There is nothing more disheartening than walking into a property you’ve just taken the keys back from the tenant on and finding thousands of dollars of property damage! It’s enough to make you want to sell all your rentals and give up on landlording altogether.
Whether you had a long and painful eviction with the tenant who damaged your unit, or he seemed nice and paid through the end of the lease with a smile, you can still be surprised to run into thousands of dollars of needed repairs on a tenant turn, and no one likes that. There is a great deal to learn about the real estate investment business and I finally have enough gray hair to help you feel convinced that I learned the hard way.
However, in reality, my hardest lessons learned were on my first few properties when I was young and naive and probably looked like an easy mark for tenants who wanted to take advantage of me.
While I never ran into malicious tenants (more like lazy, poor, and unmotivated ones…) I have heard horror stories about tenants “laying waste” to homes and deliberately sabotaging the home by pouring concrete down the drain, paint on the carpet and other horrible and creative approaches to damaging property to “stick it to” the landlord.
Selling My Tenant-Occupied House
Enter your information for a free report on how to sell your tenant-occupied house.Property Management Is The Part Of Investing No One Tells You About
While the cap rate, cashflow and appreciate tables can look great when you analyze your investment property on paper, the challenges of dealing with people is the hard part that nobody tells you about, and finding a tenant who is responsible and takes good care of your investment is not so cut and dried as working with numbers.
Whether you’ve recently experienced an eviction due to non-payment (or the tenants poor upkeep of the home, (which can be another valid reason to evict according to Seattle’s city laws), or you’re simply looking to dive into the world of real estate investment for the first time… there’s always more to learn, and I hope I can save you from having to learn too much the hard way… at the “School of Hard Knocks.”
Before diving into your first investment property that property might shine on paper, remember to protect yourself. Seattle is a NOTORIOUSLY DIFFICULT place to be a landlord and handle unruly tenants. If there were ever a city to SERIOUSLY CONSIDER PROFESSIONAL PROPERTY MANAGEMENT, this would be it… and I am not a property manager. But I have managed my own properties, and I have used a property manager… if you can afford to buy an investment property in Seattle, you can afford to use a property manager. It is a much better option in my opinion.
Tenant Screening Is Your Best Defense To Prevent Extreme Damage To Your Property
It’s crucial that you don’t overlook any step in the tenant screening process—especially when it comes to checking references and reaching out to your prospective tenant’s former landlords.
Landlord Screening Trick For Job References: If they tell you they work at Boeing, call Boeing HR directly (or at least look up the number on the internet) – don’t just trust the number on the paper. They could have given you their friend’s phone number and told the friend to lie when you answer the phone and pretend to be Boeing HR confirming their employment and income.
Landlord Screening Trick For Past Landlord References: If they give you a number that’s their past landlord, it could be their friend there to tell you what you want to hear. Ask them some tricky questions… If the application says they paid $2,000/month at their last home, tell the landlord the application says they paid $2,800 at their last place. Tell them the application says they were late 2 times in the last 12 months, and see if they confirm. If you are “making up” items that are not on the application, and the supposed-landlord is just confirming everything, chances are it may not be a real landlord.
Be Sure To Do A Criminal & Credit Background Check – Make sure you also do a criminal background check and credit check. If they have really thoroughly damaged somebody else’s property, they may have a lawsuit or collections pending from the last landlord whose home they left in ruins.
Unfortunately, Nothing Is Fool-Proof
Even with the most rigorous screening methods, landlords should be prepared for the possibility that even the best tenants can cause some wear and tear. There is a difference between “wear and tear” which is the normal expected wearing out of items in a home, and deliberate or neglectful damage to the property.
If a family lives in a home for 10 years and they move out and the carpet is shot, then you can’t charge them for the replacement of the carpet. The landlord must bear the cost of that entire carpet replacement bill.
If a family lives in a home for 1 year and the new carpet is ruined and you have to replace it when they vacate the property after just that 1 year of tenancy, then the tenant is responsible for damage, and you can charge them for part of the replacement cost of the carpet (an amortized amount.)
So… depending on how long a tenant has lived in a property, it’s possible that there could be thousands of dollars of property maintenance needed when they move out, to get it ready for the next tenant, even if they did nothing wrong while they were in the home. Wear and tear is not caused through tenant negligence, but through normal usage.
Make sure you know the legal difference between “Wear and Tear” and “Damage” to a property.
Know The Difference Between “Wear And Tear” and Property Damage
Now, if you’re not sure what to expect for the life of certain elements in your home, not to worry. HUD, the Department of Housing and Urban Development, has developed a chart that give us an idea of the expected lifetime of many of these items.
For example, most items in a house have a normal life expectancy as follows:
Hot Water Heaters: 10 years
Plush Carpeting: 5-7 years
Air Conditioning Units: 10 years
Ranges: 20 years
Refrigerators: 10 years
Interior Painting: 3-5 years
Tiles/Linoleum: 5 years
Window shades, screens, blinds: 3 years
When you are billing a tenant for property damage and planning to make him pay for repairs, make sure you don’t overcharge, by getting him to pay for a whole new carpet when the carpet he moved in on was already on its last legs.
Remember, tenants are the cornerstone of your business strategy, and they pay the bills. But also they are people and normal wear and tear is part of life. You’ve probably spilled on the couch or carpet while eating in front of the TV a time or two yourself. Some tenant-caused damage is to be expective. Only excessive damage caused by the tenant should be charged when the tenant moves out.
Types of Property Damage That Are Not Caused By Tenants
While I’m writing this there are hurricane warnings happening in Florida, and it reminds me that there are some kinds of damage that are not caused by the tenant and the landlord may want to see if his landlord insurance will cover. For example – a drunk person crashing through the front living room (Thanks for putting that image in my head, instagram!), a flood, or a tree falling on the roof. Even other “home maintenance items” like a sewer backing up, or the stove breaking. These kinds of damage may happen on the tenant’s watch, but they are not the tenant’s fault.
Make sure you don’t try to pass on every single expense, trying to cover all your costs from the tenant. If you’re unfair, he may refuse to pay and you’d have to try your case in front of a judge at small claims court. It’s seldom worth it, and it’s also not the right thing to do.
Why Do Tenants Cause Property Damage? And How To Discourage This In The Future
When you discover damage in your rental property in Seattle, the first step is to thoroughly assess the unit to understand what led to the issue. Start with curiosity, and not anger.
Remember, accidents can happen to anyone—even the most reliable tenants may inadvertently cause damage that exceeds typical wear and tear, which is a natural part of being a property owner. I remember one of my tenants was burning a red candle and spilled the wax onto the white carpet at my rental house and I was so mad at her!
Sometimes, damage arises from tenants not properly maintaining their living space. For example, long-haired little girls can accidentally clog the shower drain and let the water backup, or splash it out of the tub while bathing. I remember we had a suspicious water leak coming out of our kitchen light fixtures shortly after my daughter was showering one morning… it happens, we investigated and couldn’t find any source of the leak. We asked her to be more careful while showering and it didn’t happen again….
Similarly, toilets can get clogged up and overflow. (I won’t share any personal narratives about that – but let me recommend against carpet in the bathroom altogether!). 50 Year-Old Galvanized Pipes can break, etc.
The larger concern is trying to educate your tenants about home maintenance and letting you know early if something doesn’t look right (a dripping faucet, a smoking chimney) so you can fix it (and you won’t get angry, and you won’t raise the rent)… it’s just part of your committment to keeping up with the property.
Regular Inspections Can Help Catch Property Damage Early
Likewise, you may want to do an annual or semi-annual inspection of the property so you can look for any problems like ants, soft spots in the floor, cooking grease, and other problems that tenants might be willing to overlook, but could be warnings of bigger problems to come if they’re not addressed. Landlords face maintenance issues all the time, and shouldn’t hold these types of concerns against the tenant. In fact, working together to keep the tenant’s home nice, may induce them to stay longer because they like to live in a cared for home that is well-maintained.
What To Do When An Inspection Shows Property Damage
On the other hand, if you inspect the property and see the tenants are not taking care of it, you can make a list of repairs and chart out which ones are the landlord’s responsibility and which ones are the tenants responsibility. If they’re really acting up, and there are conditions in the home that are in violation of the lease, you can serve them with a notice to repair the conditions or leave. Although no one wants an eviction, mad tenants and a damaged property, it may be better to get rid of these kinds of tenants sooner rather than later.
If you want to “manage them out” more subtly – you can try a big rent increase (up to 10%) and more aggressive inspections and management tactics and see if it’s enough to get them to uproot and move on.
Landlord Rights & Tenant Responsibility When Tenant Destroys Property
When your tenants cause damage to your rental property in Seattle, it’s important to take proactive steps to ensure they cover the repair costs as outlined in the rental agreement. Getting your money back out of the tenants can be especially difficult if the cost of the damage exceeds the amount of their security deposit.
Consider Pursuing A Judgement
While some landlords might just write off the excess as non-collectible, I think it’s good to go after the funds. If you can get a judgement against the tenants, they may have to pay it later to clear their credit if they want to rent a better home or buy a house in the future. A collections notice from a past landlord also serves as warning to other people who might consider doing business with them in the future.
Document Conditions and Set Expectations
When the tenant is preparing to move out, you should instruct them that they need to return the proeprty to its original condition when vacating, including getting rid of all their furniture and other items, wiping the counters, vaccuuming the floors, etc. Many “good” tenants will choose to have a professional house cleaning of their rental unit, in the hopes of getting their damage deposit back.
Have good documentation of what condition the unit was in when the tenant arrived (move in photos or a checklist are a good idea) and what condition the property was in when they moved out (again, use photos or a checklist). That way, you will have clear evidence for a judge if you do need to prove your tenant has damaged your rental unit.
Once the tenant has moved out and the unexpected damage has been documented, you can estimate the cost of repairs and charge the tenant their pro-rated share. (For example, half the cost of carpet replacement if they damaged a 3-year-old carpet beyond repair, because half of the carpet was “used up” via wear-and-tear from the previous tenant).
Once you’ve tallied everything up, the tenant may be shocked or frustrated by the size of the bill you present them with. Some tenants fear the landlord is “jacking up” prices to “gouge them” and “steal” their deposit. When possible, present actual invoices or estimates for the repair costs from vendors, so tenants can see how much these goods and services actually cost.
Many landlords choose to deduct these expenses from the security deposit at the end of the lease. If the costs exceed the amount of the deposit, you should ask the exiting tenant to pay you for the balance… which they may refuse if they disagree, but if they are a good tenant who wishes to protect their credit, they will pay, or workout a payment plan. I had a tenant write me a check for $8,000 when she broke her lease early and left her house a mess.
If The Damage Exceeds The Size Of The Security Deposit
In cases of significant damage, you might need to explore legal options to address the situation. Consider hiring an attorney to assist you. If your claims are less than $10,000, consider going through the Washington State small claims court process to present your case, and try to win a collection order from the tenant.
To support your case, be sure to gather photographic evidence and thorough documentation of the damage, along with any repair estimates and receipts. This preparation will empower you to effectively handle the situation and protect your investment!
But remember, as my father always says, “You can get blood from a stone.”
What that means is if your tenant is broke, you’re not going to get any money out of them, even if you win in court. So, be thoughtful about how much time and energy you want to invest in pursuing the case. It can be extremely stressful to have something like that hanging over you. Some people love it and some hate it. Consider your quality of life.
Landlord Responsibility & Property Management Challenges
If your tenants are frequently causing issues in your Seattle rental property, it’s a great opportunity to reflect on your property management approach and enhance your communication with them. Maybe you can teach them about tenant’s responsibilities regarding proeprty maintenance and condition when moving out.
Some properties – specifically lower-rent, higher-crime-area types of properties – can be more prone to attracting high-maintenance, problematic tenants. While a tenant who destroys your property is inherently a criminal in my eyes, you can probably make an educated guess about what types of tenants are more likely to inflict significant property damage. (Famous drug-fueled rock stars included!)
Let The Condition Of The Property Reflect The Neighborhood It’s In
Some landlords respond to concerns about dealing with property damage by stripping their units of frills and luxuries, and making their units bare bones. I know a couple of guys in the Section 8 rental space, who actually wrote a book about this.
They say: Tenants break the dishwasher? Fine, we will remove the dishwasher and then there’s nothing to break.
Clients break the window screens? Fine no window screens are included – flies can come in.
Section 8 requires items present in the unit to be in good, working condition, but they do not require all that many items to be present.
Landlord’s Responsibility To Communicate
At the end of the day, you want to train your residents what to expect when they live in one of your rental units and how to handle problems and concerns that come up. If you focus on good customer service, you can avoid many potential pitfalls.
Consider this: when tenants feel unheard because their maintenance and trouble-calls go unanswered, small concerns can escalate into major problems. Late-night calls and minor disputes about parking may seem trivial, but they can have a significant impact on your relationship with your tenants. For you, the property may be a “side hustle” that you manage in your free time, which is in noticeably short supply. For them, these concerns are part of their life every day.
By fostering strong connections with your tenants, you can proactively prevent deliberate damage and protect the value of your property. Embrace this chance to create a positive environment that benefits everyone involved!
Professional Property Management And Home Buyer Companies To Fix The Mess
Partnering with a good property management company empowers you to thrive as a landlord! Instead of waiting for potential damage to your rental property in Seattle, why not enlist the expertise of property managers to take over the day-to-day burden of property management?
After managing 12 single family homes myself and then moving out of the area those properties were located in, I was forced to either sell my rentals, or hire management teams to take care of them. I did both, and I really like having a professional company with laborers, contractors, and legal insight to take care of all the day-to-day problems.
I found I liked the strategic component and wealth-building potential of owning investment properties much more than managing them myself. As soon as you can afford to do so, I would recommend you outsource your property management. You may find yourself much more likely to continue to build your investment property portfolio over time if you are not bogged down with the emotional labor that comes with property inspections, late payments, lease-breaks, and other disappointments that are all just a “day in the life” for a property manager.
A good management company will be well-versed in the regulations that safeguard landlords like you and can assist with tenant screenings, rental agreements, and every other detail involved in managing your investment properties—significantly minimizing the risks of damage.
As your investment real estate advisor, Emily Cressey of HomePro Associates.com can help you get referrals to proper management teams, navigate your real estate investment acquisitions – in Washington as well as out of State through her National network of investor-friendly real estate brokers throughout the country, and by crafting exit strategies to help you sell your depreciated properties and up-level into your next investments.
Finding the finest rental properties in Seattle is part of our job as well. HomePro Associates is dedicated to helping you enhance your abilities; we make it simple to become a successful landlord!
Our full-service team comprises the most well-regarded professionals from all facets of the real estate industry.
Whether you need us to handle everything or want to collaborate in managing your properties, Emily Cressey at HomePro Associates is here for you.
Let us help you reach your real estate investing goals and handle problem tenants and other hassles, while reducing turnover and repair costs!
Contact HomePro Associates at (206) 578-3438.