This goes along with a previous post I wrote about attitudes we have in America, and how only a change in those attitudes can lead us back to the greatness this nation once embraced. But I digress…
Today I was doing some work on a house I am flipping. (Yes, you can still buy flips in Phoenix but the margins are tight). While I was there, I got a phone call. I am in the process of foreclosing on a property. I bought a non-performing note from a lender, had several visits with the debtor, who basically agreed to sign a deed in lieu so I would not have to foreclose, then proceeded to miss the next 3 appointments that we scheduled to take care of the paperwork. I would rather have done the DIL, as it is cheaper for me, and does not impact the debtor’s credit as much, but that is another facet of this deal.
The property I am foreclosing is occupied by someone who claims they have permission to be there, rent free. There is no written lease, and they are not making any payments (but they do have water and power …) Frankly, I’d rather the property was occupied anyway. So while I was working on my flip, my phone rings, and it is the tenant / squatter. He says “I just got a notice of foreclosure posted on the door!! What does this mean????”
So I spent a few minutes and explained about what was happening, and told him that he can stay until the property changes hands; either I will get it back at the auction if no one meets the opening bid, or someone else will buy it from me. I haven’t decided where to set the credit bid yet (the amount I am willing to bid for the property, which is effectively the opening bid amount), because I’m not sure whether I want the property or not. I know I want it for what I paid for the note, plus the foreclosure cost, because I can sell it for more than that — just not sure I want a long term rental property and tenants and … … … but Maybe.
In my conversation with this person, they informed me that they had been there 3 years. And that they had not paid any rent, ever. I asked if they thought this was fair. “Well, probably not, but you know, after a while, you just get this attitude that it is your place and you sort of have a right to it and heck why should I work and pay someone else rent?” Does this attitude sound familiar?
I told this person, “You know, more than for me, but for yourself, you need to change that mindset — I mean, if you are working, contributing your time and energy to helping someone and creating, and then you can get paid for it, be productive, wouldn’t that feel better than just hanging around?” And they admitted that indeed, it would be better — that they were a little scared about the mental place in which they found themselves.
Then they wanted to know when they would have to leave. I said, “If you get a job and are willing to pay rent, you can stay there as long as you want. Otherwise, the eviction process will probably start in January. Of course, someone might offer you some cash to just leave without being evicted.”
Probably the wrong thing to say. Now they are waiting for someone to show up with some cash so they can leave. Then we talked about rent. The comps for the area are anywhere from 750-950 a month. “Have you SEEN this place? It is a wreck! It needs EVERYTHING!” they said. “You just told me you have been living there rent free for 3 years. And you are not working, so you have time on your hands, right? Why haven’t you taken a little care of the place and fixed it up?” “Because it ISN’T MINE!” they answered. Whooooeeeeee….
Seriously, folks, we need to change some attitudes.