About Real Estate : When a ‘Management’ Firm Fails
Good old absentee landlordism. Once in a while it works to the landlord’s advantage. Most of the time it’s about as much fun as a root canal.
Question: My home on the East Coast is rented to a woman with four children (at least that’s what she stated on her initial rental lease of one year). The rent is being paid by the state of Massachusetts. After many complaints from neighbors about the condition of the property and the numerous children there, I flew back and found the property to be filthy and in total disrepair.
It also seems that this tenant has eight children, not four, some of whom move in and out. Her lease expired last December, so, two months prior to that, I handed her a written notice that I was not renewing the lease and would like her to vacate the property at the termination of the lease.
I also sent notice to the housing authority that I intended to put the property up for sale. They say they will try to relocate her, but that they are having problems finding a dwelling for her because of her large family.
I feel that the lease was signed under false pretenses and I am currently renting to her on a month-to-month basis. In the year that she has occupied it--according to a recent appraisal of the property--the house has depreciated about $30,000 in resale value.
What are my rights here? Incidentally, all this came about while the property was being managed by the biggest realty and property management company in the area.
P. R., Phoenix, Ariz.
Answer: Now, I think is an ideal time for you to make another trip back home but this time with fire in your eyes. You must still have friends back there who can recommend a good Massachusetts lawyer.
Once you’ve found the right one, keep a clear eye on your logical target for the litigation--it’s not the poor soul who has caused you so much grief. She has no resources, obviously, and it isn’t really her fault because she’s merely the product of a system that has gotten out of whack.
The property management company is the real villain for the way it bungled the whole thing. How could they have run a reference check on this woman and still let her take possession of the house? Where were they when the neighbors started complaining? Why did you have to contact the housing authority? We’re talking about a real out-of-pocket loss to you of $30,000!
Wring as much recovery money as you can out of this “management” firm, and as soon as the property has been restored as much as possible, put it on the market.
Q: I am a widow with an income of about $1,000 a month. I rent an apartment now and pay rent of $500 a month. I have no debts and have securities worth about $40,000 to $50,000. Would it be worthwhile for me to invest in a townhouse or condo or stay with my apartment? I have been hearing so many pros and cons on condos that I am kind of leery, and I don’t need the write-off for tax purposes.
Mrs. F. K., Denver, Colo.
A: I’m not quite clear on a few points here: How old are you, are you employed and what is the source of this $1,000-a-month income? Does that income include the yield on your investments? Basically, of course, you’re paying a whopping percentage of your monthly income for housing and there’s no way of knowing just how vulnerable you are to further rent increases.
I don’t know what it is that you’ve heard about condominiums that have made you leery, but I would suspect that some of it might have to do with the fact that in a sluggish housing market the resale of condos does tend to lag behind the demand for single-family homes.
It might be wise for you to at least investigate the condominium market because your part of the country is currently in the doldrums, and there is quite a bit of distressed selling going on. Keep an eye on the classified ads in your local paper. It’s entirely possible that you might find an opportunity to assume an adjustable-rate mortgage on a modest condo where the monthly payments for principal, interest, taxes, insurance and association fees would be no more than you are now paying for rent.
You can save thousands of dollars in mortgage interest payments, greatly increase the equity buildup in your home and cut years off your payoff through relatively painless acceleration of your payments to principal. Our leaflet, “Free and Clear: Getting the Mortgage Monkey off Your Back,” explains how. Send a long, stamped, self-addressed envelope and $2 to cover costs to Don Campbell, P.O. Box 15237, Phoenix, Ariz. 85060
