James Wilkens was the first official tenant I met at Summerdale. We were racing to procure $9,600,000 in funding to close Summerdale, but in the meantime, the contract gave us 45 days to complete our physical inspections. If for any reason we didn’t like the condition of the property, records, title or found environmental of survey issues, then we had 45 days to let the seller know and cancel the deal to get our earnest money deposit returned.
We organized a group of us to do the physical inspection of the property, meaning we went into every apartment unit to determine the condition of the property. We were looking at things like evidence of roof leaks, mold, broken appliances and drug activity. Finally, who were the tenants living in these units and were they following good housekeeping practices?
The information from the inspection gave us a profile of the tenants and understanding of the costs involved in operations to form a budget and management plan.
We scheduled the inspection on a cold December day and gathered eight people from our property management company (TI Asset Management) including our maintenance personnel, property managers and my partners to walk every unit. We anticipated we would break up into three separate groups and inspecting the entire 244-units would take two days. The seller had its property management staff and two armed guards greet us and serve as escorts with the keys to gain access to the units which showed the perceived danger of the property.
The rent roll provided by the management company documented 244 units, of which 152 were officially occupied by tenants with signed leases or vacant but rent ready, and the remaining 92 were boarded up; but we anticipated removing the boards to get inside and inspect those units. We could easily complete the inspection of the entire 244-complex in two days with the existing staffing, allocating 80 units to each team to inspect. The unit occupied by James was first on the list. I was curious “why” a tenant with his back ground would live at a turbulent community like Summerdale.
“Management,” our security officers screamed, knocking louder on the front door while our group patiently waited behind him. The door opened a crack and James, a tall, 300+ pound man, about 35 years old, peeked out and scanned the group. Maya, the property manager, announced we were here to inspect the unit based on the notice given yesterday. James opened the door and lumbered back to sit on a small maroon sofa, rubbing his eyes with his hands.
Our group entered the apartment took a quick inventory, noting there was no furniture in the living room or dining room except for the sofa and large worn midnight-blue recliner facing an enormous, big-screen TV. Two bright yellow bean-bag chairs were tossed in a corner with some children’s books. There were no family photos or pictures hanging on the wall, nor did I see any holes in the wall or stains on the paint. Over the big screen TV hung a lone wood carving of Jesus Christ on the cross.
We walked the interior of the unit and James followed us and told us the dishwasher and disposal had never worked, but the air conditioning worked fine. I did a mental calculation that a new replacement appliance package including a new refrigerator, stove, disposal, and dishwasher cost about $1,800. We saw no active leaks on the ceiling and around the windows. The carpet was worn but clean and we didn’t see any roaches or bugs. James seemed to take good care of his unit.
After making notes on the inspection form, I headed to the back bedroom where James had somehow crammed a large king size bed into the small room. The bed was unmade but judging from the time it took to open the door, I guessed James had been asleep when we knocked. I remembered from reading his application that he worked a second job in security, probably at night. The bathroom was neat and clean.
The next bedroom was completely empty. In the third bedroom, two small beds were neatly made, one with a pink floral comforter and the other with a blue sports-equipment comforter. Small toys were orderly piled in the corner. A few clothes hung in the closet and on the dresser were framed photos of a smiling lady proudly displaying two newborn children, one in a pink cap and one in a blue cap—twins.
James told me he got his twin children on the weekends, but they lived with their aunt during the week. He looked sad. We finished inspecting the unit and as we headed for the door to leave, I apologized for interrupting his sleep, but he was very gracious telling me no problem. He gently closed the door behind us.
I had reviewed his lease file and noted that James Wilkens needed a break and he got one in 2015 when he applied for a lease at Summerdale apartments. He was 29 years old and his credit report showed a history of evictions with thousands of dollars owed to numerous landlords. He also owed money to eight trade accounts totaling $46,038 in which six were in collection or written off, mainly medical accounts that had “MedServ” as the creditor. James’s credit history listed many past-due medical bills which were affecting his financial viability and credit score. The 132 Accu-credit score in his file summed up an extremely poor credit history; it indicated James had a 132% chance of defaulting on the payment of his monthly rent. Many landlords would deny an applicant with an Accu-score of 132% and the actual Accu-score recommendation on the report was “Deny”, but the ownership of Summerdale agreed to lease James a unit. The signature on this lease ended with a flourish, like James was pleased to put his name on a lease.
His lease application gave other information. Although no criminal background report existed, James listed his job as a local correctional officer—so I did not think a history of serious crime was on his record. The prison system typically does not hire applicants with extensive criminal histories. A second job working security was also on the application. He was earning over $45,000 per year and the credit report confirmed both jobs and income levels. No spouse was listed on the report, but two dependents were listed in the application, with the same age. According to James, the mother of his children left the kids with her sister two years ago and never returned. His sister-in-law agreed to take the kids during the week, and he took them over the weekends. It was a tough situation because his children were his pride and joy. He knew he was lucky to get into Summerdale but eventually, history would catch up to him if he applied at other apartment communities, so he continued his tenancy at Summerdale. and elected to be a model tenant and took good care of his unit. The $690 he paid per month for a three-bedroom unit was a bargain for the market. He knew the growing crime was a challenge and he did not like his kids being exposed to it, so every weekend James took his children to other places so they were not in the unit. He was a big guy and prison system employee, licensed and trained to carry a gun and defend himself. The growing contingent of hoodlums taking over the property did not intimidate him, yet he was not interested in a confrontation and kept a low profile. With his poor credit report, it was doubtful he could qualify to lease another apartment or secure a mortgage and purchase a home. James was stuck at Summerdale.
