How this investor recovered after renting out to addicts
Several years and six properties later, investor Julian Lancey came face-to-face with one of the biggest landlord nightmares – renting his place out to ice addicts. How did he ultimately rise back up after the fiasco?
Like most property investors, Mr Lancey sought to avoid extended vacancy on his properties in order to secure his cash flow and maintain good serviceability. Therefore, he was always adamant to replace a tenant once the contract expires.
To minimise cost and time consumed, he screened the applicants himself.
Before he knew it, one of his properties has become home to addicts.
According to the investor: “I didn’t know what a junkie really kind of looked like, and I rented out my properties myself. I was kind of desperate to get someone in because I didn’t want the vacancy factor, so I had a couple of people come through, and I said, ‘Sure, you can have it.’”
“The rent never came in, but they knew all the legal side… Suddenly, before I knew it, I was speaking to solicitors and booking in tribunals and it ended with the sheriff.”
Eventually, the tenants were evicted, but not without a commotion.
“I was waiting outside, very nervous, one of the tenants with an addiction brought in a couple of jerry cans of petrol.”
“I’m thinking, my God he’s going to bomb the apartment block. So, they contacted the police or the Kings Cross bomb squad... A couple of minutes later, there were at least eight coppers there, all in black with the bulletproof vests.
“They burst in. It turns out, in the jerry can there was petrol, but I think if you’re addicted to ice... you don’t think rationally, and you think, ‘Oh, I’ve got to put this in the car or take it upstairs to my apartment’,” Mr Lancey shared.
The experience naturally took an emotional toll on Mr Lancey, but at the end of the day, he was thankful that it did not negatively impact his finances – thanks to his landlord insurance.
Landlord insurance
No matter how careful they are, investors always face the possibility of having to deal with unexpected and possibly costly issues when renting out their properties, according to Mr Lancey.
While his experience could easily be one of the worst possibilities out there, having a landlord insurance helped him recover easily from the fiasco.
“I’ve had probably the worst thing that can happen, which is renting your place out and it being trashed by people that don’t care. Luckily, I had landlord insurance, which I recommend everybody getting,” Mr Lancey said.
“If you don’t have it, it’s not even much, it’s a couple hundred bucks out of your pocket.”
According to him, it is fortunate that his insurance covered “everything that falls that is not attached” when the apartment is “shaken and turned upside down”.
Apart from damages, landlord insurance may also cover unpaid rents for a specific amount of time, as well as other physical and financial issues on rental properties.
His advice to fellow investors: Get a landlord insurance as soon as possible and check its coverage as insurance policies may differ depending on the service provider.
“Get insurance before people move in. Get it now,” Mr Lancey said.
“It’s a nice peace of mind. I’ve been in situations where I’ve had to call on my landlord’s insurance when I haven’t received rental repayments… and also when they’ve created damage to the property, that gets covered.”
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