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When renters need restrictions but fault the landlord’s morals for taking advantage of a good situation

January 11, 2012 By Leave a Comment

Recently, I was going through some receipts from our rental property sent from our rental tenants and scanning them in for our property in San Diego, California. As we were strapped for cash, due to our wedding and major medical bills, and we lacked time and had health issues, our original tenants moved out causing us to find a new renter. The positive thing was that we increased the rent to $1850 a month, $350 more. Within a week, we had tenants! We look back now and realize we could have increased the rent even more since we had several prospective rental tenants fighting to rent the property.

My kind, trusting husband who thinks people only have good intentions, as often I think they do until I see red flags, proudly made a deal with the new tenants. They came up with a great idea, as they are price conscious, good folks! Or so we thought! They said they can paint the house, get new carpets, and a new washer, saving us the 60 minute drive from Orange County several times as we were going to do it ourselves.

My husband was constantly raving how great the new rental tenants are. He said they are hard working, they have good credit, a new baby and are religious, which would make them honest people (if the world was ideal). He was proud of who moved in, telling me how the wife sends all these friendly emails, asking about our wedding, my health and explaining their plans for the place that sounded like she was just as kind as my husband was, a win-win situation for both, right?

Well…two months went by and then he told me that the rental tenants are sending more and more receipts over. Finally, he got all the receipts scanned in an email from the tenants. With smiles, he showed me the receipts. My jaw dropped! I have rented several places from low-end to high-end and renovated many rental homes for landlords or my own and was completely shocked how he was taken advantage of. Now we have lost three almost four months of rental income because of the expenses they felt were justified and my husband didn’t know how to be a mean landlord fearing he would start off on the wrong foot with the new tenants.

Below are some examples of their expenses. Now mind you, there were about 20 receipts. When I started questioning them, my blood began to boil. That is when my husband said he better not show me the rest. The little that I did see was enough.

Shower head $49.00
– A $10 shower head is adequate even in a high-end rental. In my opinion, if a tenant wants something better, they can pay for it out of their pocket. She never asked us to replace the old one or explained why it had to be replaced. Even Irvine Rental Company in Orange County, which are high-end rental units, uses an $8 shower head from Home Depot that they probably buy for $5 wholesale.

Gas Logs for the Fireplace $170.00
- What was wrong with the last ones? She never said she was going to replace these and we never agreed to have her replace them.

Washer $570
- Our washer in our home is only $175. It was miserable to use; however, the washer in the rental property only needed new knobs to run correctly. My last home, I bought a high-end washer and dryer for $270 each from Sears Outlet. You can get a brand new washer and dryer from Home Depot for $325. My own wedding dress was $5000 originally but got it on sale for $250.00 and shoes for the wedding were once $160.00 but got them on discount for $4.25, but yet she didn’t feel bad to buy a $570 washer and stiff us with the bill.

New Blinds $1000
- What was wrong with the old blinds? Trust me, they were fine. To save money for our wedding, I went from one discount store to another to find curtains for $7.25 to cover 15 plus windows in our house because we couldn’t afford blinds due to expenses of the rental property turn over, medical bills and our wedding. Ironically, had the curtains but couldn’t afford to buy curtain rods because of the tenant’s greed so we will have no window coverings for awhile. A great way for my husband to learn where our money went every time he complains he can’t watch his favorite show because there is sun shining on the television.

New Carpet and painting $4000.00
- New carpet and paint are justified; however, when I a pregnant woman with health complications and a friend paint our 2000 square foot house from top to bottom because we didn’t have the money to hire someone and our carpets badly need to be replaced but we now have to wait 6 months to year to get new carpets from tenant over spending. Our rental, 1200 sq foot townhouse, could have been painted and carpeted for less if when I got our house quoted it was only $2,300 (price includes materials) to paint the entire place with a high ceiling by a professional painter and only $300 to paint it myself.

Who is at fault
Now I am not faulting one party more than the other. This is both parties’ fault. My husband, the landlord, for not making better rules and understanding how much can be expensed now feels scared to make the tenant unhappy by putting his foot down and saying he will not pay for unexpected expenses that the rental tenants turned in saying he fears looking like a slumlord.

The rental tenant who comes from the entitlement generation which felt they could push the limits with lack of guilt but yet stands behind the Bible saying she is a good moral person and did not feel it was wrong to purchasing items that most other landlords would never have approved of in the first place? They never got approval to do, knowing my husband’s kindness and knowing it can be taken advantage of while knowing we are under a lot of stress with a wedding, medical bills and medial issues. Maybe in rental tenants mind, they think we are millionaires but maybe even millionaires don’t care to be taken advantage of.

My way to not fume and have my blood boil over how the rental tenant handled the situation and my husband the landlord lacks of strong foot is what I now call anyone who is greedy a $49 Shower Head Renter. Yes, it is a stupid joke that I might only get, but it says a lot when you know the story behind the phrase.

Filed Under: Jo La Real Estate Investor

Some Foreclosure “Victims” are Cheating the System

December 10, 2011 By 1 Comment

I’ve heard of and witnessed home owners, going into foreclosure, living in their homes for two to six years without paying one mortgage payment, laughing how they are living for free, and milking the system. By simply doing a search on the Internet for specific tactics of prolonging the foreclosure process, testimonials will point out people gloating about how they’ve done it. People who are responsible home owners get little to no reward, such as being able to refinance even though their house is underwater, often due to their foreclosed neighbors. As it usually goes, people in foreclosure or who are delinquent on their mortgages often have programs to help them. Worst yet, a foreclosed neighbor living freely and pocketing mortgage payments rarely keep up their maintenance. This causes further depreciation of home values.

Home owners paying their monthly mortgage payment as agreed and maintaining their properties, should be rewarded. This would act as an incentive for good behavior, hopefully getting other delinquent borrowers to change their behavior.

Some people are in foreclosure due to legitimate reasons, such as death in families, medical bills or loss of jobs. They really tried making payments, but fell behind through no fault of their own. However in many other foreclosure cases I know of, there are people who are committing outright fraud by playing the system. Sometimes they receive help from friends in real estate or from attorneys.

I’ve also seen auctions postponed over and over for years because of bogus short sale offers. Sometimes the one getting foreclosed has a realtor buddy who puts in a fake offer on a short sale, just to slow the process down. Another trick involves tenants. And then there’s the lawyer tactic. Lawyers can postpone or remove the case from the books, simply by filing bankruptcy. This usually adds a year or more, before the foreclosure again gets put on the docket.

What kind of an example is this to the younger generation? Shouldn’t we be teaching them about responsibility?

It’s funny how they can’t pay their mortgage payments, but still have the large cable television packages of $100 or more, still have Internet, costly cell phones and are buying new cars. They live well, because they’re not meeting an obligation they agreed to when they signed their closing papers. We’re not talking about people with subprime loans, but those with low rate, prime mortgages with 30 year terms.

Buy and bail is one of the worst examples of greed. Home owners with good credit, paying their payments on time, but are underwater, have a new trick. They buy another house as a second home and then “bail” on the first house.

It appears the personality traits of these same people are that they can get out of anything, and still come out on top. Maybe if the penalties for losing your home in foreclosure, absent illness, job loss, etc, should be that you can’t buy another house for a minimum of ten years.

I have had readers complain about neighbors who are in foreclosure buying new Mercedes and BMW’s, but haven’t paid a dime in years on their mortgage. In September CNN wrote a story about the people playing the foreclosure system and people with disgusting honor proudly commented they were milking the system, such as the comment below.

“November will mark the 3rd anniversary since we made a mortgage payment and we are still in our house. We are living free. No mortgage, no insurance payments, no property taxes. What would have been mortgage payments is tucked away safely for OUR use in the future. The bank has done little to make us move. Every day we stay is money in our pocket. We realize the day will come when we have to move, but until then we are enjoying life.”

In another story by CNBC published in June, a lawyer gloated how he has several clients where he prolonged their foreclosure dates, stating several have lived three years without getting evicted and that client the story was based on was on their 6th year living for free in a house they defaulted on.

Whatever happened to pride and personal responsibility? When will people realize they are not entitled to everything, if they are not responsible? When will responsible people be recognized by their banks, government and legal system? When will those not paying on time get kicked out of their houses?

There must be a strong crack down on people and stop helping them. The Realtors putting in bogus offers should have their real-estate licenses revoked, fined or even have to go to jail for fraud. Lawyers using prolonging tactics for their clients that aren’t legitimate should lose their licenses as well.

People who are living in their homes without paying mortgages for four-to-six months should be kicked out after three months and/or have their assets garnished to compensate for their greed.

Some banks are finally coming around to these games and are now teaching people whom are milking the system. In some states and provinces, banks have been going after the foreclosed owner for the differences between what they owed on the home and what the home got sold for at auction or short sale. This is often a surprise to the original owner who felt they got away Scott free and end up declaring bankruptcy or are forced to pay the difference. Whether a bank goes after defunct lenders, filing decency judgments depends on many factors, including what state the borrower lives in and whether there’s a second mortgage or liens. A borrower often doesn’t realize once there is a judgment, there are no corners to hide and the banks/lenders are able get personal financial records, garnish wages and/or put people in jail.

Yes, the housing market might be hurt for a while, if drastic measures were taken such as kicking out foreclosed victims three to four months after they become delinquents, but in the end it would make people think twice before intentionally not paying their paymentst, which would put an end to the current practice.

Filed Under: Jo La Real Estate Investor Tagged With: , , , ,

Would you rent to these folks? – In Any Rental Market = NO

October 20, 2011 By 1 Comment

Below is an actual email I received for a rental property I have listed. Needless to say I didn’t consider responding and wouldn’t event in a bad rental market with their credit.

Hello. My mother and I need an apartment. We are clean and quiet. The problem is the fact that our credit got messed up when we were institutionalized. I have since been approved for disability and my mother is seeking hers. I have a default judgement entered against me because I was institutionalized and could not come to court. However, I am now paying this off (it is a small credit card judgement). This is a crazy situation….we have the money but no one will take it. We have about 1500 in cash right now and we get paid again Friday.

I seek a one or two bedroom in Chesapeake. I’ll also consider Norfolk. My price range is 500-650 a month. I prefer all electric but I am flexible. I am tired of wasting money on application fees with the risk of being rejected. I seek something with no credit check. I will pay you a security deposit and up to two months rent in advance.

Thanks for your time

If one plans to rent in a rental market of decent tenants, one needs to thinks their actions and life style will effect their living conditions and who will rent to them.

Filed Under: Jo La Real Estate Investor Tagged With: , ,

What kind of credit score do you need to buy a home? Our credit is 640, can we buy?

June 8, 2011 By 1 Comment

Thank you for your email. My first suggestion is clean up your credit rating and become more financially responsible.  It will help our entire Nation

Currently some lenders will lend to people with 620 credit score and above to buy a home.  On the street the news is Wells Fargo is doing to 580 but this is not confirmed.

Lending to people who really can’t afford homes is one of the main reason why we are in this housing financial mess.  FHA loans looks to be the new dumping ground for sub prime loans which is scary. FHA is a governmental agency so we the taxpayers would have to bail the lender out when they fail to pay their mortgage

We need to get the economy moving so we have to relax standards, but at the same time we might be shooting our economy in the foot for a second round by lending to people who will default and having taxpayers bail them out.

Some of the best ways to clean up your credit score to buy a home are:

  • Always pay your bills on time –  Late payments play a large role in driving down your score.
  • Live in your means – If you have past-due bills now, get current and stay that way.
  • If you can’t pay on time – Contact your creditors as soon as you know you will have a problem paying bills on time. Try to work out a payment arrangement and negotiate with them to keep at least a portion of the late notations off of your credit reports.
  • If your situation is serious you might need outside help – See a legitimate, non profit credit counselor. Avoid the scam artists who promise a quick reversal of your credit problems.
  • Keep your credit card balances low-  High debt-to-credit-limit ratios drive your scores down.
  • Pay off debt, don’t move it around – Owing the same amounts, but having fewer open accounts, can lower your score if you max out the accounts involved.
  • Don’t close unused accounts – because zero balance might help your score.
  • Don’t open new accounts that you don’t need as a quickie approach to altering your debt-to-credit-limit ratios. – That can lower your score.
  • Time – Is the only thing that can improve this aspect of your scores, but you can manage it wisely
  • Don’t open several new accounts in a short period –  Especially if your credit history is fewer than three years. Adding accounts too rapidly sends up a red flag that you might not be able to handle your credit responsibly.
  • Several credit inquiries during a short period means you are attempting to open multiple new accounts, and that lowers your credit scores.
  • Credit scoring software usually recognizes when you are shopping for a single loan within a short period of time, such as a home loan. If multiple inquiries are necessary, have them pulled as closely together as possible.
  • Checking your own credit report does not affect your scores.
  • Do try to open a few new accounts  - If you’ve had credit problems in the past. Pay them on time and don’t max out your credit limits.
  • A mixture of credit cards and installment loans, loans with fixed payments, can help raise your score if you manage the credit cards responsibly.
  • Having many installment loans can lower your scores since payments remain the same until balances are paid in full.
  • Don’t open new accounts just to have several accounts or to attempt a better mix of credit.
  • Closing an account doesn’t remove it from your report. It may still be considered for scoring purposes
Filed Under: Jo La Real Estate Investor
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