Really dumb - I mean DUMB

[propertymanager]

The bottom line is that you accept the responsibility as you should, take your lumps as you say and make the money back with  a fine property and exemplary tenants moving forward...in 5 years you and your husband will be sitting around telling "remember when" stories and laughing at the whole ordeal while you sit on the vacation spot of your choice paid for by the positive cash flow that you got back around to after the cleanup...

Scott,

It is nice to have a positive attitude and to try to comfort someone.  Unfortunately, none of that matters when it comes to making a profit.  Business is very unforgiving and the vast majority of newbies fail very quickly.  In this case, this was a bad (although not catastrophic) deal from the start.  This is a negative cash flow property without even including the losses from the lost rent, any legal fees that are forthcoming, etc.  Things will only get worse after a bunch of money is pumped into repairing the property.    

The reality is that Valerie will probably never be doing anything with the positive cash flow from this property.  She'll be lucky to just get out of this situation without a major loss of money and sleep and to count this as an expensive lesson.

Mike

[scoathy]

You may be right, but then again, from what she has told us, how could you speculate that fixing up a run down property is a waste of time? I'm not saying "how dare you" but simply asking how you come to that conclusion?
Also, what we have to keep in mind is that the best business decision and what is ethically right may not always be the same thing. Should we save the money that we can regardless of the ethical or moral impacts? Many business men and women do. but for every one of those we could find one that was just as succesful and on top of that are able to sleep with their conscience at night... ethical decision making is the true key and while I tend to agree with your perception (God knows you are more knowledgeable on the matter than I am) as a landlord we all have an obligation beyond the bottom line .

Your insight is on target I am sure and I can not wait to see how Melissa's dilemma turns out as it is something we can all learn from.

Scott

[propertymanager]

how could you speculate that fixing up a run down property is a waste of time? I'm not saying "how dare you" but simply asking how you come to that conclusion?

I'm not saying that it's a waste of time or even a waste of money to fix up the property.  What I am saying is that she'll probably lose more money because she must fix up the property to make it "livable".  Properties rents are set by the market, the size of the house, and to a certain extent the cosmetics.  Adding insulation won't add a penny to the rent, nor will adding gutters.  It is money that may need to be spent, but it's just more money that will be lost in this deal.

As to the moral aspects of this deal, I'm not at all convinced that the tenant has any complaint.  I have found that the vast majority of tenant's who don't want to pay the rent complain that the landlord has done something wrong.   In the vast majority of these cases, the tenant has simply blown the rent money on something else (like cracki, a dog, a big screen tv - whatever).  Rather than taking the consequenses of their actions, they blame the landlord.  If I were going to fix up this property, I'd evict the tenants first.

Also, low income tenants aren't paying to live in a palace. They don't get the best insulation, the best carpet, etc at low income prices.  Why - because they aren't paying for it.  Many low income tenants live like pigs.  Their normal status is to live with thousands of roaches, mice, dirt, uneaten food strewn all around, etc.  They live this way because they want to, not because the landlord did something bad.  I just got a beautiful house back from a tenant that we kicked out for being a pig.  She always paid on time, but she was a pig and did a LOT of damage (thousands).  The carpet is only 2 years old but will have to be replaced.  There were tens of thousands of roaches.  It had all new replacement windows and almost every window screen is missing or broken.  The bottom line is that I wouldn't assume that the tenant's complaints have ANYTHING to do with the condition of the house.  All of our rentals are clean and safe when the tenants move in, but I've been called a slumlord countless times when we evict the non-paying swine.  (No, I don't like people who don't pay their bills).

Mike