House Gets Destroyed by Crazy Tenants

TLDR
Tenants are going to tear some houses up. It is part of the business. The job is not to prevent every scuff. The job is to match the finishes to the neighborhood, fix the real safety items every time, and protect the property from slow water damage.

Table of Contents

What The Walkthrough Showed

My property management team sent me the walkthrough video. The guy walking it was wearing gloves. You could almost smell it through the screen.

Walls wrecked. Crayon on everything. Some kind of smeared destruction I cannot identify. Floors ruined. Before we put this tenant in, we had done new floors in the main room, we had painted, we had done some remodeling. Most of the floors are coming back out. Paint is going back up the whole house.

You might be thinking, well, you were going to paint anyway on a turnover. True. But the crayon and the destruction tell you something about how these people thought about your property. They did not.

You do not get to choose how tenants treat a house. You get to choose what you build so the damage is survivable.

Why I Did Not Spend More On The Rehab

There is a line between being a slum lord and being smart with your money. Spend too much on a rental in the wrong neighborhood and you end up spending that money over and over on every turnover.

I spent somewhere in the mid teens on this renovation. Let’s say I had spent $40,000 instead. In this neighborhood, I am getting the same tenant pool either way. The finish level does not change the tenant. It only changes how much I wasted on finishes that get torn up on schedule.

That is the scale of livability. You match the finishes to what the neighborhood pays. You do not go above it because the extra finish does not come back as rent. It only comes back as more stuff to fix.

Common Mistake
Treating a rental like your personal house. Your personal house runs on pride. A rental runs on math. The question is not “would I want to live here,” it is “does this finish level match the rent this neighborhood pays.”

The Water Problem Tenants Will Not Catch

I noticed gaps between the shower surround and the tub. This is the thing that will quietly destroy a rental over years.

Anywhere water can get in, water will get in. On your personal house you would notice a damp spot and caulk it. A tenant is not looking for that. They take a shower, water runs down a gap, into the wall, behind the drywall, and nobody tells you until the subfloor is rotted and you are looking at real structural damage.

On every turnover I walk the wet areas and re-caulk anything that looks questionable. Tub to surround, tub to floor, toilet base, sink base, windows in wet areas. It is a $40 material cost and one hour of labor. It prevents five-figure problems.

Pro Tip
On a turnover, budget for a full re-caulk of every wet area, whether it looks needed or not. Cheapest insurance in the business.

The Slum Lord Line

A lot of people use “slum lord” to mean anyone with a rental in a lower-priced neighborhood. That is lazy.

Being a slum lord means you do not handle safety and liability. Fire alarms that do not work. Broken glass. Windows in bedrooms that will not open so a fireman cannot get in. Exposed electrical where a kid can get hurt. That list is non-negotiable on every single property every single turnover.

Being smart means you handle all of those every time, and you match the finishes to the neighborhood after that. Livable, safe, affordable. That is not slum lording. That is providing housing people can afford in neighborhoods that need housing.

Safety is a floor. Finishes are a ceiling you set by the neighborhood.

FAQ

Why not just sue tenants who trash a property?

You can. Most of the time it is not worth it. The cost to pursue, combined with the likelihood of collecting anything, usually loses to just absorbing the hit as a cost of doing business. Budget turnovers into the property’s returns on the front end.

How much should I budget per turnover on a rental?

Depends on the neighborhood and the tenant length. A quick turnover after a short tenant might be $3,000 to $5,000. A full after a rough tenant runs $10,000 to $20,000. I keep about one full turnover’s worth of cash in reserve per unit.

What’s the difference between wear and tear and damage?

Wear and tear is paint fading, carpet wearing down, small scuffs from normal living. Damage is holes in walls, crayon on everything, broken fixtures, plumbing abuse. Security deposits cover damage, not wear. Most judges see that line pretty clearly.

Should I screen harder to avoid this?

Tighter screening helps, not solves. Credit, income, rental history, and references catch some problems. Some tenants look fine on paper. Your bigger lever is keeping finishes appropriate to the neighborhood so a bad turnover does not wipe out a year of profit.

Is it worth installing better finishes if the neighborhood will not pay for them?

No. The better finish gets destroyed on the same schedule as the cheaper one. You paid more up front and the rent did not change. Finish level is an input to the wrong variable.