Rental Property Trashed by Tenant (Subletting to His Son)

So we bought an investment property in West Sydney which has a main dwelling and and a self contained granny flat.

The female tenant of the granny flat left and the real estate put out the ad for the flat. We got the references for a guy with a clean record and gainful employment whose reason for wanting to rent was a relationship break up, so we thought this fair enough and accepted him as a tenant in October of last year.

Fast forward to today and our granny flat is trashed to the tune of $14k that we have to claim through our landlord insurance due to the tenant subletting to his apparently mentally ill son who trashed the place. All we can claim of him is his bond. How is this acceptable. Surely he should be liable to the damages.

Anyone know any recourse on this as our real estate rep said that you can't get anything more from the tenant. It feels unfair that you can just rent a place, trash it, then just be out of pocket for a months rent.

Thanks in advance!

Comments

  • +19

    You were told that getting an "investment" property was easy money and that you'd be foolish not to do it.

    What did you have to pay your insurer, what was the deductible or change to your premiums or whatever?

  • +6

    It feels unfair

    It is unfortunately.

    Hence landlord insurance.

  • +13

    That's why you have insurance.

    In a car accident, you let your insurer deal with it. You don't try to take out the other driver. Same here.

    Also, hey you have rental income, you win most and lose some (hopefully). Lucky you have insurance though

    • +2

      But in a car accident the party responsible pays out of their insurance and their premiums go up. This guy/family trashed my place with no responsibility taken.

      • +8

        You should just care about your rental property being fixed asap so you can move on.

        Revenge/being petty is a futile way to think about things. Move on, don't dwell on it.

        • +29

          Revenge/being petty is a futile way to think about things.

          Maybe an Aussie property investor can write a screenplay for a movie like Taken, except instead of a daughter being kidnapped it's a landlord trying to get revenge on a tenant that trashed their property. They can call it "Trashed" and it can star Chris Hemsworth.

          I don't know who you are. I don't know what you want. If you are looking for a place to rent, I can tell you my rental is now trashed. Now all I have is a very particular set of skills. Skills I have acquired watching many seasons of The Block (and Grand Designs). Skills that make me a nightmare for people at Bunnings. If you fund my renovations, that'll be the end of it. I will not look for you, I will not pursue you. But if you don't, I will look for you, I will find you and I will make you build me a new kitchen.

        • r/pettyrevenge wants to disagree

      • +4

        Renting properties involves people having good references. Hopefully your rental agency is getting the word out about this guy now. Leave this up to your insurance company to deal with. I would, also, make sure you change the locks on the place.

      • +3

        But in a car accident the party responsible pays out of their insurance and their premiums go up.

        That’s if the insurer can reclaim the money. They don’t automatically get it, they have to chase it. If the other party can’t pay, it just comes out of the insurance fund.

        This guy/family trashed my place with no responsibility taken.

        He’ll have consequences of some sort. Probably not ‘paying it back’ but his rental history is now screwed and it’ll be a lot harder to get accomodation.

      • in a car accident the party responsible pays out of their insurance and their premiums go up.

        Not if the at-fault is driving your car.

      • +1

        I admit I haven't dealt with LL insurance, but I'm sure the insurer reserves the right to go after the at fault party.

        In saying that, they'd know as a renter, it's unlikely they'd have much to get from them, therefore unlikely they would pursue.

        • +3

          'as a renter' lol wealthy people rent too you know.

          They just don't usually trash the place.

          • @trapper: Yeah, I worded that pretty poorly, didn't I?

  • who said all you can claim is the bond? Your have insurance and you have a tenancy agreement between the agent and the tenant, right?

    Regardless of what the tenant does or whom he lets do, he is liable.

    • So I should be asking the agent what is in the agreement? Sorry this is not in my wheelhouse.

      • Shouldn't your insurer be dealing with your agent? At the end of the day it's their money covering this.

      • +2

        It's just like car insurance, the landlord insurance will chase the tenant for you if they deem it viable ;)

        If you really want to feel screwed over, wait until a tenant has a pet that does damage or the insurance company deems it "tenant neglect", neither of which is covered by most landlord insurance policies :P

  • +1

    Lucky you have insurance, that’s what you pay it for.

  • +1

    You make an insurance claim. The insurance company may chase the tenant for damages. But that is none of your concern. That is why you have insurance.

  • +7

    We had the same situation last year. Not mentally ill tenants…just terrible people. Our insurer put down a lot to "tenant neglect" which was not covered; malicious damage was covered but came with an additional excess. We got $400 from the payout. We spent probably $10k on getting the house back rentable, not including lost rent (which insurers didn't cover because the house was "habitable").

    There is nothing you can get from the tenants aside from the bond. You can't get blood from a stone.

    It's bad luck, we chalked it down to investment loss. Unfortunately we lost some faith in humanity and insurance companies too.

    • +1

      Bad demographic

      Too young?

      • Don't think so. When they moved in they were supposedly a couple with 5 children, mid 30s, at one point I think they had another baby…but then in the final inspection the lady's sister said she wasn't there with her 3 children? According to the neighbours they were noisy (unsurprisingly, with the children) and there appeared to be a random rotation of both hard rubbish (wardrobes, bookshelves) and people. They managed to clear the place up and hide things during inspections because they were given plenty of notice by our REA, but the last few times our REA dropped in unannounced and the place wasn't in a great state and that's when we issued the eviction notice.

        We gave them the benefit of the doubt, a family with young children, but in hindsight we probably could have taken action earlier.

        I mean it was bad tenant stuff like drawing on the walls, holes in the walls, broken glass sliding door….but also really weird random things like every set of kitchen cupboards was missing a handle off the pair. Light switch covers missing. Door stoppers missing. Curtains missing. Door handles changed - they were all different throughout the house. If they weren't missing. Air con, dishwasher, stove/oven, all broken. We have no idea what went on.

    • +3

      It's bad luck, we chalked it down to investment loss.

      Don't worry, in seven years it'll be worth 2-3 times what it is now (everyone knows property doubles every seven years). That $10k will be a drop in the pond of your net worth.

    • +3

      Who's the insurer?

      • Keen to know too - to avoid them

      • You can PM me.

      • Terri Scheer

        • lol..Lies!

          I confirmed with jolee3, it wasn't Terri Scheer.

          I have only hear good things about Terri Scheer and have 2 properties with them myself (but yet to make a claim touch wood).

  • I think your agent cant be bothered to do anything further.
    Its probably the right choice but there could be further action taken to have the tenant blacklisted (not too sure the exact process in NSW)
    Will you gain from it probably not as the damage is done and they wont be renting from you or the agency you dealt with.

    Dont know the full situation but would think the agent may have been slack in keeping on top of the property. Wonder if the damage happened gradually or an incident. Should have been picked up in the routine inspections. Maybe with Covid its harder

    • All good points and yes they did do the blacklisting thing.

  • +12

    Keep in mind this is an investment OP and investment carries risk including losses from issues with tenancy (and you deal with that risk with things like insurance. Though you probably can sue them for more damages if you wanted to take that risk too).
    It can actually be IMPORTANT that they carry risk. Otherwise every single billion dollar company will buy up all the properties if there were no risks involved.

  • +6

    Sell the property and buy index funds. Never any issues to deal with.

    • +2

      lmao, is is actually great advice. that is what i did instead of buying another property. i only have 2 properties and was about to buy a 3rd. since the prices are too high to buy another house, i went and just dumped that into an index fund, it is paying off well so far and absolutely no headaches.

    • +1

      But isn’t the sharemarket basically the same as gambling?

      • +3

        Playing the share market is gambling. Investing for long term pays off. Long term investors don’t dabble in the next new hot stock which is where the gamble is.

        • +3

          But property doubles every seven years. Shares will never ever beat that return. You might as well go to the casino.

          (By the way these comments about shares are supposed to be tongue-in-cheek, I’m trying to educate property investors through my comments.)

          • +1

            @Ghost47: I’ve no idea what educational point you are trying to make with that comment.

            • +1

              @Euphemistic: I should’ve said “the responses elicited from my comments”.

              Basically I just say out loud what property investors think, and people who know better reply to me.

              • @Ghost47: Maybe a little too tongue in cheek for me, because the other comments seem to make you out as a bitter renter.

                • @Euphemistic: Nope, just bitter about how silly house prices are because everyone wants to get rich through property in this country when there are other avenues to wealth generation.

      • +1

        Shares are a fraction of an asset (being the entire company that has issued the shares).

        A mortgage on a house is also a fraction an asset (being the House and Land), with the bank owning the rest and charging you Interest as you slowly buy more and more "share" of the ownership.

        Same, same but different.
        The gambling argument can equally be applied to the Property market, particularly when dealing with Interest only loans that "gamble" that the Capital Value will increase faster than the Interest Paid over the course of the loan.

        • buy more and more "share" of the ownership.

          So my comments in the past about actually owning only the toilet when someone has just taken out a mortgage makes sense then.

          Capital Value will increase faster than the Interest Paid over the course of the loan.

          Yeah… and let’s see how that goes with rising rates. But I’m sure the RBA will start lowering rates again in the next few years since we’ve basically relied on decreasing interest rates the past decade to help boost our GDP.

      • everything is a gamble if you don't know what you are doing and chasing the next hot thing or FOMO
        that applied to all asset class

        all investments carry risk you cant escape them, you can only manage them

        properties you get bad tenants, natural disasters, interest rate hike
        shares you get bad management, fraud, sudden market collapse etc…

        I have both properties and shares and I face plenty of those risks in the last few decades but over all
        it is a much more profitable venture than money save in the banks.

  • Claim on insurance, move along. Sometimes you get stuck with a bad renter. Other times, they are great.

  • +3

    All we can claim of him is his bond. How is this acceptable. Surely he should be liable to the damages.

    Welcome to 'business', if a customer comes into your shop and trashes it, rarely will they cover the costs too. Renting is no different. This is why you have insurance, for business, cars and homes.

  • +4

    You have landlord insurance, why are you crying here? Despite the guy having his son live in the place, there is a tenancy agreement in his name which will make him liable for the damages. Your landlord insurance provider will go after him.

    • +2

      why are you crying here?

      The injustice.

      Your landlord insurance provider will go after him

      Not enough, they want to doll out justice. Some people just have too much time.

    • You have landlord insurance, why are you posting here?

  • +4

    All part and parcel of owning an investment property.

    You have landlord insurance. Use it and don't get too emotional over it.

    In Victoria, you can't rent out a granny flat separately, so think of the the granny flat as a bonus.

    Question. Does the granny flat have a separate insuranec policy to the main house?

  • -2

    Welcome to the world of the greedy landlord baron of the 2020s. All you get for the destruction of your property will be the bond. You’ll find your Landlord insurance a bit of a joke. (On you actually)
    As you reflect on getting the just desserts for your implacable greed, you’ll probably take great care in your next tenant. Your naturally heartless disposition will stop you from taking a chance on anyone that is on welfare or that is at all suspect - because you know your risks and the only real mitigation is tenant selection.
    So possibly the folk most in need of the accommodation that you have to offer won’t get a look in.
    Its a great system we have, I do wonder why there’s a rental crisis?

    • -8

      Shut up rentoid

      • +5

        did you just say "rentoid"? go outside and breathe some fresh air

        • +2

          Sadly that’s where our country is headed. You have the upper class, middle class, lower class and then the rentoid class.

          • +1

            @Ghost47: Unfortunately there are an increasing number of rentoid wannabe-s…..

  • your insurance should pay up, how did you know he sublet it out?

    also you can sue him, does he have assets?

  • +3

    Surely he should be liable to the damages.

    He is. But so far as you are concerned, just claim on your insurance and move on.

  • +1

    It's disgusting to think how some people behave and treat others' property to the degree that $14K damage is caused.
    My wife and I treat the apartment we rent as though it were our own, and it is in perfect condition aside from regular wear and tear in certain areas.
    I can't imagine the mentality of somebody who would trash their rental.
    It really sucks that these kinds of unresponsible people can get away with this.
    Hopefully your insurance will cover the situation for you.

    • -2

      I can't imagine the mentality of somebody who would trash their rental.

      mentally ill son

      That help?

    • My wife and I treat the apartment we rent as though it were our own

      Yeah but you aren’t everyone, nor is anyone else. There will be people who take super good care of the place they’re renting in, probably even upgrade it at their own cost, then there’ll be people who neglect it completely.

      It’s naive to expect everyone to take care of the place they live in, some people are just complete grubs.

    • -1

      Did you read the post at all or did you just want to get on a high horse about how perfect you are?

      mentally ill son

  • Take the bond to pay for the excess on the insurance claim. solved.

  • +2

    And this is why the easy money facade of investment properties is really just a joke.

    Why dump money into this and deal with tenants and useless real estate agents when you can just chuck your money into the bank and make 4-5% on it without batting an eye.
    The numbers just don't stack up anymore, maybe back in the late 2000's early 2010's, but not now.

    • It's not a joke.

      I do however, agree the numbers currently don't add up, but over the long term they will again.

      Cash was getting you less than 1% a couple of years ago and over the long term, you won't achieve any meaningful returns from cash after inflation.

      The benefit of property is gearing. Put in $1, bank will lend $4, so you have $5 to invest, can't do that with Cash at bank.

      Over the long term, the property will increase in value, become cashflow positive, rent will cover all repayments and you'll pay out your mortgage, leaving you with a large asset that provides rental income.

      Unfortunately, you'll have to deal with shitty tenants and maintenance costs along the way, but 9/10 times you'll make a significant capital gain on a house^ over the years.

      Note: I did say house. If you're buying an apartment or student accommodation to invest in, you may as well burn your money.

    • Why dump money into this

      Because there was a period of time where you would buy a house for $500,000 and it would be worth $750,000 three years later. Do a few rennovations and it's worth $900,000.

      Show me another asset class that can do that.

      • there was, back when interest rates were at 0.1%, but they're not looking like returning there anytime soon.

      • PLS.

        If you bought $5000 worth of shares in 2013 for 1c a share you’d have 500,000 shares.

        That would’ve turned into $2,370,000 by today.

        $5000 to $2,370,000 in 9 years. That’s a 47,300% increase. Beat that with property lmao. If you put a house deposit of $200,000 into PLS in 2013 then you’d have $94,800,000 now.

        The greatest investor in history (Warren Buffet, not Joe Blow and Jane Blow from The Block) didn’t get rich through bricks and mortar.

        • If you bought $5000 worth of shares in 2013 for 1c a share you’d have 500,000 shares.

          Shares of what?

          • @coffeeinmyveins: Like I said, PLS, i.e. Pilbara Minerals LTD.

            Another example is if you bought $5000 USD worth of Apple shares on the 7th of Jan 2000 for 88c (USD), that would've net you 5682 shares. Those shares would now be valued at $870,455 USD or $1,258,752 AUD.

            Other examples are CBA (Commbank), DMP (Domino's) and WES (Wesfarmers), look at the long term charts for all those shares and you'll see you would have made several multiples on your money if you invested early, many more multiples compared to property.

            The main benefits (in my opinion) of property is mainly tax write offs like negative gearing (which you can use for shares too but it's much riskier to take out a margin loan compared to a mortgage), leverage (which is negated by making many multiples of your cash through shares) and more regular and frequent cash flow, although most of it goes towards paying off the mortgage anyway. By the time that's paid off you'll need to renovate or potentially knockdown and rebuild and don't forget about all the headaches along the way like bad tenants, natural disasters, general wear and tear which you need to either fix yourself or pay someone to fix. And then if you want to realise the capital gains you need to go through the costly procedure of selling the place. Property is a terrible investment, the only reason people invest in it is because they're the type who need to be able to see what they're buying.

            • @Ghost47: wow someone looks at a graph picks a historical low and says 'you could have made x' … well you probably wouldnt have you have gains and losses all over your portfolio and unless your name is nostradamus you wont peak the right share at the bottom.

              • @Blackadda: They wanted to see an asset class that beats property, I gave them multiple examples of long term investing, not picking shares at the bottom. I don't think you understand what I said from that statement.

                Read this article if you can't hack the fact that shares have performed much better than property historically.

                By the way, the person I was replying to wanted to see another asset class that can double, not an asset that class that will double. Maybe you should read up a bit about risk and returns.

  • Claim scrapping on the remaining value of the scrapped fit out.
    Claim depreciation on the replacement fitout.

  • Surely he should be liable to the damages.

    He is liable for the damages of course.

    But your insurance company knows it will be a hopeless and expensive exercise for them to recover anything from him.

    So for them it doesn't make sense to pursue it.

  • +2

    It feels unfair that you can just rent a place, trash it, then just be out of pocket for a months rent.

    I for one am socked to hear that investments carry risk. This is like complaining your super was down for the year. It's not always smooth sailing.

    You have insurance, so what's the problem? 1 months rent is the loss here? But you have already said you have kept the bond which is no. Is there any loss here?

    Your insure will pay he bill but go after the tenant for the money if it is feasible to do so.

  • +2

    So I should be asking the agent what is in the agreement? Sorry this is not in my wheelhouse.

    Love the reply from OP in a thread about this. Spends hundreds of thousands of dollars on an investment and then claims "not in my wheelhouse".

    It feels unfair that you can just rent a place, trash it, then just be out of pocket for a months rent.

    It also feels unfair that people can buy properties and just collect an income whilst providing no benefit to society and then make hundreds of thousands (millions) in capital gains, but hey, here we are.

    • It also feels unfair that people can buy properties and just collect an income whilst providing no benefit to society and then make hundreds of thousands (millions) in capital gains, but hey, here we are.

      What if 'renting' whole property did not exist? You either buy it, or housing trust…or what else?
      How much does it cost to build a house these days? Can an average renter afford the lump sum/deposit to build?

      • Oh yeah sorry my bad I forgot that our landlords are godly creatures giving us the ability to live

        • That's not what I said. If you don't have an answer but want to whinge than just say it.

          Would you be able to afford to buy the property you are renting?

  • +1

    We got the references for a guy with a clean record and gainful employment whose reason for wanting to rent was a relationship break up, so we thought this fair enough and accepted him as a tenant in October of last year.

    Who the hell requires a "reason" to rent as part of a lease agreement? How about "not being homeless" which would be the actual reason for 99% of tenants?

    I understand seeking references but actually have prospective tenants specify their reason for renting your property?

    I think that sounds extremely off-putting from a tenant's perspective.

    • Who the hell requires a "reason" to rent as part of a lease agreement?

      Isn't it the same type of question as "why do you want to work here?" during job interviews? Obviously for the $$$ so you can live, eat, not be homeless, but is that what you say during the interview?

      I've heard many stories about homes being trashed by tenants, and people always say that its part of the risk with this investment, so you should just accept it. But it seems that when people say to just accept it, it also means accept anyone/everything and not allowed to do due diligence, like asking questions and sussing out whether this candidate is suitable for your risk appetite.

      • I think when people say to “accept it” they mean to accept the poor outcomes along with the good outcomes — not just accept anyone and don’t do any due diligence or vetoing of possible candidates.

        If you’re not managing your property and you let someone else do it, that’s a risk, and even if a tenant has a good application there’s still a risk of them going off the rails or subletting to some random without you knowing, both of which could risk damage or neglect of your property. These are the risks inherent to property investing that people need to accept are possibilities.

        • not just accept anyone and don’t do any due diligence or vetoing of possible candidates.

          Some comments on this thread and other tenant related threads seem to have issues with landlords doing what they feel is needed for due diligence or to reduce likelihood of risk, including asking questions.

      • Yeah but what does that question establish about a tenant?

        Anyone can come up with any kind of pleasant-sounding, completely insincere answer.

        I can't see how a one sentence answer is going to be enough to determine whether a tenant ends up trashing a place.

        The "why do you want to work here" question is also another example of a perfunctory, entirely meaningless way of finding out any useful information about a job candidate. The honest answer for 99% of people is: money. Anything other than that is people telling someone what they want to hear.

        I honestly can't ever remember seeing or hearing about a lease agreement that had a question like that in it.

        • +2

          Yeah but what does that question establish about a tenant?

          That's up to the person asking. What may seem like a silly question to you, how you answer could tell the other person a bit about you and if they like you. First impressions and everything. Some people can see through Bs, some don't have that skill. Or maybe this is their way to feel a bit more secure about renting their life savings out to a stranger. Just feels unfair to tell landlords it's their fault if when something bad happens, but then get angry when they try to do due diligence or try to reduce risk🤷‍♀️.

          I'm not a landlord or a renter. I can see it's crappy for both sides.

          • -1

            @Ughhh:

            What may seem like a silly question to you, how you answer could tell the other person a bit about you and if they like you. First impressions and everything. Some people can see through Bs, some don't have that skill.

            If the solution to the problem of weeding out bad tenants was that easy, I think the real estate industry would have cottoned onto it a long time ago and made this redundant question a standard part of all lease applications.

            Honestly, if you think the honour system will hold people to account in 2023 especially when the consequences of their lies being exposed are thousands and thousands of dollars in damages… well, your view of the world is hopelessly idealistic to say the least.

            Or maybe this is their way to feel a bit more secure about renting their life savings out to a stranger.

            Yeah so… you do what any good landlord does, you talk to/meet the prospective tenant, check their references and use common use.

            It's not an arcane science we're talking about here that requires new-fangled methods to resolve and there are risks with any investment; these are the stakes you accept putting your property on the market.

            Just feels unfair to tell landlords it's their fault if when something bad happens, but then get angry when they try to do due diligence or try to reduce risk🤷‍♀️.

            If you actually read my post, you'll see I never said that.

            My argument is that in a country that already has some of the least rights and protections for tenants amongst first-world countries, we don't need to be creating further arbitrary hoops for people to jump through for the privilege of having a roof over their heads.

            Australia's property market is ridiculously biased towards property owners as it is and you're suggesting that we need more petty bureaucracy to encourage landlords to behave even more like Feudal age nobility and to make renter's lives even more difficult?

            I'm not a landlord or a renter. I can see it's crappy for both sides.

            It's worse for renters and always has been in Australia.

            The entire concept of being middle-class and achieving financial security is predicated on home ownership in Australia and now that pipedream is being priced out of reach for most people under 35-40 today, by factors completely out of their control and government mismanagement/poor planning.

  • He's liable for the damage
    You will have to go to court and win (that should be pretty simple)
    Then you have to get the loser to pay (you did say he had a stable job)
    Then you have to get the order enforced .. that is harder.

    I'd do it on principle.
    Going the first step you might at least get some co-operation from this guy to pay something to make it go away

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