With the cost of housing rising and new housing starts at an all time low, I understand the romance with becoming and remaining a landlord in the central valley. Rents are going up at a faster rate than anywhere else in the country. That coupled with a mass exodus of people from the bay area (that are used to paying high prices) to Stockton, Sacramento and Modesto and there appears to be a recipe (at least on paper) for great investment and income producing properties, right?
The problem is that that on paper it may be true but in reality I am not sure that with all of the new rules and regulations in California that are designed to hamstring landlords, that investment opportunity actually pencils out anymore. From where I sit I see a huge shift in the rental culture over the past 10 years. I am not sure if it was born out of the great recession, a lack of new housing, a breakdown in social morays, an entitlement mentality or something else, but what I have seen in rental property damage over the past 5 years is unprecedented.
The problem today, is that the frequency of having a bad tenant is just so much more prevalent. Like I said, I am not sure what it is. Maybe it’s an extension of the class warfare that has been being waged all over the country and now landlords we are viewed as a vastly more wealthy group than the renter population that appears to be acting more and more entitled and irresponsible. Maybe it can be attributed to a further breakdown of the family and personal responsibility for the renters of today. I do know this, very few bad tenants feel any shame or fear of retribution because right up and until they are evicted they are in possession of your property and can do pretty much whatever they want with without fear of any consequences.
I have a feeling that as landlords we have become targets and at the same time silently complicit with governments that at every level they seem to tread on the property right of owners and have turned a deaf ear to the plight of homeowners and property rights throughout the state. Is it because they know that we can’t do anything about it? I believe so.
In the past, there used to be a sort of symbiotic relationship and partnership that allowed landlords to at least deal with problem tenants in both a legal and civil forum to at least provide some redress for problems and property damage that they caused. In today’s California, good luck, because there is no more serious criminal activity or behavior that actually lands anyone in jail for much of anything.
So, Landlords if you feel like you have a target on your back with your property rights under assault, with issues like eviction, rent control and other mandates by government creeping in on your rights of ownership, you are not alone. Because there has been an all out assault on your property rights in California for the past 10 years and your once sacred rights of ownership have been virtually nullified. For the privilege of providing housing to families you get to pay property taxes, maintain your house and be liable for anything and everything that goes wrong while others are in it regardless of their right to be there. You pay a premium you are expected to be at every tenants beck and call 24×7.
5 ways to deal with a Bad tenant in Stockton.
If you own a rental property in the Central Valley the scenario is not getting any better. One after one, landlords are tired of their tenants bad behavior, the governments red tape and/or bad policy when it comes time to getting bad tenants out. Bad tenants tend to
- destroy and damage property,
- not pay rent on time,
- let too many people living in houses that are not listed on leases
- call you for every little thing that they break
- Litter yards and cause code enforcement violations
- Bring down property values in all neighborhoods
Tip # 1 Try to reason with your tenants
Regardless of how tired you are, how irrational that your tenants are you need to do everything that you can to protect your property and investment. You need to try to reason with your tenants. Explain that you provide a service so they need to pay for it and treat it properly. I had one well meaning tenant advocate actually say to me one day… “Perhaps your tenants don’t realize they are inconveniencing you or maybe they’re not paying because they need a different payment schedule (such as weekly instead of monthly)”.
Are you serious? If the tenant was concerned about any of that I would have seen a payment weekly, because they initiated the conversation. The truth of the matter is that many of the tenants today know that as long as they can prove occupancy they can live in your house for up to 120 days rent free. They also know that you will never collect on any judgement that is levied against them if and when the case finally gets to court.
Tip # 2 Offer Cash for Keys
As a landlord, you always have options when it comes to removing a tenant. One that has worked better for me is what I call cash for keys. I simply start my offer this way. I explain that an eviction is like a foreclosure for renters. It is a judgement that appears on their credit and it signals to other landlords that you dont pay your rent or that for one reason or another you violated the terms and the conditions of your lease.
To a landlord, an eviction is a red flag. I dont want to evict you and yet you can’t stay, so I am going to offer you in cash the equivalent to the cost of an eviction for you to leave quietly and peacefully. If you make me pay to evict you I make sure that that black mark stays on your credit as long as possible. You need to decide what you are going to do right now because I am posting the three day notice today.
As a landlord you need to weigh the options and make a business decision and cut your losses. The truth of the matter is that no one cares besides you that you haven’t been paid. Sure you will eventually get a judgement and the tenants will eventually be gone, but at least with the cash for keys option you get to somewhat control the exit and the damage.
For one tenant I paid them in cash the cost of the eviction (approximately $750.00), plus moving expenses and a deposit of another rental ($1,500.00). They got paid 25% when I saw that they had most of the house packed by a certain date, another 25% when they finished packing and the last 1/2 on moving day.
I have rental properties in other states and California is by far the hardest to remove a tenant that does not pay.
Tip #3 Evict your tenants
If it comes to this point, hire a professional eviction service to get your tenants out. In Stockton I use American Legal Services. Jackie is the best. I have tried it myself and what I have learned is that evicting tenants can be legally complicated that requires 100% compliance from the landlord from the beginning. That means every i is dotted and T is crossed otherwise the process starts all over again.
In california, the laws favor tenants over landlords so you will have an uphill battle but in the long run because the tenant will always get their day in court if they want it. There are legal aid attorneys that your taxes pay for to assist them in fighting the action. The experienced tenants that know this know how to game you and the system. Eviction is always worth the effort to get them out of your property..
Tip # 4 Explore other legal options
Who’s kidding who? That rabbit hole just got a whole lot deeper. But, in some rare situations, where your tenants have money, you may be able to explore other legal options, from suing your tenants to getting their wages garnished. Of course, you will need to work with an attorney to get a judgement and then again for the garnishment and I have never found it worth the expense. I prefer to just to get bad tenant out of your rental property as soon as possible.
Tip # 5 Sell your property
This is probably the best option of all. Between one time capital gains exemptions and 1031 exchanges or just p[lain creative financing with the buyer you can get rid of your headaches without losing your mail box money or having to pay a high rate of taxes for capital gains.
If your tenants are a real hassle and causing you a lot of stress and expense, then you can always sell your property. In fact, a lot of rental property owners that sell to us do so because of the frustrations they face dealing with tenants. Depending on who you sell to, you may not even need to evict your tenant first (for example, in many cases, we just buy and evict for you). For rental property owners with family living in the rental, this is an ideal solution.