The Good, The Bad And The Ugly
When Rental Registry (RR) advocates declared open season on New Orleans landlords, alleging ¾ or 78% of rental properties in our city needed major repairs, we were shocked. My experience in the rental industry told me this statement was categorically inaccurate, but it certainly played well at the city council hearings and made for good theater. The false allegation seemed even more implausible when a few doubled-tongued RR advocates said most landlords were doing a good job, but there are bad landlords that need to be held accountable. How can someone say 78% of the rental properties are in disrepair and at the same time the majority of landlords are doing a good job? Is that credible? You can’t have it both ways, right? Wholesale commendation of the rental units (78%) and the majority of landlords doing a good job is blatantly contradictory. This illogical hyperbole is intellectually dishonest and contemptuous to the rational mind. Thankfully, the AHSi data provides us with sobering clarity that unequivocally reveals there is no rental property crisis. In fact, landlords actually garnered a 93.51% satisfaction rate in the AHS data we researched .
Currently, RR proponents care little about the facts and are aggressively campaigning and trolling cyberspace with emails, tweets, and text to misinform and stir up any disgruntled tenants. They are attempting to harvest a few horror stories to foster and prop up the illusion of a systemic crisis. It’s all about creating the perception of a crisis through relentless, loud, emotional, embellished drama while ignoring the larger body of factual information. Here’s a couple of recent quotes:
Nearly every New Orleanian has a horror story when it comes to unsafe conditions in a rental home:ii
We don’t have to be last in the country in protecting our residents.iii
The attached data report clearly demonstrates these statements are grossly inaccurate Exhibit A AHS. The data ranks our landlords at 92.72% which is inline with the national average of 93.54% in the measured categories reporting no problems. The renter’s satisfaction rate was an amazingly high 93.51% which is above the national average of 91.33% regarding a renter’s satisfaction with the landlords maintenance and repairs. The questionable dissatisfaction rate would be about 6.49%. If we factor in the following facts you will gain even greater insight and a more balance look into the rental industry in New Orleans.
In 2014 landlords were forced to file 4,516iv eviction proceedings at an estimated loss of $3.6 million in annual rental income, $850 thousand in court filing fees and about $4.5 million in repairs, marketing and make ready expenses totaling roughly $8.9 million in loss revenue and expenses. Using HANO’s estimate of 86,300v rentals in Orleans, about 5.2% of the renters received eviction notices in 2014. If you assume about ½ of the 4,516 had a roommate, spouse, child or other person living with them, the number increases to 6,774 renters. Of the 5.2% evicted, we suppose it would be difficult to locate a few that had a kind word to say about their former landlord. Let’s take a look at the good, the bad and the ugly of tenant landlord relationships.
The good tenant landlord relationship represents approximately 90% to 95% of all rental experiences. It is important for renters (Lessees) to understand when signing a rental agreement (lease) they are generally taking possession of a rental unit valued between $70,000 and $250,000 and assuming a financial obligation between $10,000 to $30,000 annually. The rental deposit serves as security for the renters full and faithful performance of all terms and conditions of the rental agreement. When the lease term is fulfilled the security deposit is refunded, less any charges for cleaning, damage or other unpaid charges on the account. Louisiana law requires an itemized list of any deductions accompany the refund no later than 30 days after the lease term expires. This is the normal experience for about 90% to 95% of New Orleans renters. These renters understand that the rental property owner has expenses like mortgage payments, insurance, property taxes, maintenance and repairs, management fees, utilities charges, etc. and without the monthly rental income the landlord’s financial stability could be threatened. In this relationship repairs and rental payments are made in a timely manner and everyone functions with mutual respect and consideration toward one another. When any conflicts arise they are normally resolved in a spirit of mutual cooperation.
Contrary to what RR advocates claim, the rental experience is a healthy social and business relationship. This is not to say that there are no conflicts where either the landlord or tenant or both fail to fulfill some facet of their contractual obligations. This small percentage is limited in scope and is mostly resolved by following the well established existing codes, ordinances and laws available to both the landlord and renters. Of this 5% to 10% we know that in 2014 at least 4,516 renters or 5% faced eviction proceedings as stated in our introduction. This leaves about 5% or less that are perhaps either bad landlords, bad tenants or both. Based on the observable facts surrounding the RR ordinances there is absolutely no verifiable crisis or need to create a multimillion-dollar RR and tax our tenants with a $10 to $19 million government bureaucracy.
The bad tenant can be a nightmare and financial liability that few outside of the industry can comprehend. There are various contributing factors surrounding the bad tenant such as loss of employment, failed relationships, alcohol or drug abuse, legal problems, physical and mental disorders, con artist, criminally minded, and professional tenants working the system. Some of these slip in unnoticed because they use false identification, phony references and basically charm and lie their way into a leasing agreement. You contact their previous landlord for a rental reference and he gives them a high rating, “good tenant” approval. The employer also speaks highly of them and verifies the prospects income. All seem in order so you sign a leasing agreement. Shortly thereafter you discover that you have been deceived and you are in a relationship with a bad tenant. Many bad tenants know the eviction process and laws as well as the landlord and are able to con the landlord for a month or two, until the landlord realizes the game. A professional tenant works this system with skill and finesse. Depending upon the landlords experience, the professional tenant can stiff the landlord for 2 or 3 months rent. He is a master of deception and when he is not busy bending the rules he is breaking them. If the RR becomes law, the professional tenant will work the system to avoid paying rent.
Not every bad tenant is a con-artist. Some face life altering challenges and debilitating or paralyzing issues that render them dysfunctional and unable to exercise good judgment. Job loss, divorce or other circumstances may arise and contribute to this one single fact: the renter cannot pay the monthly rent. When the rent is unpaid the landlord must act quickly to understand why and determine how to mitigate the loss. Should he extend more time, set a deadline or file eviction? Each situation is different and the landlord needs the wisdom of Solomon and the intuition of Freud to navigate these unpleasant waters. If the landlord makes too many wrong choices he could soon find himself pleading with his mortgage company for more time to find good tenants before foreclosure proceeding are brought by the mortgage holder.
A distressed tenant without the means to pay their monthly rent soon becomes an angry tenant and often resorts to any means possible of holding off the enviable. Eventually, it all ends badly for the tenant and the landlord with the landlord losing about $2,000 to $3,000 in eviction fees, legal fees, management cost, marketing, loss rent and repairs to the usually trashed apartment. Bad tenants often trash the rental unit as a pay back for being evicted or not being allowed to live for free in the rental unit. In their mind the landlord is the evil greedy slumlord.
Some rental situations turn ugly fast. From the moment the tenant takes possession of the rental unit they become the tenant from hell. They are outraged by any and everything. They complain, criticize, argue, curse, threaten and verbally insult everyone. There is no pleasing them. They break things and then demand you repair them. When the repairman arrives they turn him away. Then they call and curse out the landlord for not making repairs. They are unreasonable, crafty, manipulative renters that are impossible to make happy or keep happy.
The ugly tenant never pays rent on time, if at all. He disturbs and threatens his neighbors, plays loud music, has many guest in and out all hours of the night, sneaks in a pet without permission or a deposit, clogs the sewerage, rents his apartment to others like a hotel, trashes the grounds and denies that he has been anything but the perfect tenant. They fabricate stories and sometimes acquire free legal representation to threaten landlords. They will kick in the doors and bust out the windows. They will trash the apartment in ways you never imagined. When you finally get them out of the unit you may find they stole the appliances. Sometimes they get physical and deadly. In one such case a tenant killed the landlord.
Charles Dilapi, 61, was found dead in the leasing office of the Cascades Apartments at 2212 N. Arnoult Road.vi
Some have estimated thousand of blighted properties and lots exist in New Orleans. Abandon uninhabitable blighted properties are not the same as occupied rental units. Blighted propertiesvii are actively being adjudicated under current codes and ordinances. RR proponents often and unfairly reference these abandon decaying properties in the same context as occupied rental units because it elicits public outrage. The RR focus is occupied rental units or soon to be occupied rental units–not abandoned blighted properties. Again this is grossly misleading to commingle and post pics of blighted buildings as evidence of a rental industry problem—they are separate and distinct from occupied rentals.
Our research shows that the issue is limited In nature to about 5% or 10% max. When you back out the 5% eviction rate you are left with perhaps a 3% to 5% of renters and landlords that may not be doing the right thing.
Going forward we will outline a specific actionable plan that functions within the existing ordinances to address this issue and assist renters in getting things repaired.
Your help is needed now to stop government intrusion. The Rental Registry is a bad idea and without your help it could become a $10 to $19 million tax on tenants and landlords.
Contacts for New Orleans City Council members and staff. Your voice matters!
iUS Census Bureau American Home Survey 2011
iiiRR proponent (emailed) by GNOFHAC
ivFirst City Court, New Orleans, LA.
vFootnote “8” Interview with HANO staff, 2013. http://www.gnofairhousing.org/wp-content/uploads/2014/12/Unsafe-Overpriced-Home-for-the-Holidays-FINAL.pdf
viMetairie Apartment Manager Found Dead: http://www.nola.com/crime/index.ssf/2011/09/police_say_killer_of_metairie.html