While investing in property to rent out is a sound financial proposition, there is always an element of risk involved. Unless you know beforehand and absolutely trust your tenants, there is always a leap of faith. You are handing over financial responsibility for your investment to people you don’t know – and you just have to hope that their references were real, and they’re not going to trash your property.
Sadly, that does happen. There’s no point pretending it doesn’t; you can take all the measures in the world against it, and still wind up with tenants who cause damage more expensive to repair than the sum they ever paid in rent. It’s a nightmare scenario that blights the dreams of anyone considering property investment.
So rather than pretend it doesn’t happen, let’s think about how you can bounce back to your dream scenario if you find yourself with nightmare tenants. After a (potentially lengthy) eviction process, you finally get the keys back, and you realize the damage and mess is going to cost a small fortune to repair. What are your options?
Repair It Then Rent Out Again
Some people may find this the best option, hoping that the lightning of bad tenants isn’t going to strike them twice. Given that this is a known risk for landlords, it makes sense if your attitude is just to shrug it off and try again.
You might want to consider claiming on your landlord insurance for the repairs, if it’s financially viable to do so. However, this can delay things as you wait for the claim to process, so it might make more sense to make the changes yourself. At least that way your insurance policy isn’t going to increase in price.
Sell It As Is
There’s every chance that your response to bad tenants is going to be to run for the hills at the idea of ever renting out again. Given that there are plenty of less stressful – albeit less lucrative – options for investment, then you might run for those instead. However, this decision means that you’re stuck with a damaged property – and you don’t want to sink more money into repairing it.
Firms like Cash PDX specialize in buying houses quickly, even if they’re not in the best of condition. You might not get a huge amount of money, but at least you’ll then be free of an investment proposition you no longer consider to be viable.
Repair, Then Sell
This is an expensive way to handle the situation upfront, as you will have to pay the repair costs for the damage that’s been done. Nevertheless, it might work out well, as with a good repair job and a deep clean, you can attract buyers to the house who are willing to pay more.
Of course, this route takes a lot of time, and keep in mind it’s time when you’ll be out of pocket. Not only are you no longer collecting rent on the tenancy, but your outgoings are going to increase as you cover the cost of repair and renovation. If your finances can handle this break, then it might be the most lucrative in the long term.