One crucial thing I have learned having been a syndicator/operator of six multifamily properties in the last 10 years is this: No matter how nice a property has been renovated or how impressive your capital improvement plan, you can never substantially change the submarket, otherwise known as your tenant base.
Over the years of owning Elmstone Group Property Management (shameless plug here), I have encountered some precarious situations and unstable individuals covering all gamuts of this business. I personally dealt with mentally-unstable and sue-happy residents.
Allow me to share some experiences with you that hopefully will preempt the same legal dilemmas from happening to you. Follow along with me as I periodically share my experiences.
Episode 1: The Knife-wielding Resident
ISSUE:
A brand new owner/operator in 2011 in South Irving, Texas, we inherited with Casa Del Sol a resident, shall we say, suffered a few mental issues. I distinctly remember when we walked all units during due diligence, seeing this unit. Hung on the walls were numerous martial arts weapons, a sword, very sharp disc of some kind. You get the idea.
A month or so after takeover, our manager and maintenance guy went to collect the resident’s late rent, knocked on the door and was greeted with a hammer crushing through the door from the inside. Cops were called, entered the premises by busting the window and kicked in the door. They were greeted by the knife-wielding resident, who was promptly tased and taken to Parkland Hospital’s Psych Ward, a place he called home for two weeks.
SOLUTION:
During our resident’s vacation at Parkland, our manager called the city’s Adult Protective Services to greet said resident upon his return to his apartment. We had since changed the locks and called APS to help him. Family in Florida did not reply to our requests for help.
This was a truly tragic situation that broke my heart, but this person truly was a danger to himself, our staff and other residents. We call this a legal liability, a lawsuit waiting to happen. Guess who sits in the hot seat in court when someone files a lawsuit. Yours truly. My job title requires I defuse these situations from escalating.
Multifamily ownership is not for legal virgins. Educate yourself.