3 houses for almost 10 years, and we had NO idea about what could happen if one of our tenents filed for bankruptcy while we were going through the eviction process!!!
The eviction process is difficult enough, (our case was thrown out once because we signed in the wrong place, which meant we had to refile, pay a sherrif $50 to serve the tenent again and lose another month worth of rent!) I don’t understand why the court seems to put more emphasis on protecting the delinquent renter than the property owner!
I also loved your term, “metal gymnastics.” Between being a property owner and working in human services, the justifications people make for not doing what they are supposed to never ceases to amaze me. One of my favorites is when tenents says they paid “their half” of the rent, so they shouldn’t be evicted. (I’d love to try that one with our mortgage company!!!) Another favorite is a tenent who was mad at us for not cashing his check until the end of the month, because he went and spent everything he had in his account by then, and had to pay the bank overdraft fees to cover his rent check. So HIS irresponsibility in not leaving enough money in his account to cover his rent check makes ME the bad guy??? Unless you are a property owner, you would not believe what people consider to be ok. Many people DEFINITELY believe that if you own a rental property, you are wealthy, and therefore the bad guy. We actually use our business name and the tenents think our husband is just the property manager .. that way he can listen to everything they want done, (you wouldn’t believe the things they want, either .. my favorite was a tenent who wanted the hardwood floors re-done, when her kids kept breaking windows and putting holes in the walls) and he can say that it’s not up to him, but he’ll ask his “boss.” This way the faceless boss is the bad guy, not my husband.
It’s important to note that not ALL of our tenents are like this … we’ve had some wonderful, responsibe tenents over the years .. one woman has been with us since we first bought the properties. And we do work with our tenents when they fall on hard times, IF they are making a sincere effort to work with us. We’ve had surprisingly few evictions over the years, because we can usually work with people to volunterily leave by doing a “cash for keys” (which is when we offer to give them half of their security deposit back if they are out of the apt, and leave it in good condition, on a certain date.) This may seem counter inuitive .. giving a tenent who hasn’t paid rent money to leave, but in the end it costs less than the expense, time and frustration of doing an eviction … and it gives the tenent motivation to return the apt in good condition, instead of them tearing it up, and taking things that don’t belong to them, (we’ve had people take the globe off lights and the batteries from the smoke detectors) because they are angry and want to retaliate.
Thanks again for your article – we would never had know about how a bankrupcy filing would affect us until it actually happened!
Sharing your experience will definitely help other people not to be taken off guard like you were. We really can’t thank you enough!!!
Peggy
My first home I bought was a duplex; I lived in one side and rented out the other side. This was in my early twenties. I followed my parents lead. They had done the same thing. Fortunately for me, I had them to learn from. I also spent alot of time researching the laws prior to renting the first time. I had actually written a sorta proceedure with the steps I needed to take to evict renters so nothing came as a surprise. After all, this is a business. Poorly run businesses don’t last very long. On top of that, I always set rent somewhat below the area average, and I always checked credit, jobs, and previous landlords. This way, I could pick and chose the best candidate. I was never greedy. I was just looking to leverage someone else to cover the mortgage. I can say that I never had any issues like this.
I’m a little bit cynical, but if you given people space to take advantage of you, someone will.
Thanks for sharing, Shara. Confirms many experiences I also have had. The media and politicians love to portray landlords as the Big Bad Wolves and renters as their innocent victims. Unfortunately, the reality is usually far different.
Shara (#59) wrote: I am not saying that people with bad or questionable credit are bad renters. What I am saying is that most people who seek to rent have red flags.
And I think this is where people are disagreeing with you. “Most” isn’t the right word to use here. “Many” or “some” or “a significant number” would probably have been fine. Still, I agree with Erica that overall it’s a side issue to the article. (Which is why I wanted to excises the sentence in the first place!)
Like everyone else, I think this is a great post that shows a side of bankruptcy that we haven’t explored at GRS much. I don’t think it gets mentioned anywhere very often, and I’m grateful that Shara took the time to share her story. Thank you.
I was a Landlord for a short time and it was a complete disaster. I sold my house several years ago but am still in a court proceeding with an ex-tenant who left without notice. I didnt sue her out of compassion because she was this old lady who was a Refugee but I realize now I should have.
She is now suing me because of a fall in my house. Last time I saw her in court she had a walker which she was literally carrying until she got before the judge. Now we have to go for part 2 of the hearing because she wouldn’t stop talking with all her complaints about me.
She said she has all these medical issues but reading her medical report it states that all her medical problems were issues that this was dealing with before she even stepped into my house.
I know I will win in court but the hassle, the stress and the general expense of travelling, taking time off work and just the fact that she would go to this length is what is making me so mad and sad.
Quite an eye opener and reminder of how south some agreements go. Thanks for sharing Shara & reminding this reader why I don’t really want to go into Rentals. We live next door to a Landlord of several houses in our community & as they have dealt with non paying renters, we have found their tennants searching for them at all hours to make 11th hour payments, yelling over being served, etc. Ugly at times & a real heartbreak while trying to raise 2 kids in a rual community away from big city presssures. Dan#69, you have not been there, don’t criticize perspectives from others who choose by choice to break the cycle. Glad this article was published! Thanks again.
Great post, Shara. Several people in my family own rentals, and this story, unfortunately, is very similar to some of their past experiences. They nearly always have to rent to people with less than stellar credit, though I believe that to be a function of the neighborhood in which the rentals are located, as well as the price of the rentals. If you own rentals in a depressed neighborhood, you are likely to get potential renters with bad credit. They simply don’t have the means to live elsewhere. I have ZERO interest in being a landlord!
Thank you for telling us the other side of bankruptcy. Reading stories defending the other side quickly became annoying, but your story is a pleasant reminder of why we should encourage responsibility – people, who’ve worked very hard, are hurt from people’s feckless choices of slipping from owning up to their mistakes.
Obviously as a renter, I don’t agree with your characterization. But, I also realize that you’re writing that from experience with renters, and in your area, that might be a very good characterization. Thank you again.
TRUE! I work in the mortgage industry and see how people ABUSE the system everyday. It has made me understand that there are some creditors who are ruthless, but I really think there are more people that have no idea of standing behind their word.
Banks may have gotten us into some of these messes, but people were the ones who signed up for the loans. Both are at fault with this crisis…. and in my perspective the PEOPLE more so. Lack of education may be a legitimate explanation… yet still people agreed to terms, regardless of how “shifty” …. and then they come complaining that banks are evil and expect a free lunch. It is a crazy situation to be watching from the inside and made me want to avoid renting a house out… EVER.
“But there are red flags with most people; renters rarely have clean records or most of them wouldn’t be renters. ”
I understand their resentment because of the experience they had with some bad people, but this is just plain wrong. There are a lots of reasons to rent having steady income and clean record – for one, the hosing prices where I live were beyond insane in the times of the boom, and are just returning to the plain insane level now. I understand that being a landlord is not easy, but nobody forces anybody into it. Maybe if there wasn’t so much prejudice that only “bad people” rent or that if you rent there must be something wrong with you, the current situation with housing and people going into insane debts to buy houses they can’t afford wouldn’t be that bad…
Thanks for sharing your story, Shara. We’ve been landlords for just a few years, and lucky so far. DH is the Property Manager, and belongs to the landlording association, so we’ve heard many cautionary tales like yours. I need to point DH to your story!
You’re reminding me why I try to keep the “investment properties” account full!
To Shara’s controversial point about renters with dodgy credit: the person who’s renting our house has bad credit, but is also the single mother of young children who has a solid job with a stable company. Her credit history showed that she always paid on time and in full for housing, car payments, and food, no matter what; her credit problems were mostly for school loans. We’ve had no problems so far (knock wood). So, there were red flags, but DH chose to take the risk, and here we are. I encourage DH to make an appointment to see the house a few times a year, to make sure things are OK. So far, the rent shows up, and the neighbors don’t complain, so . . . (fingers crossed).
Shara, I think you are confusing “most renters” with “most people who apply to rent my house.”
Where I live, almost everyone rents. Your statement might be true in suburbia, or in a neighborhood where it’d be cheap to buy, or in any number of other situations. But I think you’re dead wrong in your generalization.
What I mean is, we “get” that your applicants have had red flags. But all that means is that your house is not the kind of place that people with good credit and steady incomes want to rent. Maybe those people are renting in a different neighborhood, or prefer apartments to houses, or any number of factors. But thinking they don’t exist just because they don’t want to live in your house is pretty ignorant.
And stating that people who move out after their 1-year lease is up are “bad renters” (or not “good renters” as you said) is silly. The person met the terms of the contract. Moving on doesn’t make them bad. If you have people leaving as soon as their contract is up, maybe they don’t like their landlord.
Rent-to-own is just as bad if not worse. Next door, the house was these people’s second rent-to-own (began in 1999). They refi’d in 2002 and put the house in their company’s name. Then when the company went belly-up and filed bankruptcy, they got their church to pay the arrears on the house. They then put it back as a residence. But they still personally weren’t able to pay. Their church has pulled them out three more times over the five years (four times total). The outside hasn’t been painted in twenty years; needs a new roof; the owner’s idea of maintenance is to shoot the squirrels ruining the eaves. The inside carpet is matted with food. It’s now gone thru sheriff’s sale and they are to be gone end of August. Where are they going? To a third rent-to-own. Helllll-lo! Check the courthouse records before you sell to someone who wants “rent to own!” Over the last four years I figure they’ve paid maybe a year of rent. Eighteen years ago, they did the same thing. It’s allllll there in the courthouse records!
@Nicole(#73)- Oh yeah, that “cleaning fee” I’ve been seeing everywhere the past couple years? My current landlord explained it as a way to cover the costs of turning an apartment, but man, did it hurt to pay.
Re: the 12-month lease: I typically move every 1 1/2 to 2 years, and it never occurred to me to feel bad about it before! I figure the places I typically rent from are in big cities and nice but not very hip neighborhoods (with charming seventies/eighties era decorating and appliances), so they’ve got to be used to people “trading up” after the lease runs out. We’re good neighbors and tidy renters who pay on time. If the landlord needs me to stay over a year to make a profit, they’re not charging the correct rent. We all agreed on the term of the lease, isn’t anything longer just icing on the cake?
Perhaps it is the people we see who have red flags. The reason I made a point of that is how many times here I have heard “You should have seen the red flags”. It is really easy to see these flags when you read eight months worth of interaction distilled down to a page and a half intending to highlight the bad turns. In reality very few things are clear cut. People can look good and be awful tenants and people can look bad and be great tenants. I am not making moral judgements on people with red flags, but it’s easy after the fact to claim that from the flags that were raised one should KNOW the outcome would be bad, because it isn’t always. I know we madebad decisions, I always refer to this experience as “Tuition in the school of life”. I think of picking a bad renter like picking a bad stock. I am a lot better for what I have learned from landlording, as painful as it is sometimes.
I was also thinking about the “most renters…” statement today, and I think a distinction can definitely be made about what TYPE of housing one is looking at. This is a single family home. Therefore many single families look at it. Many of the reasons people remain in rentals by choice are for the type of people that aren’t looking at this property.
And vacancy is a consideration for profitability, but not for price. I price my rental at what I can get for it, which may be higher or lower than my expenses at any time (hopefully higher, but there are bad years with repairs, vacancies, and bankruptcies), not at what it costs me. I am fine if someone stays for the term of a 12 month lease and leaves, but most renters don’t think of the cost of turnover. Just because you are clean doesn’t automatically make you good.
I think it’s funny that so many renters take things personally when landlords make general comments about renters. Without renters landlords wouldn’t be in business, and we are always looking for people like you guys describe yourselves. Of course many aspects are adversarial, but ultimately we are dependent on each other. I don’t WANT bad tenants. I am entrusting an asset that is worth a lot of money! I want you to be exactly what you say you are, great honest people who always pay your bills on time. But I’ll pick stinkers and make mistakes. I’m human. But wasn’t that my point? 😉
@Carol
Rent to own is a GREAT point. It is a completely different animal and one should NOT GO INTO IT LIGHTLY. In my state you don’t evict someone in a rent to own situation. It is considered closer to a financing situation and is closer to a foreclosure than eviction. In a rental situation the law assumes the house belongs to the landlords and renters are simply using it. In a rent to own situation the house is considered the renter’s property. Instead of a 30 day best case eviction cycle you are looking at months (a friend of mine went through the situation around the same time and we traded war stories).
If vacancy isn’t a consideration with price, then why are month-to-month leases more expensive than 6 month leases and 6 month leases more expensive than 1 year leases? The market prices it that way no matter what any individual decides to do. You may be a price-taker but that doesn’t mean that vacancy rate isn’t included in the price. That’s the invisible hand at work.
Nasty horror story.
I think its a good argument for hiring a lawyer from the start. A lawyer would have been able to navigate the legal system better and resolve the issue faster at less total expense.
Unfortunately I think the comments about renters undermine the article, and the clarification really doesnt change it. The fact that I have to move after a year doesnt make me a “bad” renter. If that is your perception, then you probably should not be renting. As the wife of a government employee who had to move, we always payed our rent on time, left the house better than we found it, gave two months notice and so on and so forth. As far as I am concerned, that makes us good renters. If you really think that in order to be a good renter you need to stay for multiple years, you probably should not be renting I expect. And secondly, as others have stated, relying on an angency does not necessarily improve your life as a landlord. Been there and done that-I was renting out a primary home to tenants will iving in a rental home (with landlords who were happy to have me and did not care that I was there for only a year).
@Julie (#51)
We used a property management company when we moved and rented out our previous primary residence in 2008. The company was a referral from our real estate agent. They definitely took the time to take care of the house, which I appreciated. The tenants were wonderful. We decided to sell the house in February, which coincided with the tenants planning to leave anyway. The real estate agent said she’d never seen tenants who kept the house so tidy for showings. None of the other agents who showed the house realized a tenant was in there. Sounds like we got lucky or maybe it was the property management company’s screening process. Do some research before selecting a property management company–online reviews from tenants, ask real estate agents, etc.
“Renters rarely have clean records or most of them wouldn’t be renters. No renter is perfect.”
Yeah, I think you lost a lot of us with that one statement, because it describes perfectly how you view your clientele before they set foot in the door.
Plenty of folks here have responded with their stories and told you that they are good renters who pay on time, and have perfectly good reasons to rent. Here’s another perspective though – you probably consistently get bad renters because of one of several possible reasons, and possibly others that I haven’t covered:
1) Your house is in a low-income neighborhood that attracts folks with seasonal jobs. Inner-city rentals will also attract the same kind of clientele. Suburban rentals in high-income, white collar neighborhoods, or those in communities that encourage permanence (schools, hospitals, universities) are naturally not going to have the same kind of bad-record renters.
2) You have priced your house too low, or at least lower than the ones perceived by renters as “mid-level” or “high-end”. Folks who view themselves as mid-level or high-end renters with good records will wonder why yours is priced so low and not rent from you.
3) Your house doesn’t look “high end”.
4) Your house is in an unsafe neighborhood. I can afford to pay good rent, and I understand that I could pay lower if I was willing to live with a certain level of crime. I’m not the only one who thinks this way.
5) With you being a private renter and not a property management company, I never know if you’ll have the money to support large repairs or if some significant repair will cause you to go bankrupt, leaving me stranded and having to move on short notice. With a property mgmt company, my risks are lower because they will have other revenue streams to cover repairs. So, I, as a “good record” renter will not rent from you. Guess who else is left?
I am sympathetic to the troubles faced by creditors, and for the reasons you have described in such helpful detail, I probably will never choose to become a landlord. I really liked your article. But, just to add color to your story, it’s naive to paint all renters with the same brush based on your limited perspective and then after these many commenters have told you why your perspective was wrong, continue to defend this view (Comment#59).
We rent because we’re students, and in our town there are plenty of wealthy and broke students renting, some party animals and some spending their weekends in the library.
My landlords have been more bad than good, though- especially the individual people.
Landlord #1 had bizarre repair priorities (he replaced the carpet on the porch (!), but never fixed the dishwasher which never worked since before I moved in.) Then he let a bunch of jerks move in below us with multiple undeclared pets (lease said no pets), who had a massive speaker system that broadcast noise and vibrations into my bedroom almost 24 hours a day. It would wake me up in the middle of the night because my bed was shaking. Even though they had broken the lease in 10 different ways, he refused to kick them out because they paid more rent than us. I left midyear.
Landlord #2 was a company, no problems whatsoever!
Landlord #3 may actually be insane. He shows up at the house late at night and knocks on our windows (?) if he needs to talk to us. He has never done a single repair that cost over $5, and there is still a pile of gutters in the yard from years before we moved in (and the house is missing half its gutters, which he promised to put on before we moved in.) Oh, and the basement is infested with groundhogs sometimes. Time to try our luck with landlord #4!
Oh, and someone who leaves after a year is NOT a bad tenant. If they leave, you raise the rent slightly. If they stay, you leave it the same. Problem solved.
The statement “Renters rarely have clean records or most of them wouldn’t be renters” was ridiculous.
Perhaps, as Sarah #89 suggested, the kind of renters you want don’t want to rent your property.
After my divorce, I decided to stay in the area so my children could remain in the neighborhood with their friends and not have to change schools. I am leaving this area as soon as my daughter graduates from high school in three years. I have enough money for a down payment on a house, excellent credit, but I don’t want to buy a house. I feel blessed that I got out of the housing market for a profit when I did. I CHOOSE to rent.
From reading everyone’s comments, it sounds like you have to be very careful and do your homework whether you hire a management company or whether you find renters yourself. And, even if you do, you can’t completely eliminate the risk of getting a bad tenant that can do serious damage to your investment.
Personally, this makes me think that if I ever get rental property, I would want it to only be a relatively small portion of my total investments, as I would not be able to minimize the effect of a bad tenant through diversification. It’s much easier to “evict” a bad stock from your portfolio than it is to evict a bad tenant from your propery.
Tim,
I understand why you have your list, but if the previous landlord has a “no comment” you may not need to run quite so fast. I just moved from a rental to another rental even though we are saving to move. The reason is because we couldn’t take the manager of the previous complex anymore. We lived there for 5 very miserable years. I didn’t mind paying my rent or even when the rent went up, I minded when I was constantly berated by a woman who had nothing better to do than watch the tenants and complain about everything they did. When we moved, there were 6 empty apartments (out of 25).
We were good tenants. We were “late” on a payment once because the check was mailed and the first was Labor Day, so the check didn’t get to her hand until the second. We got an earful that day. We didn’t cause disturbances, even though we have two small kids. If you had asked her for a reference, though, you would have gotten a “no comment” or (more likely) an earful of all the terrible things we did in her mind. We had it happen to a friend who moved out a few weeks before us and they were good tenants too.
By law in our state, we lived there long enough in our state that unless there was massive damage done, everything should be covered by wear and tear and we could leave without doing anything and still get our entire deposit back. We still cleaned, filled in holes (even the ones that should be covered by wear and tear, like the dents left by the door locks) and painted. It’s two weeks later and I have yet to see a check. By law, it should show up this week, but I doubt it will.
Shara, thanks for sharing the other side of the story.
Thank you for this story which shows the other side of bankruptcy. People forget that a lot of the creditors going after those who claim bankruptcy are not the big guys… but the small businesses/landlords/etc. who have trusted them when they shouldn’t have.
When it is time to rent out my property, I will not rent to anyone who comes back with a bankruptcy or very bad credit. This story reminds me why I’ve put this rule on the top of my list for filtering out potential tenants.
Thank you for this article. The information is much appreciated, but I hope that it will not come in handy some day. I am a landlord also and have luckily not had to deal with the same hassle you have, but we’ve been close enough. We now keep a VERY close eye on each of our properties. It is amazing how much damage even a “good” tenant can cause. I understand that it’s hard to respect a house that you don’t actually own, but it’s still hard to take and hard to understand.
As for the controversial statement that was made, I think that the next time I need a renter I’ll advertise here. 🙂
@cg
I wouldn’t necessarily be so harsh on older renters, or renters with families. My (wonderful) apartment complex has renters of all ages and situations, and it shows no signs of having financial troubles or rampant delinquency.
Probably the moral of the story is that the credit of renters matters, no matter how nice or trustworthy they appear to be. Saying that every renter has something wrong with him is the same kind of rationalizing that the renters were doing while not paying your rent–you took a risk and it didn’t pay out.
If the renters claim to have false problems on their credit report, it’s their responsibility to take that up with the bureaus. Beyond that, it’s your responsibility to use the credit report to know how safe an investment they are–and they were obviously not a safe one to begin with. Please don’t rationalize that by making negative generalizations about renters.
@Julie — You could minimize the risk posed by a bad tenant through diversification, but you’d have to have a lot of rental units. A single unit is, by definition, non-diversified (like a family house is also non-diversified), and should be treated as such in your portfolio.
Thank you for posting this story, it was badly needed.
Not paying your debt is stealing.
For crying out loud, if I see another politically correct whine-fest about the one sentence regarding renters and red flags, I am going to throw up on my keyboard.
We know all renters aren’t bad renters. Whether you agree with use of the word “most” or would prefer that she said “many”… it really isn’t that important.
Everyone has been a renter at some point. You are a good person. You never hurt anyone and you always paid your bills on time… We get it.
Flying Spaghetti Monster loves you. Now move on, please!
Thanks for a great post. In a world of mega-corporations, it’s easy to forget that creditors are often crafts- and small-business-people.
I’m curious, since their bankruptcy filing was thrown out by the federal court, would you be able to pursue judgment against them in small claims court for the ~$7,000 they stiffed you for? You might still never see it, but it seems like it might be worth looking into.
This was a fantastic post!
Like others, I do have an issue with this statement “renters rarely have clean records or most of them wouldn’t be renters”, and I can see why you would mention it, but I thought the post contained excellent content.
I would just like to point out that I, personally, chose to rent an apartment even though I can easily afford a home. I live in the Midwest and earn a six figure salary, have zero debt and have enough in investments to purchase almost any moderately sized house in most neighborhoods in my city. So why do I rent instead? Freedom! I love the fact that I can move to another city whenever I chose and not have to worry about selling a house first. I hate yard work of any kind; hate the thought of having to worry about replacing a furnace / AC unit / roof / water heater, etc; hate the fact that I can’t up and move on a dime (even though it will cost me to break my lease, I don’t have to worry about finding a new tenant). Although renting has its drawbacks (noisy neighbors, etc), these are far less important to me than the responsibilities of owning a home. I simply would not be happy owning a home. The only reason I would even consider owning a home would beif any future wife of mine was dead set on owning.
Another renter by choice. I’ve been a renter for the past 14 years. I’ve only been in my current townhouse for 7 months but prior to that we were in our apartment for 5 years (the same unit). I’ve never made a late rent payment and I’ve only made two late payments on anything ever (and purely by accident, they were paid as soon as I got the missed payment notice). My husband just finished a 6 year PhD and he’s now completing a 3-5 year “post-doc”. We don’t know how long it will take (these things are set in stone) and we know we don’t want to live here permanently. It would be reckless to rent. Post-doc also aren’t exceptionally well-paid so we don’t have the emergency fund necessary to support the cost of owning a home and we’d rather let a landlord cover the cost of snow removal, landscaping, insect control, etc.
The author should take solace in the fact that “What comes around goes around.” Those people will eventually get “theirs”.
I can appreciate the headache and financial loss that the author went through.
However, I don’t think this article is about bankruptcy at all.
This article is really about a couple who worked the system.
I get that there’s a human face to bankruptcy, and one can also choose to leave certain debts out of the bankruptcy.
So, one could continue to pay the dentist for the crown.
Or, if they felt that they couldn’t pay, and wanted to include it in the bankruptcy, they are allowed to do so by law.
While the dentist is a person who will not get paid for their work, the dentist is also running a business, and like any other expenses, it’s one of the costs of doing business.
“Renters rarely have clean records or most of them wouldn’t be renters.”
NICE. This line alone pretty much makes me not want to read your article. I have an 817 credit score, make 6 figures, but rent because I like to live in new cities while I’m still a young professional and know from my real estate family background that you shouldn’t buy unless you plan to live someplace for more than 4 years.
You should have listened to JD, that sort of line is both incorrect and inflammatory.
We only own investment properties in Australia so there may be some differences in management companies. All our properties have management companies who manage them. As Sharla says, one eviction process makes their fee worthwhile. That said, those who have commented that having a management company is a “set and forget” policy are also correct. We spend up to a day or two a week managing the management companies. We are ACTIVELY involved in the way they manage our properties. And some days, yes, we do wonder if we wouldn’t do a better job of it ourselves. We have had one eviction in over 10 years of investment property ownership and having a competent management company was essential, to our mental health if nothing else.
The one sentence that tripped me up a bit, Sharla, was “it is not my responsibility to house people”… when you are offering a rental property for money, then I would say that it IS your responsibility to fulfil that job well. If you choose to take your asset off the rental market, then that of course is perfectly fine. But once you do have it as a rental, then it comes with responsibilities. I empathise with some of the stories renters have shared here about their nightmare landlord scenarios.
Thanks for this piece.
I am so angry for you! And it makes me even madder that they will most likely do this to someone else, too. Can you file a small claims suit against them so it is at least on their record? Hopefully Karma bites them in the @ss–hard and with very sharp teeth!!
As far as the ‘renter’ comment–She said “most”, not “all”. So, the flip side is that “some” will have great credit. Every one of you on this site can count yourself in the some with great credit category if that fits. 🙂
We used to have two rentals, are now down to one because I can’t stomach it. Having my finances so tied to other people is too frustrating for me. One of our friends (also a landlord) said, “Buyers are boring, renters are interesting.”
@J.D. – I think your responsibility as the editor is to remove offensive comments, especially unsubstantiated claims. I understand it is a reader’s story but by allowing flammatory (“most renters . . . “) remarks you open you up to criticism and takes away from the main point of the story. I think you need to exercise more editorial control of content.
My parents had to file bankruptcy after a car accident that left my dad in the hospital for four months (yes, months). My dad said that “Bankruptcy removes the legal obligation, but not the moral one.” After more than a dozen years, they finally paid back every debt that bankruptcy “discharged.” Bankruptcy should be a tool to take away the immediate pressure, not a free pass.
It is almost comically how many people fall for one line. I love the reader stories since they provide some real life cases and you can learn most from mistakes. If I want to learn, I’ll focus on the good things in the articles, but apparently quite a few people here read articles for a nice comfy feeling, and get quite upset when one sentence doesn’t agree. Read it, frown, laugh, move along. Thanks for the article Shara.
Hi Shara,
I found your article very moving and have seen many friends go through similar situations with renters. Their references seem great, but some just like to find every excuse not to pay what’s due. The law seems on some ocassions seems to er on the side of the tennant even when they are in the wrong…
Like most people have said, the issue about renters not having clean records was off. I chose not to buy a house in the US because I did not want to live there permanently. I am from Africa, work for an international organization, came to the US five years ago and moved back to Africa after four years (but to a different country) and will be moving to Europe after just one year, wo why would I want to buy a house in the US? I always paid my rent on time because it is my obligation to. I have a beautiful 10 acre plot in my home country on which I have built a beautiful house. Sorry Sarah but just that one statement changed the whole tone of your story. All the best with your renting……..
This story is why I’d rather allow a property to sit vacant than rent it out. I just don’t feel it’s worth the headache.
My brother rents out a couple of houses, and even with good tenants it’s still a hassle with slim profit margins.
You know, I think I was willing to forgive Shara’s snide comment in her post, until I read this in her comment (#59):
“And for those of you who say you rent because you are mobile, that doesn’t mean you are a good renter, it just means you take care of the place.”
Yikes. You know, those mobile people never said they were lease-breakers; that was Shara’s assumption, and another gross and negative generalization. It sounds like maybe Shara is very bitter toward renters, having been burned. And I feel bad that she has had these experiences. But she threw caution to the wind, and is now venting online. I have a hard time feeling like she is any different than Giant Bank Credit when she is fostering this kind of negative and adversarial attitude online. Even my loan creditor has nice customer service people who don’t go smearing people who borrow money. Those are their customers! Renters are Shara’s customers! The fact that JD mentioned this would be an inflammatory line and she kept it in anyway even though it serves no functional purpose to say it that way, the followed it up with more chilliness in comments, says something powerful to me.
Some very quick research on Shara’s part would have revealed many, many potential things that can go wrong with renters. I wonder why she signed up for a credit check service if she was going to dismiss their findings anyway?
I suspect Shara may be acting in an adversarial way to her renters, whether she realizes it or not; these two comments reveal a lot to me about her attitude toward her customers. I have never, ever had a perfect landlord. I have had several bad experiences with landlords, and yet don’t generalize. My current one is great. My last two were awful. Even though math is on my side, I still wouldn’t say “most” landlords are bad. Have I been a perfect renter? Of course not. I know I have been very good, though; no late payments, no damage. But you don’t know that from my saying so online. Nor can we assume Shara has been perfect, either. It’s a world of caveat emptor.
Let me make it clear that I do appreciate her posting her story; this kind of information online makes it easier for potential landlords to see pitfalls, and that is a good thing. However it’s unnecessary to make this kind of useless and disparaging remark. That makes it worse for all of us.
In Shara’s defense, maybe her choice of wording on the characteristics of renters was a bit harsh, but a little bitterness is expected after being put through such a legal and financial nightmare and the loss of thousands of dollars. May of us who jumped into the landlord pool, whether as a way to invest in real estate, or because we couldn’t sell our homes, are inexperienced and were bound to make a few mistakes. We’ve certainly learned many an unfortunate lesson (too many to list here). Until you’ve been in a situation where you’ve been swindled out of tens of thousands of dollars, that you could not afford to lose, you can’t possibly know how that colors your view of people. While there’s good and bad on both sides of the renter/landlord equation, your opinion will certainly be affected by which side you’re on. While many of us chose to focus on the rental situation, Shara’s story was really trying to put a face to bankruptcy.
Wow. Just wow. These tenants are not good people and while I can’t bring myself to wish any real harm to anyone, I hope they both get canker sores the size of a quarter. Thanks for putting a human face on the creditor side.
Although I think Shara’s comment that “renters rarely have clean records or most of them wouldn’t be renters” was poorly written, I think that many are taking it a little too personally. This statement is not about any individual reader, but about the whole nation of renters. For as many GRS readers out there who are great renters, there are likely just as many individuals with shaky credit, a shaky jobs, or a shaky character.
This article highlighted the author’s belief that people want to do the “right thing,” but the “right thing happens to be whatever is best for them.” It is about how a renter (whether good or bad) can justify to themselves that they are, in fact, a good renter worthy of a perfect landlord.
A good renter is something very different for a landlord, especially a single unit landlord, than it is for a renter. Covering the transition time between renters is much easier to do for a multi-unit landlord that has staggered renters than a single unit landlord. And the “red flags” that Shara speaks of are different for every landlord since each has their own unique business practices. They are likely different from the “red flags” that most renters would think of.
@ 98 Arts – Shara stated that it was a middle-class neighborhood. Also, I think you’re right that people who see themselves as high end renters would question a lower price point, but I’d imagine that high-end apartments with higher rent prices would be more risky for a landlord since you’d have to be doubly sure that the renters could cover the cost and was in no jeopardy of losing his/her job. So, a landlord for a high end unit would probably run into the same problem as Shara (i.e. that the rent applications they receive would still include quite a few individuals who for a multitude of reasons are not great renter). But that’s just an assumption. . . .
Best reader story I’ve seen on GRS. Thanks for your candor and insight.
I’m a renter myself, but I won’t get into my objection to the offending phrase. That’s been quite well covered so far!
Two things I will point out about this story:
First, I’m not sure the title is appropriate. The story isn’t so much about bankruptcy itself – the couple didn’t even qualify – but about the hassles of dealing with the process.
Second, there are bad landlords just as there are bad tenants. I’m 10 months into trying to get my damage deposit back from my previous landlord (actually the rental agency). Personal attempts failed, filed for a hearing, they didn’t show up for the hearing, order in my favour, currently in the enforcement stage. The Sheriff’s office takes it from here.
Thanks for the article — I am tired of hearing stories of people filing bankruptcy with the assumption that their creditors are just faceless companies that don’t get hurt. Not true — filing for bankruptcy has a cost, and it’s unfortunate that it’s often the little people who pay the biggest price.
As a landlord myself, I have to say that I would never have rented to these people in the first place…bad credit, a recent bankruptcy, undisclosed pets and unable to come up with the security deposit. In my mind, just a disaster waiting to happen.
I tend to trust my gut in these things — my home is worth several hundred thousand dollars, and I won’t just hand it over to anyone, even if it means letting some units sit vacant until the right person comes along. Hopefully you have learned this now too.
I have also learned NOT to trust management companies. They generally get paid on a flat per-unit basis. Think about that. Every extra minute they have to spend showing your units to potential tenants is profit being taken out of their pockets. Same with fixing your units, responding to tenants complaints, doing maintenance checks, spending money for small repairs that could become nightmares down the road. Time is money, and the less time they have to spend on your place means the more money they can keep for themselves. You are better off managing the place by yourself, and taking more care with who you rent the apartment to.
One more thing — I have been a landlord for over seven years now and have never considered someone who moved out after their yearly lease to be a bad tenant. I assume everyone will move out after a year — and build one month of vacancy into the cost of the rent over the year. Anything more than a year is just gravy. That’s why I am a great, responsive and proactive landlord — I want my tenants to stay.
As a former landlord, I agree with the controversial line if you narrow it’s scope to a particular neighborhood. After the area I grew up in went south, it became very difficult to find good renters.
I had poor judgment a couple of times and here’s what happens. You meet dozens of applicants that aren’t even worth a second glance (no income, come to the property intoxicated, dirty or smelling of pot etc). After troves of these people, you run into a few that give you hope.
You run the $35 credit checks..after spending a couple of hundred on those and a few months lost rent with no luck, you finally meet someone who tells a good story. You roll the dice and give them a chance. Sometimes it works out, sometimes, not.
In the end, I realized that my neighborhood just wasn’t going to attract reliable people any longer. I either needed to adjust to section 8 tenants and deal with the damage when they move or sell.
————————————-
One of the reasons we sold the property was it was literally making me lose my sense of good in the world. It didn’t matter that their landlord was a 75 year old elderly immigrant (my mom). She was better off than they were, so it was okay to steal from her.
It’s the opposite of pay it forward. I call it screw it forward. They get screwed by someone, so they try to screw someone else over in return.
I’m glad I had the initiative and opportunities to get out of the hood. Middle class neighbors are so much nicer.
This was a perspective I definitely needed. Thank you.
I really enjoyed this article. As a home-owner turned landlord myself, I have always wondered what the process could really be like if I ever have to go through eviction/bankruptcy filings.
I have been extremely lucky with my tenants, even though some might classify one couple as “bad.” My first tenants stuck around for about 3 years, and during that time, I think I received about 2 payments that were actually on-time. EVERY month they were one, two, three, or even four months late, but by the end of the month, they would always pay in full (including my $5/day late fees!!!). I realize that I was extremely lucky that they did actually end up paying every time. It’s just one of those times when having a little patience paid off.
EXCELLENT ARTICLE, THANKS.
So, what have I learned today?
I learned that the vast, vast majority of renters are actually rational, reliable, responsible individuals who take perfect care of their property and always pay on time. Shara was WAAAAY off-base characterizing most renters as irresponsible deadbeats. It turns out that’s actually just a tiny minority of renters.
Also, virtually everybody has ample emergency funds and is saving adequately for retirement.
Or maybe it’s just GRS readers.
Hmm. That’s a real head-scratcher.
Let me review my old university statistics textbooks and remind myself what it said about “self selection bias.”
Maybe you should, too.
This was an extremely well written and informative post. I always enjoy the reader stories but this one was exceptional. It has also generated a lot of good comments. I just wanted to say than you Shara!
There is no need to overreact about the comment about no renter having a clean record. I don’t think the author was saying that if you rent, you must be a convicted felon who is in debt $200k and hasn’t made a payment on it in 3 months. All she was saying is that it’s rare to find a renter for a house, not an apartment, with a *perfect* credit report, because most people don’t rent in that situation. It’s hard to know the difference between a potentially good tenant and a bad one if neither is absolutely *perfect*. I rent and I found nothing offensive or judgmental about that statement.
I take strong objection to Shara’s comment that even good renters are not good because they will leave after their 1 year contract is over. (Specifically, the statement “And for those of you who say you rent because you are mobile, that doesn’t mean you are a good renter, it just means you take care of the place. There is a typical vacancy term between tenants that the owner has to cover.”)
That is the regular cost of being a landlord–and the very reason why many people choose not to be a landlord. If you do not like renters who leave after one year, make a 2-year contract! Of course, the reason one does not is because the very nature of renting is based on the fact that renters are generally much more mobile–otherwise, most would buy if they were living there for years upon years. Vacancy is a cost-of-business for landlords, and you cannot place any blame on the rentee for “merely” fulfilling his or her contract. A landlord who cannot normally cover this very typical cost-of-business should not be in this business.
I also disagree with the statement that most renters are not reliable. I know of no person who went from living with his or her parents to buying his or her own home–most everyone has been a renter. Thus, since everybody has been a renter at some point, statisically, your facts are off.
However, it is possible that the more high-risk renters are attracted to renting a house. When I used to be a renter, I did not want to rent a house because it was too high risk for me–I wanted to rent from an entity with a good reputation that I would not have to fight with if something went wrong and therefore chose an apartment complex with a good reputation. I’m sure most landlords are good, but some can be cheap and if you rent from a landlord without a good safety net, what will happen to you as a renter if the A/C needs a complete replacement? Renting a house from an unknown landlord can be equally risky to a renter.
I understand the sentiment of “Renters rarely have clean records or most of them wouldn’t be renters”. While it is harsh, it’s often true when it comes to renters that rent from a person, instead of a big apartment complex.
As a person playing landlord, we’re far more likely to grant leniency to a potential renter. If your credit even 1 point below an apartment complex’s threshold for rentals, they will not let you sign with them. This sort of empathy is what gets private landlords in trouble. We had a renter that was in their mid twenties, and had credit that was 1 pt below what rental agencies recommend for rental properties. But at 25, with student loans, and an impulse car buy – it happens. No apartment complex in the area would qualify this person for rent given their credit score alone, but as a person, we considered ourselves at that age, and felt for the guy. Unfortunately, he certainly knows how to play us.. I assume, a property management agency would keep us from empathizing and making these sorts of decisions when it comes to renters, but we’re already running it at a loss, as it was never meant to be a rental first place.
On the other hand, the renters in the neighborhood I live in, rent because a mortgage, even w/ 20% down ($100k in this area), would require 1.5x the rent per month. Unless you’re moving from another high-cost of living area, buying is simply not an option, especially if you want to be in a prime school district.
So, for those who are offended, don’t be. Like all blanket statements (“Chocolate is good”, umm not to everyone, I’m allergic), there are always exceptions. Unfortunately as a landlord, somehow you run into every exception.
You must live in a small town or lower-income area, if you think that people who rent do so because they have no other options. In most major metropolitan areas i.e. areas of the country with highest population, highest incomes and highest property values, it is normal to rent.
Also, in NYC, you generally have to show tax returns, landlord references, credit reports, pay stubs and recent bank statements to rent an apartment. You basically brought this situation on yourself by not doing your due diligence and not requesting adequate documentation from the renters as well as overlooking the writing on the wall with the initial deposit and other red flags.
@136 Kevin
Reread those textbooks a little closer. Shara is also succumbing to the availability heuristic.
Note Lil’s #138 comment: Most people have been renters at some point. That’s probably a true statement in the US.
Also note my earlier comment that “good” renters generally get their first choice place and “bad” renters are seen by multiple landlords, making it seem like there are more “bad” renters, when, in fact, it’s just the same people. “Bad” renters are also more likely to move from place to place more frequently as they get kicked out, again, making it seem like there are more of them.
If the majority of renters were indeed “bad” then I’m fairly sure that the rental business would look a lot different. There would be a lot more commitment devices (like much higher deposits), more Section 8 kinds of arrangements, more big companies doing rentals and fewer small landlords, weaker renter protections (stronger landlord protections), and so on.
It’s a ridiculous statement with no evidence to support it except one person’s experience trying to rent one house. I don’t do real estate economics, but I’m sure there’s someone who does who could tell you exactly what the average credit score of a renter is, and possibly even the average age-adjusted credit score. That would be actual evidence to show whether the majority of renters or people in the US have bad credit. Not one person’s experience renting out one house.
This is exactly why “good” renters can find life difficult. Every time I’ve rented in the UK, both as a student and in employment, I’ve had to provide a guarantor (i.e. my parents have to promise to pay if I don’t/can’t). Even when I was earning more than them! The management companies take the line of “if you don’t want to put down a guarantor, then you can’t want the property that much”. Helpful… I have excellent credit, but I am not looking forward to moving out of student accomodation again. My last landlord (2005) was happy to provide a reference then, but I was moving into university digs, and I can’t exactly call on them now. The university won’t give anyone a reference.
Being a good renter also didn’t help when I wanted to move out of my last place. I gave 3 months notice (as in the contract), and I couldn’t have given more as I had only just got my doctorate offer. But the landlord still asked me to pay an extra 3 months rent “because it’s our pension”. That’s not my problem! If you want 6 months notice, put it in the contract, and I will honour it. Of course, I then had a rent refund because I moved out 2 weeks early to allow the new renter to move in on the bank holiday (and lived on a friend’s couch while working out the rest of my notice at work).
It goes both ways. Some renters need to be more respectful of landlords, but a lot of landlords or their management companies need to be more respectful of tenants, too.
This has been an interesting read.
I’d guess that large apartment complexes would be less open to hearing sob stories in making decisions about renting an apartment, sending a large number of people with bad credit to smaller unit landlords, who despite not having the resources to deal with the worst case scenario are desperate enough to assume the risk.
I never considered renting a house in the 6 years I rented after college, it just seemed risky and a pain in the ass for both the tenant and the landlord. The house I ended up buying was used as rental property and it was torn up and had to have extensive repairs done to it. After all the effort to patch up the walls, I’m still hesitant to put holes in it!
As both a renter and a landlord, I have some things to add here:
1. It’s clear that Shara is bitter about the costs incurred when she rented to a family that ended up gaming the system. She also seems bitter about the fact that people try to blame her for that fact that her renters stole thousands of dollars from her. THIS IS BLAMING THE VICTIM.
2. That being said, Shara is wrong about renters. It’s a gross generalization that crosses an enormous spectrum of people — from families living in a $600/month “casita” in Tucson to a $30,000/month highrise in New York. This is a big country. Renters vary.
3. I rented out our guesthouse for 3 years, and mostly, I was very lucky. I did not do credit checks (what was the point? It was a tiny guesthouse I rented for $400/month) but I did do criminal background checks (my kids played in the back yard, after all). I also ignored sob stories, offers to do landscaping/repairs in lieu of rent, and had zero tolerance for drug use (I’d call the cops in a heartbeat). Did I have the occasional late payment? Yep. But, we figured that into our calculations, and made sure our mortgage hinged on OUR finances, not our renters finances.
4. Costs can be high, whether or not it’s your renters fault. We had a leak in one of the walls of the guesthouse closet (it was my fault), and ended up with mold throughout the bathroom. The cost of tearing out the walls and flooring, replacing the bathroom fixtures and the plumbing went into the thousands. For a $400/month rental, we were never, ever going to recoup the money from that.
In short, renting is a huge responsibility. Could I have bleached down the walls and let my tenant get by without replacing everything? Sure, but I have pretty strong morals about endangering the health of someone, even if that doesn’t line up with my bottom line. NOT ALL LANDLORDS FEEL THE SAME. In the end, we sold our place and are preparing to rent — guess what?
A single family home in a middle class neighborhood. With our two kids and two dogs.
The owner only asked for a $500 deposit, and no pet deposit. We are their first renters. They let us have a 6 month lease.
I am happy for their leniency, because I know that we will take care of their home as if it were our own (we love it already). But I plan to have a little sit-down with them at some point, and advise them to be a little more careful next time.
After all, those safeguards — lease, deposit, pet deposit, etc — are there for a reason, and should AlWAYS be used. A few months vacancy is a lot cheaper than a bad tenant, as I’m sure Shara more than realizes now. I’ve heard a lot of horror stories (two friends went out-of-country and let a management company take care of their rentals. When they returned, one place had been turned into a meth lab, and cost about $20K to clean up, and the other had been completely trashed, appliances ripped out and sold, etc., and cost about $15K. Neither was able to recoup their money despite suing the tenant — can’t get blood from a stone). But this is the world of risk/return, and everyone should go in with open eyes.
@136 Kevin
I think the objection isn’t to the notion that there aren’t bad renters (there are, just like there’re bad landlords and bad homeowners–and, on the plus side, bad renters never nearly brought down the US economy). It’s the characterization that *all* renters are bad, which simply isn’t true–the fact that there’re good renters posting here shows that there are some good renters. It doesn’t show what percentage of renters are good, but it shows there’re some good renters.
I also agree with the commenters that say this isn’t a story about bankruptcy. After all, their second bankruptcy claim was thrown out. If they were honest people, they’d have paid their obligations that weren’t canceled by their legitimate bankruptcy without trying to game the system. It’s just a story about dishonest renters who can’t get their financial lives together.
JD, thanks for stepping in to moderate the foolish debate of whether renters are bad people. Honestly, that was kind of silly.
However, I want to offer a teensy objection to this article. It’s great to have multiple POVs but I know people will read this and take it as an excuse not to sympathize with folks who are currently suffering in this housing crisis, the ones who are filing for bankruptcy because they got screwed (NOT the people poor shara had to deal with).
In general, in a choice between someone who owns two (or multiple) houses and someone who is left with no house at all, my sympathy is with the latter, regardless of who was fiscally smarter.
Basically your renters weren’t being Robin Hoods, they were merely doing what most people do when in a bad situation. They step on the necks of anyone they can to stay afloat.
But, the sad truth is that all of us do this in some way every day. Every time we buy something manufactured by slave labor at slave wages, (Foxconn’s recent spat of suicides comes rapidly to mind) every time we calculate to screw someone to get the cheapest deal possible on a car.
Whatever happened to working out deals that benefits everyone positively rather than looking out for number one all of the time?
People are angry at credit card companies for “shady behavior” when the truth is they openly tell you what their behavior is should you actually bother to read it. Then again we live in a country that doesn’t require any sort of basic finance/home economics class for graduation. With how complicated the world has become when it comes to financing purchases, etc. Why aren’t such classes mandatory?
My parents have been landlords for as long as I can remember. I also currently rent. So I’ve seen both sides of it. Unfortunately all landlords aren’t like my parents (fix stuff on time, don’t harass, etc.). Unfortunately most renters that they’ve had don’t behave as they should.
They learned quickly that if they get one month behind on rent they evict. They don’t budge on late fees. They are rarely understanding of their circumstances. They learned the hard way that if you don’t make them play by the rules, you get burned 99% of the time.
On the flip side I’ve seen landlords that don’t play by the rules either. There’s nothing more frustrating. It would be so much simpler if both parties simply played by the rules (not just legal, but ethical).
I don’t frequently comment on this site (I’m much more of a lurker!) but this is going to bring me out of the woodwork. Thank God for landlords like Shara, who are willing to take on renters who might have a few more “red flags”. My husband and I were a military family, and we moved quite frequently, renting out in town until we could get into military housing (Which could take anywhere from 2months to 2years, depending on the area!). However, we always had the whole “military paycheck” thing backing us up, so only once were we denied a rental.
However, when my husband got out of the military and we moved back to the East Coast from Hawaii, finding a place to live got a lot more complicated. We didn’t have jobs in place (because finding a job in PA while living in Hawaii is quite difficult!) and we had two children. We were denied in four separate locations, when finally a couple took a chance on us and let us rent. We paid for the rent with our unemployment, never late, and after a few months I was finally able to find work and start supporting us myself again. My point is, if the landlords hadn’t looked at US, two hardworking former Marines with a family, and just saw the numbers, instead, we probably would have had to keep looking for a place to live.
I’m sorry that in this case, things turned out so poorly, Shara, but thank you, on behalf of families like mine who need a landlord who sees people, not numbers.
Not all renters are thieves like the ones you rented too. Neither are people who have claimed bankruptcy. Yes I rent now, I am in my early 40’s, married with a young child. My husband and I own a business, made a very good living, owned a home, a couple of boats and had a very good life. Then the downturn of the economy all but destroyed our business, we drained all of our retirement funds, savings accounts, stocks, sold our boats and the other “toys” to just pay the bills and our mortgage, relocated the business, I got 2 part time jobs and things were improving after 3 years of struggling from a 6 figure income to a low 5 figure income. Then my husband was diagnosed with stage 2 colon cancer and had to shut the business again temporarily. We made the decision to file for bankruptcy, which included our home that during the 6 years we lived there added on to it and improved it to the tune of $40,000 out of our pocket cash. When we met our prospective landlord, we told him we were going to be filing bankruptcy and the events that led up to that decision, and we asked if he would be interested in renting to us in spite of that, he said absolutely. We paid our deposit, and first months rent, have never been late on any rent, pay all of our current bills on time, and just recently our bankruptcy has been discharged. It’s a matter of the quality of person that you rent to, in spite of their credit score. So no I don’t have a clean record but I am also not a thief and would never do what your renters have done. I also did rent before purchasing a house and all of the landlords we had told us what wonderful renters we were and hated to see us go.
I just wanted to thank you for the courage to tell the truth about the other side, the creditor’s side, and not be over-the-top politically correct. Saying most renters have red flags is the truth. Although you may hurt the ‘good’ renters feelings, you don’t have to feel bad for pointing out the obvious without sugar coating things.
I was really taken aback by the ‘most renters have red flags or they wouldn’t be renters’ comment.
I am a renter by choice. I have an excellent credit history, etc etc. I just am not at a point in my life where I want to invest in property, mostly because I have been changing cities every few years due to professional obligations.
My father owns more than 11 multi-unit buildings, and he deals with renters of all stripes. I am sorry if you have had problems with some or all of your tenants, but given that he manages hundreds of tenants on a monthly basis – many of them students – I can quite confidently state that your general characterization of renters is incorrect.
JB: “It’s the characterization that *all* renters are bad”
No, she never said “all” renters are “bad”.
She said “most” have “red flags” ( on their credit) and that “no renters are perfect”.
That is NOT he same as saying they are all bad.
“renters rarely have clean records or most of them wouldn’t be renters. No renter is perfect.”
Those were her exact words. Why is no renter perfect? Is the corollary that all home owners are perfect? And what does perfect even mean? There’s no definition offered, unless we are to infer that all renters have red flags on their credit, or at least, most renters do. Why make a statement like that with no actual data to back it up? It’s opinion, not fact.
It is easy to lash out after being burned like this, but it doesn’t make it good material for a post. What exactly is the message here? Sometimes bad things happen to good landlords?
I have just read some of the author’s follow-up comments, and they come off as very condescending. I assure you that I have seen apartments that are completely coated in a layer of black muck from floor to ceiling after a year of occupancy. I have also seen nightmares from renters that you may have not, given that you do not have to deal with nearly as many tenants as my father and I have. However, you will note that this does not cause me to make sweeping statements about renters in the same way that your experiences have. Perhaps your experience as a landlord simply isn’t as broad as you might think it is.
How many tenants do you / have you had, Shara? What is your sample size? I am drawing from a pool of more than a thousand here during my family’s period of ownership of these buildings – which are completely managed by my father, I might add, without any outside contracting.
Any sympathy I had for the article writer (given her ridiculous generalizations about renters) absolutely disappeared when I read her follow-up comments, containing even more ridiculous generalizations about renters. Possibly understandably, she has a huge chip on her shoulders about renters, but no one is forcing her to continue to deal with them. She could let the house remain vacant or dispose of the property. Staying in the business of being a landlord, painting renters with a broad brush and perpetuating stereotypes is useful to no one.
I recently moved to a new city and am renting now because I have not decided whether I want to stay here for the long term. And yes, I claim to be one of those “good” renters who is mature, responsible, maintains the property, has good credit, stable income, etc and pays rent on time. However, I would be happy NOT to rent from a landlord like the author who would view me as undesirable to do business with simply because I chose to be her customer.
What a bunch of jerks those renters are. Hopefully they get what’s coming to them.
We’ve been landlords for years. Our worst experiences have been with nightmare property managers in another state. They’ve chosen horrible tenants, taken kickbacks from contractors, way overcharged us for repairs. We’ve done fine (for the most part) when we chose the tenants ourselves.
What a fantastic story. Thanks for sharing.
Too often, people who file for bankruptcy see themselves as “victims” of faceless “creditors.” I’ll take it a step further than your story.
Consider people who file bankruptcy to avoid paying off credit card debt. They still have all the “stuff” they bought with the credit card, but no longer feel responsible to pay for it.
So they file bankruptcy. Who gets hurt? I’ll tell you who:
– the credit card company, which has millions of shareholders (anyone who has a 401k or other retirement account is harmed)
– small businesses that use credit card processing services, which charge higher fees because of this kind of behavior
– consumers, who pay more for all goods and services because others refuse to pay their bills
Now, if only the irresponsible folks out there could figure out they are harming their friends, family and neighbors … but somehow I don’t think they would care.
I’m going to sidestep the renters bad/good debate since I think that’s been covered. 🙂
I’m glad Shara shared this story, and I also wanted to add that I have owner-financed acreage, and I was surprised the seller offered to finance it because of stories like Shara’s. Now, my husband and I have never missed a payment, not even by a single day, but what a leap of faith to take on a couple you don’t know that well!
We got a great interest rate, and I love not dealing with a bank, but I’d never do this myself. That said, our seller lucked out with us–if we were only able to pay one bill, it would be our land payment because there’s a sweet retired couple who count on that money! 🙂
I have a rental property in Australia and luckily have never had any issues.
I rent to the Government though and they rent it out to people who are on welfare and need housing.
One question, why didn’t your landlords insurance cover all of that hassle and the shortfall in the rent and the damage?
S
In no way do I think that red flags mean someone is a bad renter. I was a renter myself once upon a time. I lived in an apartment for three years, broke nothing, dealt with an occasional apathetic repairman, paid my pet deposits, and paid my rent ahead of time if I was out of town. But when I applied to rent the place I had plenty of RED FLAGS. I was a 19 year old student with very little credit history and very low income. I stand by my comment about most people having red flags. That seems to be interpreted as some kind of snobbish argument about renters or defamation against them which it is not. It is a reminder that as landlords we make tough decisions. Plenty of homeowners have red flags that have to be assessed when they access any kind of credit. But they aren’t usually, by definition, trying to rent a house. However many people who have not had to make the judgment themselves think picking a renter is easy: you pick the person with great references, solid income, high credit, with perfectly straight white teeth and a great sense of humor. And if you don’t find and rent to that person you are somehow at fault for whatever befalls you. Rather than start an argument I was actually trying to deflect one.
The fact of the matter is for a single unit (opposed to an apartment complex with regular turnover and a standard number of vacant units) you have to choose between who is looking for a rental when yours is vacant. And when you pick that 19 year old with low income and no credit and the person turns out to be a bum people write off your loss as something you should have been able to see from the get go. That isn’t the case. A flag is an indicator of potential problems, not a guarantee. That’s why red flags can be so difficult to assess. If they were a guarantee of failure then it would be easy to just toss those applicants. But in reality if you do that you are often tossing the baby with the bathwater. It is important not to bring in bad people rather than leave a place vacant, but on the flip side it’s stupid to leave a place vacant waiting for that perfect candidate.
Second point: I am not bitter. I admit to a fair amount of anger but I’m human. Originally this was a very long post with a bit more of my perspective that JD cut for the sake of brevity. I have pity for people. I feel extra sorry for their kids. And I hope their kids learn what NOT to do rather than follow in their parents footsteps. But these people have to live at the bottom of the financial ladder due to their choices. They will go through life perpetual victims and not understand why things never work out for them. In my experience people who are dishonest don’t usually prosper in life. Some do, but most wind up just victims of their own bad choices.
I also understand that there are plenty of people who choose to rent for completely reasonable reasons. But I read today that 65% of Americans are property owners (the vast majority of which are homeowners). That leaves 35% of people. As I understand it the word “Many” means not insignificant portion and “Most” means more than half. Knowing what you do of our society and culture, is anyone willing to go out on a limb and claim the MOST of those 35% of people have good jobs, good credit, and are renters by choice? MANY are and they are the people every landlord is looking for, while MOST are people with some problems who turn out to be good risks and SOME (perhaps MANY) are jerks who don’t pay their bills.
And as I have repeatedly pointed out: renting to these people was a mistake. I made plenty of mistakes along the way. As a commenter pointed out, I should have called a bankruptcy attorney sooner, that’s just one of many: lessons learned. This post wasn’t a complaint but a cautionary tale. I have eaten my culpability and long since analyzed how I could have done things better. As JD pointed out, I volunteered only after he solicited someone from the credit side, not because I needed to cry in my soup.
Ooo, #160, that is a good question. Is there such a thing as landlord’s insurance in the US? I know there are renter’s insurance, but I’ve never heard of the flip side.
Once again, you have chosen to post your opinions dressed as fact. You have also yet to reveal what particular data you are basing you opinions on.
1 – How many tenants have you had since you started renting?
2 – How many buildings do you rent?
3 – How long have you been a landlord?
4 – “Knowing what you do of our society and culture, is anyone willing to go out on a limb and claim the MOST of those 35% of people have good jobs, good credit, and are renters by choice?” – This is the worst kind of leading question. How could you even make a statement like this? Are we supposed to buy in to your point of view with no relevant supporting fact? ‘Knowing what you do of our society and culture’? What does that even mean?
Consider this: If we were to extend your seemingly bizarre reasoning, then the 65% of Americans who are property owners feature even MORE people with poor jobs and bad credit. I mean, ‘knowing what we do of our society and culture’.
I really like this site. I am however disappointed that this guest post was included. In particular is the underlying assumption made by the writer – who seems to have very little of what could be considered extensive experience as a landlord past her experiences with a single property – that home ownership is the ultimate goal of every single person in the United States. Given that Get Rich Slowly aims to challenge the fallacies that often mislead individuals and cause them to make poor financial decisions, I can only guess that this slipped under the radar.
Even the continued use of the term ‘renters by choice’ is a loaded one, as it instantly puts anyone who is renting a home under suspicion – which is absurd. It makes the assumption that people only rent because they cannot buy, or that they are frustrated because they don’t own property, which is demonstrably bogus.
I think this is an important article to show that debt, like any tool, MUST be used responsibly.
These people were thieves, plain and simple.
I think the lesson for renters here is this:
Take care of the property you’re renting like you own it because your benefit comes in the form of references and “good karma” when negotiating for next year!
apparently there is a word limit on comments – the remainder of my comment is as follows:
Consider the fact too that Shara writes about renting for a three year period as though that were some kind of trial by fire, a necessary slumming before somehow emerging from that circle of hell like a shining phoenix in order to buy her own home. She relates how her own past was filled with ‘red flags’ and then automatically assumes that everyone who rents is exactly as she was. How does this line of reasoning not stand out to the writer as being an incredible projection that is not at all associated with the reality of others – ie, people who aren’t her at whatever age that was – who are renting a home?
Looking at the number of forecolosures over the past few years indicates that many, many, many home buyers made poor choices, unfortunate decisions or simply acted without good financial advice when buying a home. From the tone of this post, Shara would still laud those individuals as being financially more prepared or stable than dreaded ‘renters’, who inhabit some vaguely described universe of economic malfeasance and murky financial pasts.
That came out a lot longer than I wanted it to, but honestly, I really don’t understand the viewpoint that is being defended, or the tools with which that defense is being mounted.
“MANY are [renters by choice] and they are the people every landlord is looking for, while MOST are people with some problems who turn out to be good risks and SOME (perhaps MANY) are jerks who don’t pay their bills.”
This is getting funny. It’s like a Bush quote.
But really, Shara, you were trying to say something about yourself (that you know people will say you should have seen red flags, but that you’ve learned that for your property it’s necessary to overlook them sometimes) but instead keep saying something about someone else (most renters rent because they aren’t capable of owning) which you never substantiate with any statistics, facts, studies, or references of any kind. And the sad part is, this point is in no way integral to your article, except to show that you don’t respect your customers.
Just because YOU only rented when you were a 19 year old with no credit doesn’t mean that’s the case everywhere. Wrap your mind around the idea that the whole world doesn’t replicate your narrow experience.
The fact that you interpret 65% of Americans being homeowners and 35% being renters as meaning renters have more problems makes no sense. Do the 35% of Americans who live in small towns do so because they can’t hack it in cities? Are the 35% of Americans who are Catholic only Catholic because they’re not good enough to be protestant? (numbers invented, obviously) Being in the minority doesn’t equal being inferior. Your bias is showing, and it’s getting sad.
In fact, this country has a HUGE asset gap, and most people who are homeowners have benefited from parents and grandparents who were able to pass down assets, whether land, inheritance, or paying for their kids’ education. People who own homes didn’t necessarily “earn” them.
Of course this isn’t really the point of the article… but then again it sort of is. It seems the whole point of your article is that it’s bad to not pay your debts (duh). It’s like writing an article about why it’s bad to wildly swing your arms in a crowded bus. Especially considering the audience. When people have posted stories of declaring bankruptcy here they’ve been eaten alive, it’s not like the world doesn’t know that not paying your debts is problematic. You wrote an article just to finger-wag, and the finger-wagging leaked all over the place.
If anything this is a good cautionary tale for all the people who talk about becoming a landlord like it’s a risk free investment. And for people to be careful who you rent from. I’ve lived in NYC and Chicago where property management companies are rare, and generally shady, and have rented from numerous individuals. Two were fat, lazy, “retired” men in their 50s who inherited 6-flats and hadn’t lifted a finger in years. Like you, Shara, I’ve learned the hard way that you won’t find a landlord without red flags, as none are perfect. But you won’t catch me finishing that sentence with “They wouldn’t be landlords if they could get a real job.”
The 65% number includes people who are currently in default on their mortgages. Renting from the bank for 15-30 years (what a mortgage is, practically speaking) means the majority of people are renters. Most homes are not paid off, and this has been the norm for several decades.
A lot of ‘homeowners’ miss payments and pay late, but because they signed a mortgage contract, they are considered more responsible than renters who do the same. Tons of ‘homeowners’ move from house to house every couple of years, but again, are considered more responsible than renters doing the exact same thing, just without the overhead the homeowner prefers.
Not every landlord is cut out for it. I had red flags going off reading this post that this was a couple that was too soft-hearted to reliably keep their rental property filled with non-damaging tenants. That is just my opinion of the situation based on reading the information given. I have also seen altogether too many landlords who couldn’t really afford multiple mortgages (even having a mortgage is questionable in a landlord for obvious reasons unless it’s something like renting out part of a duplex/triplex) and as a result had chronic tenancy problems.
Shara, I like this clarification you sent to me by e-mail:
What I meant (and then failed to articulate even in my comments) wasn’t anything about renters, but that the golden renters are few and far between.
I think that if you’d framed your comment this way, you probably wouldn’t have caused such a strong reaction. Rather than framing it as “most renters are bad”, you’d be framing it as “there aren’t a lot of great renters”. It’s subtle different, but much less provocative.
Shara thank you for your contribution and the resulting comments.
To all the renters who are so offended by Shara’s remarks about her experience with the people renting her house, please don’t get it twisted she didn’t say all, she said most. The reality is that MOST people that rent houses do so because the are not in a financial position to afford one of their own. Yes, many have already listed the “reasons” why they choose to rent-this story is not about you.
Also, if I were renting out a house I would not think a renter that stayed 1 yr only was a good renter either. Ideally you would want people to stay at several years. The first is usually a trial period, and then go from there.
By the way Shara, I am renting a 1700 square foot duplex on over an acre of land with a garage and full basement at $1500 a month. How much are you renting your place for??
JD, it’s not even that there aren’t a lot of great renters, just that there aren’t a lot of great renters wanting to rent Shara’s house.
No offense, but bankruptcy isn’t the problem. First, you choose to allow the people to move in your home after running a credit report that would show you 1) the previous bankruptcy, and 2) the kind of debt discharged in that bankruptcy. Second, when you received the notice of the bankruptcy filing, you didn’t seek legal advice. Upon the filing of the bankruptcy you could have immediately filed a release from stay, but instead choose to listen to non attorneys who told you you had to wait until the meeting of creditors (which is false since the bankruptcy trustee couldn’t help you, only the bankruptcy judge could). Third, like with everything in life, people try to abuse the system. The same applies with bankruptcy. For the most part, people play by the rules, sometimes they don’t. You could have filed a motion with the bankruptcy court asking for sanctions from the debtors trying to abuse the system.
This had potential to be a great article, but you allowed your classist attitude to come out and it left a bad taste in my mouth.
Perhaps you should examine why it seems that your house attract bad renters?
As far as vacancies, if I’ve met the terms of my lease, the onus of refilling the apartment is on you. My job is to pay rent on time and not to damage the apartment/house/whatever more than normal wear and tear. Your job is to communicate with me about my plans after the lease term is up, either to find new tenants or to draw up a new lease.
I stayed at my previous apartment for 4 years (and I’d still be living there if I hadn’t moved 3,000 miles away). I just renewed my lease for this apartment for year #2. I always pay on time. I even have enough money to buy a house! I stayed because the apartments were wonderful and the landlords were decent. What are you doing to retain tenants? Or, why does your house seem to attract only the temporary renters?
@ Wendy
“Also, if I were renting out a house I would not think a renter that stayed 1 yr only was a good renter either. Ideally you would want people to stay at several years. The first is usually a trial period, and then go from there.”
It’s a trial period for the renter AND for the landlord. If you aren’t a good landlord, you don’t get another year! (This is ignoring the other narrowminded claims in your comment, which have been refuted by other comments…)
WAY TO GO SHARA!!!!
Your tenacity is impressive.
It is bullcrap people feel they can take from you and feel like the victim.
You have every right to kick the deadbeats out, and i’m impressed with your patience!
Best,
Sam
Shara, thank you for your article. I do think it is good to hear from the landlord side, because in my experience that is a little told story. An old landlord friend use to regale me with stories of court appearances, trash-filled apartments and other nightmare renter situations. It can be awful.
Again, I appreciate you writing. Submitting an article about oneself here is not for the weak. I have also gotten much from comments you have posted on other articles at GRS.
That being said, your hot “renter” statement did not really bother me until you began to comment in defense of it. Those statements seemed to only pound home that you have some harsh feelings about renters, in general. I understand, with your experience, where that could come from, but I also understand that making assumptions about the general public (this includes your stats and even the clarification J.D. just listed) based on what appears to be limited experience is not very credible. I can only hope that some “golden renters” come your way and shift your future perspective.
Full Disclosure: I’ve been a renter all my life… on time payment and leaving the apartments in better shape when I exit. Have had good landlords, bad landlords and an extremely rotten management company.
I think I agree with a previous commenter that said something to the effect of stated facts needing a citation or fact checking. If there isn’t proof provided that most people do X, then it shouldn’t be stated as fact.
And no, 35% of people being renters doesn’t mean that more than half of them have problems, or have problems at the time of first renting. There are a lot of people in the renters pool, including rent controlled folks, professionals in large cities, graduate students with steady stipends, section 8 folks for whom the gov’t pays the landlord, and so on. Maybe 50% have bad history, maybe they don’t. If neither the writer nor the editor knows the truth behind the statement, then a less definitive statement should be used.
For me it isn’t a problem with the statement itself but that the statement wasn’t fact checked and there’s a high probability that it actually isn’t true. If it is true, then go ahead and make the statement, but supposing it to be so doesn’t make it so.
And the logic behind why it *must* be true was bad logic. That also bugs me. Shara, you’re a smart lady but some of the logical leaps you make to prove a point are not the best. I wish you’d take our graduate program– I think you would do well in it and it would give you a lot of tools for thinking these kinds of things out.
As someone else said, this article isn’t really about bankruptcy. It is about the hazards of being a landlord. That’s a really interesting topic but I would have introduced the story in that context.
No one was hurt here because of bankruptcy. Stalling tactics to avoid eviction (the actual role of bankruptcy in this story) are used all of the time by those who are either in desperate circumstances or unethical. In some cities it is waiting until it is too cold to evict tenants, in others it is timing court dates, the list could go on and on.
I’d like to gently support what another commentator said: JD should edit out things that are clearly inflammatory, like the “renters are bad” statement. If the guest writers don’t like it then their posts don’t go up.
I was a landlord for about five years. I never had a bad tenant and I still hated it. I had bought a duplex, lived in half, rented half. I screened potential tenants carefully and kept my rental rate a little lower than market so I would get a number of applicants when I had a vacancy. One thing I did that I don’t see here (coulda missed it)was having a serious conversation at lease signing time. I told the new renters they weren’t dealing with a rich landlord. If they didn’t pay me I couldn’t pay the mortgage. This was hard core conversation, stern eye contact, requiring clear responses. I said that if I wasn’t paid on time I would start the eviction process the very next day because I couldn’t afford to carry people.
I never had to do that. I never had a bad tenant. Even so, I did have vacancies. The vacancies eroded almost all of the money I had hoped to get from renting out the other half of my house. I’ll never be a landlord again. I don’t have the stomach for it.
I am always amazed at how some people know how to work the system… and these people did know how to manipulate it. Reminds me a little of an ex-friend (we fell out over issues along these lines). She and her husband filed bankruptcy last year and she is now talking about leasing a new car. And thus, the cycle continues.
I’ll go out on a limb and say, yes, many people are renters by choice. I was a renter by choice for almost seven years. I know lots of people. First, being a homeowner is an obligation. I dont want to have to mow the lawn, do the repairs, pay the taxes. I want someone else to do that. Secondly, a huge number of people live in the city, where renting is the norm. Are you really willing to say that just because renters are in the minority, that must mean that people who do so wish they werent renting. I’ve been a homeowner, a renter and now a homeowner again, and darlin, being a renter was the most relaxing time of all.
Another thing that I find interesting here – and it’s nothing new when talking about finances & responsibility – is the heavy dose of morality and judgment.
Funny thing is that businesses make these kind of decisions on a daily basis – pay this bill late, pay that bill late, etc, pushing the limits and paying based on cash flow, which isn’t always consistent, and filing bankruptcy as needed.
But when an individual makes these same choices, the judgment flows like crazy.
For companies, it’s a “business decision”. For individuals, it’s “being irresponsible and making a series of bad choices”.
I find that an odd way of looking at things. In fact, I think that companies, which are run by people who ought to know better, should be held to the higher standard.
This isn’t a fault of the bankruptcy system, this is the fault of irresponsible people abusing the law and partially the landlord’s own lack of knowledge.
Yes, an automatic stay can usually be easily lifted by a landlord. Don’t forget that ever again. I strongly recommend the Nolo Press series of self help law books. They contain a wealth of information and are reasonably priced.
Just as there are bad tenants, there are bad landlords. Landlords that purposefully ignore the law and ‘forget’ to refund deposits, refuse to fix things or claim they don’t have to. That doesn’t mean that all are bad or that rental law is bad.
In the same way,
Bankruptcy is a a useful and fair way of handling a situation where someone doesn’t have enough money to pay all their debts. Without bankruptcy to provide a structured way to deal with the various debts, a mom and pop landlord team would find themselves in a legal race to collect back rent with 4 credit cards, the auto loan and a paycheck center. And who is going to win that fight over a very small pie?
“Renters rarely have clean records or most of them wouldn’t be renters”
From this statement, I’m figuring you don’t live in the same kind of area that I do. I have rented for 20 years in the San Francisco Bay Area. My credit is completely clean, but the cost of housing is such that on my salary, I could never afford a house(or condo) within an hour’s commute of where I work. There’s a huge number of people just like me. I suspect the situation is the same in other very large metropolitan areas.
I’ve got to add, I sympathize with Shara. I see where she’s coming from, and I largely agree.
Repenttokyo, the truth is that the conventional wisdom is that in general, owning makes more financial sense than renting, over the long term. Yes, of course there are exceptions (“What about people who move frequently?”). Congratulations – you found some exceptions. But the math proves that overall, it makes more financial sense to own than to rent. That’s why there’s an assumption that everyone wants to eventually own their own property, so therefore renters are only renting until they can afford to take the more financially-advantageous step of owning. That’s why the phrase “renters by choice” exists. It’s not derogatory. It simply explains why someone with financial means has not taken the next logically financially prudent step towards ownership.
Also, I don’t think Shara’s characterization of renters is that far off base. The only time I rented was right after I graduated university. I had the same red flags (young, no credit history). Likewise with all my friends. We fit that description to a ‘T’, and we rented until we could afford to buy homes.
We rented an apartment in a large building for 2 years. When we gave our notice, our landlord said she was sad to see us go. We had a short discussion, and I learned that a huge number of her tenants were habitually late with the rent, complaining about each other (noise, cigarette smoke, pet smells, etc.), even when those complaints were unfounded or horribly exaggerated. In contrast, my wife and I never broke anything, always paid our rent on time, and never complained about our neighbors (some disruptions are par for the course when you rent – you just deal with it). Until that last day, I just assumed everybody was like us. I had no idea that so many people (maybe it’s just renters, hmm?) were irresponsible, opportunistic jerks.
All that to say, I hear what Shara is saying. And she actually has the experience behind her to support her claims. How many of you who are attacking Shara have actually been a landlord? You’re basing your comments on a single anecdotal experience – your own! Give her a break.
@ comment 184 (Kevin):
Perhaps you missed the part of my comment where I mentioned that I have helped my father deal with over 1,000 tenants at the more than 11 multi-unit and single family rental buildings that he owns? I don’t feel that a 1,000+ tenant base is anecdotal – I do feel that the post writer’s experiences related in this piece are anecdotal, based on her very limited experience as a landlord.
Have you ever actually been a landlord, Kevin?
Kevin: You probably live in a flyover state where you can buy a house for less than $200K which is what my deposit would be on a two bedroom apartment. Don’t use your narrow experience to judge all renters. People in NYC rent apartments for $8K a month or more. Clearly they could buy, but choose not to. Not all renters are irresponsible or have no other option.
Kevin! You’re making more statements that aren’t true! “owning makes more financial sense than renting, over the long term”
To make that statement, you have to factor in how frequently people move on average, the average gain for real estate compared to the next best option, and the break-even point for renting vs. buying across various markets.
From my urban economics class (4 years ago) I can tell you that ON AVERAGE there is no financial benefit to renting or buying. ON AVERAGE the markets break even and it works out.
The only way that buying is more financial sense than renting, I tell you from my experience in my own field, is that it forces savings for people who are no good at saving (and that benefit has diminished with the ease of tapping into home equity in most states). Everyone else is equally well off renting and putting their money away in a diversified portfolio (which can include REITs if they want). Not better off, not worse off. Heck, you could argue that people with “good” credit don’t need that kind of commitment device, but that would be taking things to a pretty silly logical extreme. One could also argue that people better with their finances are more likely to have seen the rent vs. buy calculator in the NYTimes or to live in big cities where the cost of ownership is prohibitive.
Governments like to encourage buying because they think homeowners are more invested in their communities and are more stable people. But there’s no actual PROOF that that’s true, and the mortgage credit has not actually improved homeownership, all it has done is increased the size of the average house (there’s some famous papers on this, but it’s easiest to get the summary in Jon Gruber’s Public Finance textbook). That’s why many very prominent economists, like Jim Poterba, have been urging the government to get rid of the mortgage tax credit– it’s inefficient and doesn’t do what it was supposed to do, and what it’s supposed to do has debatable benefits anyway.
Stop with the making false statements as if they’re facts. If you’re going to make factual arguments, get the facts right first.
“renters rarely have clean records or most of them wouldn’t be renters.”
That is totally IGNORANT for you to stereo-type!
I have been renting for 9 years in the SAME home? Why? Because I have poor credit? NOT!!! I work full time, have never been late on any of my payments on ANY of my bills. I have a 2 year emergency fund & am nicknames “frugal fannie” by all my friends. Why don’t I buy? Move down to Sunny Ca & find out! Property Taxes & Home Prices are still so high that it is more realistic to rent. Sorry you got screwed but don’t lump renters into the same category.
Wow. This was extremely informative and useful. My job caused us to move away from our first home and we are now renting in our new locale. We are also attempting to rent out our home we left behind because it hasn’t sold. Thanks for sharing your story.
*It wasn’t just ‘someone’ who told us to wait for the creditor meeting, it was the county court judge whom we mistaken assumed should know.
*Lifting a stay is possible, but court isn’t user friendly and lawyers aren’t cheap, nor do they come with a sticker price. $250 to the court to file the release, another $150 to have a lawyer file it, then they have an hourly rate for consultation and follow up. It wouldn’t have been inconceivable to get them out a month or two sooner and more than spend that much on legal fees.
*It is a story about bankruptcy as it was someone using bankruptcy court to avoid debt. I fully expect to receive a notification soon that they have filed again, declaring bankruptcy for the eviction judgment. I have not pursued the matter because they don’t have much to take and the process of tracking them down and calling the sheriff again would cost MORE money. Then they would just file again because they don’t have any money and they don’t want to pay me.
*I never claimed to be an expert. But there is doing your due diligence and then there is being an expert. Maybe I shouldn’t be a landlord. Part of the reason I turned it over to managers was because I realized my limitations, but you don’t always know what they are until you hit them. But people should be able to be independent landlords without having to understand the intricacies of the bankruptcy system. Besides I know things that the property managers I have consulted don’t know how to handle.
*You have all convinced me: I’m worse than a evil faceless corporation. I’m a closed minded snob with serious gaps in my logical thinking skills. I even need to go back to school. Renters can smell me from far enough away that they don’t even bother to look at my cute house in an upper middle class neighborhood, so I only see the worst tenants out there. At least I haven’t read anyone yet claim that because of that I deserved to be stiffed (although apparently to get sympathy you need to be cute, smart, and charming).
*And for anyone who asked specific questions, I apologize, but I am not going to answer them because I didn’t read them. I saw some question marks but I was just scanning (for supportive and constructive comments). If you don’t know why I haven’t taken the time to read and respond to each person: re-read the comments and use your own deductive reasoning to figure out why. I’m just glad I don’t have to monitor for offensive comments while people have such critical things to say, like JD does on a daily basis.
To Missy @162.
I am only aware of it in Australia, but I have a policy that covers me for most of what happened to Shara.
It covers for most tenant damage, lost rent etc etc. It is not an easy process to claim, but then again when is insurance easy to deal with…
S
Actually, just thinking about it, I am a tenant as well as a landlord (the house I own is about two hours from where I work so not practical to live there) and I have renters insurance for where I am renting.
Shara, I’m afraid you’re still coming off as mighty defensive. Why not take a step back and consider whether there might be some substance in what some of the readers have said (most notably those you disagree with so vehemently), and also take a look and see how many comments *were* supportive and appreciative of your story. Sometimes the lessons we most need to learn are the very lessons that are the hardest for us to hear.
I think we get it. You’ve been seriously burned and you’re still pretty mad about it, you wanted to tell your story, and you want to continue to be “right.” But you’re not apt to build much more sympathy by continuing to respond with such defensiveness.
I enjoyed Shara’s story, and barely noticed the “most of them” comment. If it hadn’t attracted so much other attention, I wouldn’t have remembered it. I get where Shara is coming from, and I am a good renter who’s had a terrific landlord for several years now. I’ve had bad landlords too, which makes me appreciate my current good one all the more.
Bad renters can make life miserable for more people than just the landlord. We had some renters who were a real piece of work. On separate occasions they sicced the local police on a visitor, a neighbor, and finally my landlord after he terminated their tenancy. After they moved out they filed a frivolous discrimination complaint with the state fair housing agency. The case fizzled, but if it hadn’t I was prepared to go to bat for my landlord.
Shara, as one of the renters who protest that single statement, I do think that you had a lot of very interesting and informative information from a creditor’s point of view, and agree that these tenants have behaved absolutely terribly. Neither you nor anyone else should have to go through the B.S. you went through with these tenants. The problem is, that single statement was inflammatory enough to prevent your useful information from being the thing that got across to readers, and your unwillingness to consider the objections to that statement only made the situation worse.
Wow. Interesting post from a perspective that isn’t in the news much. I feel for you (and Tara and Peter.)
From an outsider’s standpoint it seems the law worked as it should with everyone using the letter of the law to protect their own interests.
You got possession of your property back, later than you would want, but in far less time than some of the stories we’ve been hearing about in the news (and without having to pay their moving expenses). They got to hold off eviction while, hopefully saving up some money and figuring out what to do next (though they did lose their home, not fun.)
My advice to you: if you’ve had a series of bad tenants, perhaps you are giving off subtle vibes that signal you consider tenants adversaries and that is scaring off the vast majority of good renters?
I hope your next tenants work out better for you.
Great article, I really enjoyed reading about your experience. I’m glad it didn’t permanently damage you financially. I have always had reservations about becoming a landlord because of the downside risks.
Too bad most of the commentors focus on one thing they don’t agree with.
Wow Shara, thanks for that story. It somewhat makes me thankful we didn’t keep our old house to rent out.
I hope some of the people commenting go back and re-read the story instead of focusing on one immaterial comment.
Perhaps JD left it in to drive comments? 🙂
Sassy said: “I am only aware of it in Australia, but I have a policy that covers me for most of what happened to Shara.
It covers for most tenant damage, lost rent etc etc. It is not an easy process to claim, but then again when is insurance easy to deal with…”
I have not heard of similar policies here in the USA. I’m a landlord and my dad has been one for decades. WE do have ‘landlord insurance’ but as far as I know it typically covers increased liability and loss of rent due to loss of use from stuff like a fire. But it doesn’t cover loss of rent due to renters not paying rent. Maybe there are policies like yours in the US but I’ve never heard of it.
Shara please don’t let the negative people get you down.
Shara said: “*Lifting a stay is possible, but court isn’t user friendly and lawyers aren’t cheap, nor do they come with a sticker price. $250 to the court to file the release, another $150 to have a lawyer file it, then they have an hourly rate for consultation and follow up. It wouldn’t have been inconceivable to get them out a month or two sooner and more than spend that much on legal fees.”
I said originally that I think your experience is a good argument for hiring legal aid from the start. But thats only something I’d conclude in hindsight here. I wouldn’t expect you to make the ‘right’ choice to hire a lawyer before hand. If I was in that situation I might have tried to handle it myself without a lawyer to avoid the legal bills. But after hearing about your experience might make me hire a lawyer from day 1. Its a good cautionary tale for landlords.
My fathers first eviction was difficult. He didn’t hire a lawyer. He learned from that experience and he now hires help from an eviction service if he has to go to court for eviction. Its only something he learned after the 1st time.
Shara;
Thanks for sharing your story. I also read right over the statement about renters without a second thought, and I wish more posters would have focused on the point of your article, and not a distracting side issue that many seem to be taking personally.
It is amazing how many people missed the “point” of this story. I feel so bad for the couple who own the house. The point was… sometimes people think they’re sticking it to ‘The-Man’ but ‘The-Man’ isn’t always a large corporation or company w/ insurance to cover losses like this. I too am a home owner in a small mid-class neighborhood. We had a contractor take 50% of the money up front & then never do any work or show-up. Because we had a contract we were able to sue & win. The contractor spent our money on personal stuff. For 18 months we have heard him say in ‘status-hearings’ at court… “I have no money your honor to pay them back”. He too has said he will file for bankruptcy… which would leave us out $6000.00 We too are not Fannie May or Goldman, we are just average people.So remember, sometimes “The-Man” is you.
I am also amazed at how defensive so many “renters” are.. I was a renter before I bought & I took no offense to her comments. If you are a honest person, she was not talking abt you.
I second that, Rachael, #201:
I, too, was a renter all through college and even for 2 years after, and I was a model lessee. I can believe that there are as many good as there are bad renters.
Too bad Shara had to endure all of that! What a nightmare!
I still sometimes think rent is too high (my sister-in-law pays $1200/mo. for a third floor, 2 bedroom apt. and I pay the same to own a 4 bedroom, 2.5 bath, 2700 sq. foot home), but when I read these kinds of stories I start to think that the more you charge for rent, the more likely you are to find a responsible tenant.
The point of the article, at least as it was written, was how not to be a landlord, not bankruptcy per se. It’s an effective cautionary tale about being a landlord, but it has little to do with bankruptcy itself. Bankruptcy was just one small piece of a much larger picture in this particular case. Shara’s blaming the bankruptcy when in fact it was just one of several tools these tenants used to jerk Shara around.
As to the continued “I was once a renter! I wasn’t offended!” comments about Shara’s attitude toward people who rent, may I just say that no group of people appreciates being disparaged or painted with the broad-brush biases and negative stereotypes associated with that group, whether racial, ethnic, religious, or class. Sure, the folks who rent and who are “honest” as in this case (there are probably more of us than you think!) are probably “not the ones [Shara] was talking about” but it still betrays an attitude of class bigotry on the part of the landlord. It’s possible that her attitude and beliefs were a strong factor in the progress and outcome of this case – tenants are her bread and butter, at least in her capacity as a landlord. Her attitude may have had a big influence on the kinds of tenants she attracted and that she consented to rent to. I personally would not want to do business with – i.e. rent from – anyone who had such a negative attitude toward people who choose to or who need to rent their place of residence.
I’m still not particularly offended. I just think that “factual” statements, especially those that cover a broad group of people should actually be factual and should have evidence to support them. That’s true whether the statement is controversial or not. I’m inclined to think that the editor should have rejected that statement not on the grounds of controversy but because it didn’t come with evidential support.
As a bigger point… not everything in the world is black and white. And just because someone disagrees with a statement or logic doesn’t mean they think the person who made the statement is a bad person. There’s a lot of ambiguity in the world and it isn’t always easy to (nor should we always) sort into “good” and “bad” slots, as much as our minds are set up to think that way. That holds for renters and health insurance and people who make or disagree with statements on forums. The world is very complicated.
wow. i’m sincerely sorry that all of this happened to you; there’s no excuse for it. these people took blatant advantage of the system in order to steal from you. however, like many readers here, i also take umbrage at the remark that “renters rarely have clean records or they wouldn’t be renters.” i’ve been a renter for about ten years (moving around for jobs, college, grad school, and such), and i can’t see buying a house for at least another couple of years, at the very least. i’ve never been late on my rent, and i’ve always taken impeccable care of every rental i’ve ever been in. maybe i have already rented from someone who regards renters this way, but i really hope that in the future i don’t ever have to rent from someone who sees me as just a woman whose record isn’t clean enough to buy a house.
I totally disagree with the statement that renters rarely have clean records or most of them wouldn’t be renters. No renter is perfect. My husband and I have rented for the past 4 years and I have rented for several years before that. We don’t do it because we don’t desire the stability of a home. We do it because we aren’t willing to jump into a homeownership situation where we might have problems like the millions of other people who recently had to default on their loans.
Sorry about your experience with renters…as both a landlord and a renter, I can attest to the fact that not all renters are perfect, nor do all renters try to screw their landlords. Luckily the house I own and rent out is in Texas, where anything goes as far as landlords are concerned, and evictions can take place in as little as 15 days. I haven’t had to evict anybody yet, but I probably would if the economics were right.
As a renter in Seattle, I’m paying approximately 1/3 of the monthly mortgage on my landlord’s home, which is quickly depreciating as the housing market falls. (Don’t worry, he’s a physician and can afford many times the loss he’s taking, although I wouldn’t want to be in that position.) It absolutely makes economic sense for me to rent at this time, and at least for the next year or so. I don’t pay late and haven’t damaged anything, although I do keep the landscaping at somewhat less than show quality and I may occasionally leave a dish in the sink. You are welcome to your opinion of renters while I, the ‘dirty renter’, reap the benefits.
Now if I can only keep my tenants from screwing me!
I have lived in Section 8 as a child. My husband and I have rented and took care of the property, paid on time. We now own. Which of the three is best for us? Owning, even in this market (see my prior post re rent-to-own) and even with the situation next door.
Why is Shara being castigated for one short comment? Why are you who castigate so defensive? How about doing some soul searching and then sticking to the topic, eh? Seems to me you’re over-reacting and that in itself blows your credibility. IMHO.
Oh, dear. What a terrible story! I do have to agree with some other commenters, though: it echoes experience I’ve heard from friends who have rented property.
It’s too bad that some folks personalize your comments as though they thought you were speaking about them specifically. What you say amounts to words to the wise: even though many renters are decent people who will respect your property, as a business operator you must make decisions based on the worst possible case. So, unfortunately, it behooves you to expect that any given renter has the potential to wreck your property while squatting in it and then steal you blind on the way out the door.
Your first mistake, IMHO, is that you didn’t treat the relationship with these renters as a business transaction from the outset. You cut them a break at the git-go, when they told you they didn’t have enough for the deposit (!!!).
Next, you let them float for at least four months: two months when they paid late and then even longer, after they didn’t pay at all.
By now, in their minds you’re a sucker and a soft touch. They know they can get away with whatever they please.
This happens because you have not behaved like a business owner.
If you owned a department store and someone came in and put a bunch of Christmas gifts on layaway and then didn’t pay by December 24, would you let that person walk out the door with the unpaid-for goods just because you didn’t want to disappoint their kiddies? No. The deadbeat renters and their offspring should have been celebrating Christmas under the freeway overpass. Not because you’re a bad person, but because you own a business and your responsibility is to the business, not to the tenant’s kids.
Third mistake was not to have hired a professional the instant the word “bankruptcy” floated into the air. In fact, you should have a permanent working relationship with a good real estate lawyer.
If the picture is of your house, it’s very pretty. You say it’s in a middle-class neighborhood. Renters don’t have to be low-income to behave like trash — even upscale properties get trashed with some regularity by renters. That’s why those of us who do live in middle-class areas dislike it when owners turn homes into rentals: even when rental rates are high enough to cover a hefty mortgage payment, renting usually leads to deteriorating properties and depressed property values.
Shara, seriously, what if I talked about how all landlords are money hungry people that found a bunch of money and didn’t take care of their obligations to keep property up? You’d take it pretty personally. It sounds like you live in a really cruddy part of the country. My parents and my brother are landlords and have had NOTHING like the experience you report. I’m sorry you had a bad experience but that is no reason for prejudice.
And there are going to be a lot more people renting now that getting mortgages is much more difficult.
I have 4 rental properties and have been doing this for 6 years. My number one piece of advice to new landlords is to NEVER make exceptions on credit risk. Define your standards based on your property and neighborhood and stay firm. Don’t fall for the trap of the fact that the place is empty so I might as well take a chance.
I haven’t read all the comments but the part of the story that sticks out to me is that these people had previously filed or were about to file bankrupcy. I would NEVER allow a tenant in my property that just filed or recently filed for bankrupcy. I wouldn’t care about the reason. That may sound callous but in a world were a landlord has to make a guess on whether a tenant is going to pay the rent. I don’t want to bet on a tenant that has already decided to not pay all his/her bills.
Great! I’m going through a foreclosure and bankruptcy. I will be needing to rent a house. I would NEVER do anything like what they did to you. I hope someone (like yourselves) offers me a chance to prove myself. I’m the kind of person that would advise you and leave if I couldn’t pay – even if you held me to the lease – I would borrow from a family member to fulfill the lease. And I would actually clean up the house and hand you the keys (and hopefully shake your hand) before leaving. There are SOME good people out there going though tough times. While your story is a sad and unfortunate one, please don’t think everyone who files bankruptcy or has a foreclosure on their record is a bad person or risk. Thank You.
It’s good to see an an article that illustrates every dimension of bankruptcy. We certainly like to make sure that our clients are aware that its not all doom and gloom, but it is definitely not all good. There’s too much advertising focusing on the benefits of filing bankruptcy these days, with little regards given to each individual’s situation.
Thank you for sharing your story.