Rent To Own done ethically

Another Big Lesson: Keep emotions out of Real Estate

Another big mistake

In late 2006, when one of my three-bedroom units became available, I received an application from a single mom with two young children. She had terrible credit, questionable references and a history of moving from place to place. She also spun a good tale about how she was working hard to try to make a life for herself and her boys but she faced so many barriers. She had recently landed a good job and she was determined to finally settle down for her kids’ sake. Since her background was so spotty, her parents were willing to co-sign the lease as added security for me.

At the time I had a three year old daughter and I was five months pregnant with my second child. My head told me in no uncertain terms to walk away from this woman, but my “mom heartstrings” kicked in to override all rational concerns. Everyone deserves a break, right? Surely I could do my bit to help out a fellow mom raising her kids alone. Those poor boys had endured so much already. Could I really turn them away? After all, the parents were co-signing. Surely everything would work out well since there was a back-up plan in case this woman, whom we’ll call Amy (not her real name), didn’t live up to her promises.

Amy was effusive in her gratitude. Finally someone was giving her a chance and thank you so much. Yes of course she would maintain the yard, to which she had exclusive access, and meet all other requirements. No problem.

The problems start

One month into her lease she stopped paying the rent. Then I got a call from the police: Her boyfriend (what boyfriend?!) had pulled a gun on the garbage collector because he was asked to move his car which was blocking access to the driveway. The boyfriend apparently fled and was now on the police’s wanted list.

A meeting with the police also revealed that they had been watching my building because they suspected that Amy was selling drugs.

At this point a few months had gone by and I had served the tenant with the proper notices stating she had to pay up or be evicted. I heard nothing. Every time I drove by the curtains were drawn and there was no sign of life. I finally left a notice taped to the door stating that I would be entering the next day to inspect the unit.

When I showed up the note was still taped to the door. I knocked and rang the door bell. Nothing. When I unlocked the door and and began to open it, her two large dogs lunged at me, growling and baring their teeth. I just managed to get the door shut in time to avoid the dogs. At this point I was eight months pregnant so moving with speed wasn’t always easy. The dogs continued to throw themselves at the door. I was petrified.

I called the Humane Society and waited in my car for them to arrive. I also called a large friend who graciously came out immediately to be with me as I entered the premises. The Humane Society staff managed to subdue and remove the dogs, photograph the environment and take a statement from me. Then I was allowed into the unit. What my friend and I saw when we finally gained access was shocking.

Abandoned dogs

The tenant had clearly left in a hurry with her boys, abandoning her two dogs in the apartment. She had left large bags of food on the floor of the kitchen and the basement. A raised toilet seat was their only source of water. At a guess, the dogs had been alone in the apartment for roughly three weeks. They appeared to be physically fine, but they were not very happy.

When the Humane Society workers removed the animals, we were left with a shattered unit: dog feces everywhere; chewed wood and claw marks on most of the door frames and doors; children’s clothes, toys and sports equipment scattered about; a fridge full of rotting food; and more junk than I have ever seen strewn on every surface both inside and out. I can remember needing to sit down from the shock of it all but not daring to touch any surface. Every square inch was disgusting.

When we turned to the parents for help, we discovered that they are mentally disabled and while their credit was good, they were essentially penniless. What little money they did have their daughter stole from them on her way out of town. It was a tragic situation in every conceivable way.

That mistake cost us more than twelve thousand dollars and a lot of heartache. This is how I spent the first few months of my youngest daughter’s life. And all because I let emotions guide my decision-making at the outset.

I learned a very hard lesson in 2006: As a landlord you have a responsibility first and foremost to protect yourself. By all means engage in charity work outside of real estate – donate your time, knowledge and money to worthy causes. But remember that investing is a business. It requires a rational analysis of the facts and the numbers. Treat every aspect of investing like a business. Renting a unit is not the time or the place for charity work.

If warning bells go off in your head as you’re making a real estate-related decision, do yourself a big favour and listen.

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