Are Landlords getting the Raw Deal?

The housing market is currently insane for most places in North America, we have seen appreciation in double digits for the last several years even in smaller towns that typically lag the larger urban areas. With that said, I was triggered into writing this article as a small business owner and landlord here in Bangor, Maine based on some of my experiences as of late. Getting into the multi-family investing space can be intimidating to say the least, especially if you happen to be the first person in your family tree to venture into this arena. I know that when I started out, you would hear all sorts of horror stories about evictions and what rules exist to protect the rights of tenants throughout the process. What about the landlords that take all the financial risks? Shouldn’t there be some level of equal playing field? Don’t we also have rights that protect us from financial losses that are not created by our own poor decision making but as a result of someone else’s poor choices? Here is the story of my most recent eviction process.

We had a 1 bedroom apartment open for rent and we showed this single mother the apartment who had indicated to me that she was leaving a domestic abuse situation… and although ALL us landlords are automatically catagorized as money hungry monsters without empathy, in this case I made the same mistake I have in the past, and that is to break my normal rules of research and gave the young woman the apartment. Let’s just say that the past predicts that future once again and shortly thereafter, I’m calling to chase down rent..getting noise complaints from the neighbors, police are making frequent visits and on and on…. Then with all of the COVID relief funds available, she begins to get assistance from a local organization for rent payment. Well it became obvious that an eviction was in order after providing multiple opportunities to get things sorted out. So as the landlord who has an LLC, I’m required to find representation from attorneys and the eviction paperwork typically costs around $600-$800, and we wait 30 days after the notice to provide feedback to the attorney’s that (of course) she is still residing in the apartment and has not vacated yet. It’s at this time that we look into court times for eviction cases and we are 2 months out for the next case opening due to the COVID backlog….just great. Well finally the date comes for the eviction case, and my attorney has to be present which costs an additional $500-$600. Well on the way to the courthouse, I receive a text from this tenant saying “I had sharp pains in my chest this morning, so I went to the hospital and requested a continuation” which from my perspective I said hope you feel OK, but was under the impression that with her not appearing I would be given default judgement and would obtain a writ of possession in 7 days to get our apartment back? WRONG…. The judge says “Well it looks like the tenant called the court this morning and is in the hospital, we will add this case to the next opening a month from now”. WHAT?? That’s it? Here is a woman that has done major damage to the apartment, has not paid any rent in 4 months and for several months prior to that, the government tax payer covered her rent.. and she heads to the hospital for “chest pains” and automatically gets to stay FOR FREE another month? It made no sense to me, however the attorney states to me that they are able to do this “continuation” one time. I was literally shocked….I’m currently out of pocket for $2800 for 4 months of rent, an additional $1000 for attorney fees, and perhaps an additional month plus more attorney fees as they will need to return and represent me on the next court date? What about the tenant? What does she owe? ZERO…. She has no requirement to pay back anything, unless I go through civil claims court which is a lot of time and effort in an attempt to collect money from someone who has none.

I completely understand that there needs to be some level of protection from landlords wrongfully kicking people out of apartments, however; based on my experiences with eviction in Maine the pendulum has swung too far on the side of protecting the tenant when more tenants are taking advantage of these laws to get something for nothing. And then it’s natural human instinct to repeat something that has previously worked, and so they will likely repeat this with the next landlord and so on. There are many ways to describe this, but in the end I would describe this as theft. The agreement is quite simple, the landlord invests his/her capital into a real estate asset and the tenant agrees to pay monthly for the ability to reside in the apartment. Lucky for me, I have been able to avoid costly evictions early on, or I would not have been financially capable of continuing to invest in real estate. If an investor experiences this early on when they are getting started it can completely discourage any future investing…and we NEED landlords!!! We provide housing, jobs, invest capital into buildings, and improve neighborhoods. I’m not saying that ALL landlords do this, but the majority do. By the time the mortgage payment, insurance, Heat, water & sewer, maintenance and other expenses are handled, there typically isn’t much left contrary to popular opinion. The idea is that if you are able to leverage bank money, have tenants pay for the mortgage and expenses leaving a little bit of breathing room, that after 20–30 years or so you have some equity making the journey worth it.

This article is NOT meant to discourage you from real estate investing at all, I still believe it’s the best path to long term wealth, but I AM saying that we need to re-evaluate these public policies and eviction cases so that everyone’s rights are protected, not just the rights of the tenants. The only loser in these situations is the landlord, regardless of who is to blame. I’m suggesting that if the landlord has done nothing wrong, then the tenant should be required to pay back any costs the landlord has incurred from the eviction. Why is it that the landlord needs to pay ALL the costs? Why is it that I am REQUIRED to pay for attorneys, when the tenant is given attorney access for FREE? Feel free to comment and provide your feedback and opinions!