Case Study E Drake Ave Stockton: Tired Landlord, Deferred Maintenance and Family that refused to move out
When you are a landlord and the tenant is no longer paying the rent, it’s time for an eviction. But what happens when the tenants are family members and/or friends of the family?
Here is Their Story:
- Deferred Maintenance
- Family and Friends Tenants
Mom and Dad had worked hard their entire lives and over the years had managed to purchase 4 properties as rentals. When Dad was alive the houses seemed to always have good tenants, that paid on time and took care of the houses. The cash flow was good, the houses were maintained and the investments were a substantial monthly addition to the family’s cash flow.
Dad died and after a period of about 6 years 3 of the houses became the rent free homes of children, grandchildren and friends of the family. It didn’t start out that way but soon Maria was overwhelmed with the cost of the houses as they were no longer the assets that her husband had established, they were liabilities as no one paid rent and it was up to her to pay for repairs, damages and the property taxes, insurance and even utilities.
No matter what she did there was resistance and bitterness from the family occupying the houses until Maria finally had enough.
She wanted to sell the houses one at a time.
The homeowner had tried on her own to get everyone to understand how upset she was. She even went as far as issuing the proper 3 day pay or quit notices as required in Stockton evictions. They all knew that Maria would not follow through.
She wanted them out but wanted to start with selling one house hoping that the others would know that she was serious.
I remember the first time I met with Maria and her oldest son Tony. Maria was crying as she explained what family had done. Not only was she paying for everything and receiving no rent, she was also paying the water, gas and electric bills because her grandchildren were in two of the houses.
Maria cried as I explained the eviction process to her. I told her that I would pay for the process all the way up and through to the Sheriff removing them physically from the property if need be. I also explained a cash for keys technique that I have successfully used to get tenants to leave prior to eviction whereby I offer them the equivalence of the cost of the eviction if they leave peacefully on an agreed upon date and time. I usually add in enough for a deposit and moving expenses. Either way it was clear that Maria was upset, but she was resolved to see this through.
We discussed the house in question, my inspection and the comparable sales in the neighborhood. Maria had a number in mind and when I made the offer she smiled and said I though it would be less. We agreed on a sales price, I drew up the Purchase and Sale Agreement and I submitted it to the Title Company that day.
I filed for the eviction (unlawful detainer) at the courthouse within 3 days and we knew that it could take up to 90 days. I then went and personally delivered the eviction notice to the relatives at the house with a cash for keys offer. I explained that the house had been sold and that I was prepared not only to evict them but to also get a judgement for past due rent and laid out the numbers. They were clearly upset but I explained that they had 48 hours to make a decision and either accept my “Cash for Keys” proposal or face the eviction and its credit consequences.
The Challenges with Drake were all related to the decision to become landlords for family. The house itself had no liens, loans or judgements. If we could get the tenants out, we could close in a matter of Days and move to the next house that she wanted to sell.
We offered the existing tenants cash for keys and when we were done we had paid $1,500.00 to get them out of the house with in 20 days. Maria was so happy that we signed a Purchase and Sale Agreement for the next property.
Once we took ownership of the house we paid the homeowner in cash and began to repair, remodel and update the house. We spent thousands on gutting the house, replacing drywall, electrical and plumbing. We moved a couple of walls expanded the Kitchen and redid the bathroom to current buyer standards. The remodel took 45 days and the house was sold with 5 days of listing on the multiple listing service.
Some Real Estate Problems Are Resolved in the Sale of the House
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