Results from Certified Letter to Unknown Occupant [Letter]

 

Shortly after the letter was delivered via Certified USPS mail (signature on delivery), I received a phone call. Although short-lived, I was excited to learn the current occupant was willing to sign a lease.
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Back in November I wrote a blog titled My First Tax Deed Purchase and described the situation of an unknown person living in a property I just acquired through the Escambia County Tax Deed Auction in Pensacola, FL.

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After consulting with my attorney, I rectified the situation by drafting the letter below. This is a copy of the actual letter I sent to the person occupying the property.

Shortly after the letter was delivered via Certified USPS mail (signature on delivery), I received a phone call. Although short-lived, I was excited to learn the current occupant was willing to sign a lease. Two months after signing the lease the eviction process began. Related Articles below go into more detail on how the evicted tenant destroyed this Pensacola property and our improvement efforts afterwards. Spoiler Alert: we rid the kid filled neighborhood of one of the most worthless human beings I’ve ever met. A drug dealer/user who allegedly was stealing his mother’s disability checks.  

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Evicted Tenant Destroys Property [video] – 6 Month Follow-Up

And now for the after….we now have properly screened tenants (which are paying rent on time), an improved property and a decrease in criminal activity for the neighborhood.

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In February I posted a horrific scene of a recent tax deed purchase in Pensacola that turned into an eviction, that turned into the tenant destroying the property [original post here]. After a few short months of demo and installing a different mobile home, we now have properly screened tenants (which are paying rent on time), an improved property and a decrease in criminal activity for the neighborhood. Let’s break down some #’s.

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Our Cost Summary:

The debris, oh man the debris. The rollaway dumpster guys in Pensacola made some bank on us. We had a total of 8 dumpsters to haul away 14.9 tons of trash. This was just the trash on the outside, not to include the demo of the mobile home that was original to the property.

Nowgoing back to our Tripod of Adopted Investing Criteria:

  • Cash Flow: ✅
    • After all expenses (repair/maintenance, vacancy, insurance, taxes, property management) are considered for this property, we’ll still cash flow $375/month.
  • Cash-on-Cash Return: X
    • With $375/month in cash flow, that is $4,500/yr. Dividing our cash investment of $40,716 by our cash flow of $4,500 we yield an 11% CoCR. On this project, our clean-up and demo costs were much higher than anticipated. Although an ok return at 11%, if we had more accurate cleanup/demo costs during our napkin test, we would have passed on this property as it doesn’t yield our target of a 15% return.

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  • Asset Acquired @ 20% Under Market Value:
    • This property now appraises at $57,000 and with our all in costs of $40,716, we are almost at 30% below market value.

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Evicted Tenant Destroys Property [video]

The more time I spent at the property, seeing the # of kids riding their bicycles through, I’m happy we got him out and giving us a chance to clean up and improve the neighborhood.

Evicted tenant destroys property

In a November 2016 post titled My First Tax Deed Purchase I talk about just that and the unknown tenant living in our new Pensacola property. What started out as the best case scenario resulted in an eviction just 2 months later after signing the inherited tenant to a lease. As in most cases I’ve heard about, an eviction typically results in the property being damaged, or in my case, destroyed.

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The property was in bad shape when we purchased it off the tax deed, but nothing like is shown in the photos and video here. As I’ve spent some time with my clean up crew at the property, I’ve been able to confirm with a couple of the neighbors this individual was real trash. Squatting on this property for the last 10 years, I knew he was trash but wow, what a piece of work. Supposedly he’s been stealing his mother’s disability checks and even baking meth in the back storage unit. Worst house in the neighborhood – we got it!

The more time I’ve spent at the property, seeing the # of kids riding their bicycles through, I’m happy we got him out and giving us a chance to clean up and improve the neighborhood.

Once we have the property stabilized, I’ll be sure to do a follow-up post with some #s, figures, etc.  Enjoy the video – off to clean up the trash’s trash!

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Evicted Tenant Destroys Property Videohttps://youtu.be/S9L9AS6_qOY

Photos:
Evicted Tenant Destroys Property PensacolaEvicted Tenant Destroys Property PensacolaEvicted Tenant Destroys Property Pensacola

Evicted Tenant Destroys Property PensacolaEvicted Tenant Destroys Property PensacolaEvicted Tenant Destroys Property Pensacola

Evicted Tenant Destroys Property PensacolaEvicted Tenant Destroys Property PensacolaEvicted Tenant Destroys Property Pensacola

Evicted Tenant Destroys Property Pensacola Evicted Tenant Destroys Property Pensacola

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My First Tax Deed Auction Purchase [Letter]

Do I just walk up, knock on the door and tell them you’re in my house? Start paying rent or leave? How well do you think that will go over?

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real estate investing pensacola fl

 

Like many states, Florida is a tax deed state, meaning, if you own the tax deed (or win it at the county tax deed auction), under FL Statue you have the right to take immediate possession. Most folks tend to purchase tax deeds where the property is unoccupied. I now understand why this can be an issue, but in my first experience, so far/fingers crossed, my first tax deed auction purchase was occupied and it has gone extremely well.

Quick Details:

  • Yes, this was my first tax deed purchase – Pensacola property in Escambia County
  • I did very little due diligence pre-auction (not good and certainly not advisable, I was lucky)
  • Mobile Home Trailer in a class C neighborhood
  • From several pre-auction drive byes, I could not tell if the property was occupied or not; a call to the utility company let me know power was being paid (of course they wouldn’t give me any details by whom)
  • Post Auction (After I paid for the property!) I discovered the occupying party was not on the title, he had lived there for 15+ years (discovered this from a Professionally paid title search – Always use a professional )
Being as it was my first tax deed auction purchase, the Pensacola property being occupied by an unknown entity, and my natural behavior to avoid conflict (especially one where I may be shot by Shotgun Sally), I didn’t know what to do. Do I just walk up, knock on the door and tell them you’re in my house? Start paying rent or leave? How well do you think that will go over?
A while back I posted about the importance of having a lawyer on your team and here is a great example of why. My first thought was just to evict the occupant. Per my lawyer’s advice, I cannot evict the current occupant as there is no lease agreement to evict on. This left me with 2 real options:
  • I can attempt to perform an ejectment notice – lengthier than an eviction and WAY more costly (estimated around $3,000).
  • Have the occupant sign a lease and become my tenant.

I like option B MUCH better. After all, supposedly this occupant had been there for 15+ years and clearly he was settled in by the looks of the place. It was going to cost me thousands of dollars to clean it up and even more to find a new tenant. But with the fear of being shot, how do I make contact to see if he’s open to it? Via a Certified US Letter, that’s how. And that’s exactly what I did.

Contact me via the form on this website or email [ jay@helmsREI.com ] and I’ll send you a copy of the letter I sent. 

Through the letter I explained and provided copies of the tax deed auction purchase, I was interested in keeping him as a tenant, but if he didn’t contact me within 10 days of receipt, I’d be forced to take legal action to remove him from the premises. In approx. 10 days he called me up, we worked out a deal and he signed a lease. This could not have went any better.

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Will I continue to invest in tax deed sales? Yes, but the next go round will institute more pre-auction due diligence. I really was lucky here. As a matter of fact, I placed bids for additional tax deeds in Pensacola the month immediately following this one, but did not win those auctions.

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My First Eviction Turned Into Greater Cash Flow

I received the email no landlord wants to receive. “It’s the 11th of the month, Unit A hasn’t paid rent yet. Do you want us to start the eviction process?”

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real estate investing pensacola fl

 

Being my first eviction and at times a hard ass, my initial reaction was, rent is due on the 5th, it’s the 11th, why are just now bringing this to my attention? Why didn’t you already file the eviction on the 6th and just let me know that you’ve done it? But, as I get older I’m learning that sometimes cooler heads do prevail and in more ways than one, this is certainly one of those examples.

A week later I followed up with Pensacola property manager to find out the status of the eviction. “She’s fighting it”, was their reply. “She paid rent through the court and now’s she fighting it.” I thought, that certainly sounds strange to me. If Tiffany Tenant (Tiffany is not tenant’s real name BTW) had the money to pay rent, why didn’t she? I’m now out $400 court costs. Again, being my first Pensacola eviction and trying to be wiser, I let it roll.

Before I go any further, I must admit I assumed Tiffany was a “professional renter.” I inherited these tenants with the purchase of the property and at the time of the eviction they had 2 months left on their lease that was signed with the previous owner. I assumed the worst.

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Toward the end of the month I receive a call from Tiffany. How she obtained my # I still don’t know, but I appreciate her determination. We had a lengthy conversation about the eviction and her story was not matching up to the Pensacola property manager’s. Tiffany brought up several maintenance items, that I was led to believe had been addressed – as in there were line items on my monthly maintenance statement from the property management company as being addressed. I figured the truth was somewhere in the middle but I needed to see for myself.

Sure enough, personally doing an inspection of the property, the maintenance items had not been addressed. The tenant even showed me the cancelled money order (date printed/receipt) where she attempted to pay rent through the property management company.

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Why this transpired and I’m out $400 court costs, I still don’t know, but I’ve now decided to manage this property myself. I was able to sign Tiffany to a new lease, one she is happy about and one that cash flows an extra $75/month for me. As for my Pensacola property management company, I see that relationship coming to an end soon, but for now I’ll let it roll.

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