Are You Dealing With A Slumlord? Five Signs To Watch For

We have all heard the stories about roach-infested properties, overgrown landscaping, crime-ridden communities and beyond. Working in the real estate industry, you may have even met a few of these individuals who actually gloat and admire their abilities to manage a building while doing the least amount of work for the cheapest price.

These people are known as slumlords, and sadly, their methods are still alive and well. In fact, being a slumlord for some is actually a business model: running the property into the ground and utilizing as much depreciation as possible, not really caring what happens at the end of the property’s useful life. Although many investors have benefited from the aftermath of slumlords’ actions, in the end, more damage is done to the community and the people who have to live and work in the surrounding area.

Here are some telltale signs that you may be dealing with a slumlord.

1. Deferred Maintenance

The most tested and true sign you may be dealing with a slumlord is the property’s physical condition. Broken or boarded-up windows or doors, graffiti, trash, overgrown landscaping, broken or nonworking lights, and nonfunctional gates are several factors you want to be aware of. It’s one thing to have one or two of these items noted; it’s a whole other when the property as a whole appears drab and run-down. The lack of care is hard to ignore and is a good indicator that you may be dealing with a slumlord.

2. Untimely Or Incomplete Tenant Work Orders

Another sign to consider is how the work orders are handled with the tenants. Although laws differ throughout the country, common sense should tell you what a reasonable time frame for day-to-day work orders should be. Unless a major issue is at hand, such as heating or cooling, sewer, plumbing, roofing, or electrical, there is no justifiable reason items should not be addressed within reasonable time frames.

Orders for issues such as a running toilet, leaky sink, broken dishwasher or garbage disposal should all fall within a five-to-10-day range. Also, when the work is done, is should be fully completed with care and craftsmanship. Many slumlords are known for starting jobs and not finishing, or using the cheapest labor they can find. This typically leads to faulty work and can actually encourage the problem to get worse.

3. Unlicensed Workers

Some states are now requiring that property managers use licensed workers for all their property maintenance issues and that handymen can only work a limited number of hours if they are not licensed. Although a slumlord may not be required to follow these guidelines if they are not licensed, it’s always a good idea to determine who is doing the work around the property and if they are indeed licensed or not.

4. Cash Deals And No Leases

For slumlords, cash and limited or no leases at all are great strategies for “staying under the radar” from the IRS, as well as not being held to a binding contract. Ironically, the cash they collect does very little when a tenant without a lease decides not to pay or leaves the property in shambles after vacating. Nonetheless, the mindset of a slumlord doesn’t stop this type of behavior from happening.

5. No Respect For Tenants

Slumlords have the tendency to feel superior or show a lack of respect for their tenants. They might see addressing their tenants’ concerns is more of a privilege to the tenant than their obligation as the owner. The goal is to use and abuse tenants and do as little as possible, all the while collecting as much income as possible, while the property steadily declines. In the end, it is a receipt for disaster and has been a contributing factor to the erosion of communities.

What To Do

If you are considering buying an investment property from a slumlord, take heed. Although there could be “potential” in the numbers, some properties have established such a bad stigma through years of neglect that no amount of revitalization may be worth the return. Also, what you may be inheriting could be far worse than even the due diligence can discover. When the risk exceeds the rewards, don’t take the chance.

If you’re a current property owner and justify any of these items in your day-to-day management practice, you may want to reestablish your priorities and stop putting off the standard requirements involved in owing and running property. Once major issues start spiraling out of control, it becomes hard to catch up, but easier to let things slide.

If you’re neither an investor nor owner, but rather someone needing direction on how to combat a slumlord, your best bet is to call your local city or county and make a complaint, or call your local news station. The more pressure you put on these individuals, the less they are able to hide.

Security Cameras and Airbnb Rentals

With all of the security options out there, it’s tempting to want to protect your investment by recording everything that goes on when you are hosting Airbnb guests. You might think that because you own the space you’re renting, you are allowed to record what goes on when you aren’t there. This is not the case.

If you are going to use security cameras on the property that you are renting on Airbnb, you MUST disclose their locations to your guests. You should be sure to include this information prominently in your listing. Failure to inform your guests of recording devices may result in reservation cancelation and host fees charged to you. This is a non-negotiable rule set by Airbnb for all of their hosts. This includes any camera or device that captures video, audio, or still images.

Even if you disclose the location, you are not allowed to have recording devices in any private areas like bedrooms and bathrooms within your rental.

One other note, your guests are also not allowed to record you or other guests staying in your rental without consent. So, the policy goes both ways.

As a good rule of thumb, make sure you consult the Airbnb hosting policies before putting any sort of recording device on your property. You don’t want to unknowingly put your hosting status or ability to use the service in jeopardy.

Collecting Rent Through Chaos

Dealing with the financials and collecting rents is one of the most important aspects of a property manager’s duties. The larger the operation and the more properties there are, you can anticipate, based on scale alone, that your delinquencies will increase. As you navigate this part of the process, how you respond and the methods used can mean the difference between a successful payday, three-day notice or eviction. If that wasn’t enough, how about introducing a global pandemic to the fold?

This is the current reality and state of affairs and every property manager is having to adjust to the situation. There is no training, past experience, nor guidelines to follow. To make it more puzzling, each state is wrestling with different policies and protocols and it can seem as though the U.S. government is changing time frames on social distancing and industries deemed “essential” by the week.

Most notable is the economic impact the rising unemployment has had across the world. With the inability for Americans to go to work and earn income, it was only a matter of time before the rental industry was affected. Well, that time is upon us, and understanding the laws, your obligations to both owners and tenants and setting a reasonable and consistent standard is what you will need to weather the storm. Let’s have a go.

Have compassion, but be fair.

This may be an unorthodox first item on the list. With owners and bills to pay, management fees to collect and maintenance issues to address, the last thing you may think of is compassion. However, the truth is that people are scared. To add more stress, many have lost their jobs, or worse, may have had family or friends impacted by the pandemic. The more you listen and show compassion, the better your chances of working out the situation will be.

With that stated, having compassion doesn’t mean being taken advantage of. Unfortunately, there will be those who also use this situation as an excuse to not pay. One way to prevent that is to require a doctor’s note or documentation from their employers stating how they have been affected or if they in fact have been terminated. Doing this helps everyone stay honest and also provides feedback for your owners.

Know your laws.

In property management, this goes without saying. However, with the current mandated eviction moratorium, you must be clear on what your capacities are. Make sure to check your local and national government resources daily and abide by what is deemed appropriate.

Set up payment plans.

Although the pandemic is currently preventing most evictions from proceeding, it is not consenting that past-due rents do not have to eventually be paid back. Once states and their communities start to re-open, it would behoove any property manager to already have a payment plan in place for tenants. Talk with your owners and tenants alike and see what the best compromise is for both parties.

Make all announcements in writing.

Currently, one of the big issues is all the changing policies, mixed information and messages we are getting from the media, family and friends. If false information is cited to your tenants or owners, this can be a disaster and have serious legal repercussions down the road. To be safe, never assume or speak in hearsay. If you feel any kind of major announcement for your tenants or owners is necessary, make sure you have them done in writing and provide the source. Having this approach can reduce your liabilities and protect you from providing incorrect information.

Consider virtual showings.

This is an instance where technology can be extremely useful and provide the ability to showcase a property without the fears a live tour may bring in the current times. There are several platforms that are offering great options for virtual tours and it may be something to consider. Of course, economics comes into play and you should determine if your returns would be worth the investment. If you’re a smaller operation, then doing a simple phone tour may be the best option. Be sure to keep it short and sweet, as most people are just looking for a basic overall description, not a detailed grand showcase.

These are some fundamentals that will hopefully help you navigate during these fickle times. Your biggest takeaway should be to set up consistent protocols based on state and country mandates, keep everything in writing, set up payment plans and, most importantly, be kind. As we all move through this, hopefully we can use the opportunity to show compassion and, at the same time, facilitate proper management duties for both tenants and owners alike. In the end, this is the best way to prevail through the chaos and your tenants and owners will thank you for it.