Identity Theft! (Updated)

It appears my wife has been a victim of identity theft. We got a letter last week from a check approval company saying a check had been bounced. The account number was not ours and it was written at a store we never shop at. Further, my wife never writes checks. I mean, like never! I pay all the bills with our joint checking account and she has her own checking account that she only uses a debt card with. So when we got this letter, we figured it was some sort of database glitch that matched her name and address up with someone else's account.

Then Saturday, we got another letter, this time from the Kroger grocery company. This one said she had bounced two checks. We called them up and found out some more info. Kroger had already written the checks off as uncollectable. The checks were written at a Fry's grocery store in Peoria. They had my wife's driver's license number on them and were drawn on a Wells Fargo bank account. My wife has never had a checking account at Wells Fargo. We requested copies of the checks.

The next step was contacting the police department and filing a report. We had a bit of a problem determining which police department to contact. We first tried our local police, but they said to call the Peoria police because that was where the checks were written. Peoria said no, we need to call our local police and they would open the case, gather some evidence, and if there was enough to investigate further, they would pass it on to the Peoria police. So we finally managed to get our local police to take a report. The copies of the checks, when they arrive, will also be turned over to the police for evidence.

We also contacted all three national credit agencies and put a 90 day fraud alert on my wife's credit file. This can be done via an automated process over the phone. Once we have a copy of the police report, we can submit a written request and the fraud alert can be extended to a year. Thankfully, I have been reviewing our credit reports every four months, so I know exactly what should be on my wife's report and should be able to easily spot anything new. I believe activating the 90 day fraud alert also triggers the sending to us of a copy of her report. The checks were written the last week of September, so there's a three week window where the thieves could have been using her info without our knowledge.

We also contacted the Federal Trade Commission and filed an identity theft report with them. We don't know how much information the thieves have. We know they have a name, address, and driver's license, but we don't know if they have a social security number or anything else. You need a social security number to open a checking account these days, but they could have used a fake one. (We're hoping they did.)

Today, we're going to visit a Wells Fargo branch and try to shut down the phony checking account. We'll speak to a manager and find out what we can do. If he won't shut the account down for some reason, I figure since it's in my wife's name and address, we can just go to a different location and tell them to close the account.

I figure the theft must have been the result of a database hack at some company or an insider job somewhere. I have a shredder and shred anything that has personal information on it. We also had our names taken off the pre-approval lists for credit card offers a couple years ago and that status has been verified each time I check our credit report.

About two weeks ago, we had another anomaly that I now wonder might somehow related to this. My wife started getting phone calls from people asking about a car she had for sale. The only problem was, she didn't have a car for sale! We did some research and it turns out someone placed an ad at autotrader.com for a used car for sale. The ad listed my wife's cell phone number. I emailed the person who placed the ad and got back a typical scam email message. The seller was supposedly located in Scottland on business, but the car was in Arizona and if I would send them my name, address, etc., they would send me information on selling the car via an escrow company. Typical email scam. We filed a fraud report with Autotrader and the ad has been taken down. They told us the ad was placed over the phone at an Arizona Autotrader office.

So far, we've had no direct financial impact. The bounced checks have all been from accounts that aren't ours. There is no unusual activity in my wife's bank account or on her credit cards. It looks like someone is using her identity to open new accounts rather than take money from her existing accounts.

Update: Wells Fargo has no record of any accounts using my wife's social security number, so that's a good sign. They also have no accounts under her name at our address. They suspect what happened was someone got some checks from a valid account and "scrubbed" them - chemically took the legitimate name and address off and printed hers on. Wells Fargo can't do anything until we get the copies of the checks, which will have an account number on them.

Since they do have her driver's license number, we're going to contact the motor vehicle division and have a new license issued with a new number.

Damaged Doors At Rental #1

I received my September statement from my property management company today and was unpleasantly surprised to see a bill for $150 for some door repairs to my property. The bill states one bathroom door was repaired and two other doors were shaved to fit properly.

My lease states:

Lessee will, at lessee’s sole expense, keep and maintain the leased premises and appurtenances in good and sanitary conditions and repair during the term of this lease…Major maintenance and repair of the leased premises (reserving and excepting costs of ordinary repairs) not due to lessee’s misuse, waste, or neglect… shall be the responsibility of the lessor.

It seems quite clear to me that any damage is either due to the tenant's abuse of the property, or required as part of ordinary maintenance. In either case, it is the tenant's responsibility to pay for the repairs.

I have faxed my property manager and asked her to call me and explain what exactly was repaired and how shoe came to the conclusion that the tenant was not responsible for the cost of the repairs. I have not heard back yet.

I am quite glad these tenants will be moving out at the end of the month. I get the feeling that they thought they were living in a hotel instead of a house and that whenever they wanted anything, they just called the property manager, who was more than happy to do whatever they asked and pass the cost on to me.

General Update

My tenants in Rental #1 have opted to not renew their lease. On Monday, my property was not yet listed on my property manager's website, so I emailed her to ask if they put it up as soon as the tenants give notice, or if they wait until they have moved out and they have cleaned the place. I never got a response, but my property is now listed on their website. And the PM must have felt rents could be increased, because it is listed for $775 a month, a $25 per month increase. There are no pictures on the website, and the link to a map of where the property is located doesn't work, so there is still some work to be done.

The Louisiana project I am a mortgage investor in has gone to foreclosure. According to those dealing with him, "Joe" is pissed and is threatening lawsuits left and right. Why is he pissed? Because the rent checks ($15,000 a month on one building alone) are no longer going to him! As per the terms of our mortgage, we can step in and collect the rents directly sholud Joe default. The existing property manager has been named the "keeper" of the property, which means he is responsible for the upkeep, holding all the foreclosure documents, collecting rent, etc. Since Joe never paid this guy and we did, I think he's happy to perform this duty :-)

It's still possible that Joe will file bankruptcy and delay this further. We shall see how it goes..

Rental #1 Tenants Have Given Notice

My management company told me today that the tenants in Rental #1 have chosen not to renew their lease, which expires on November 1. This stopped me from making a decision I wasn't really looking forward to making - should I continue to rent to them or not?

The reasons for not renting to them were fairly clear - they paid their rent late several times. Given that the management company keeps the late fees, there is really no benefit to me to accept late rents. I also just didn't get a good feeling from the tenants. First, when I bought the property, the people paying the rent were not on the lease. I corrected that. There were a couple of times when I needed to have people contact them, and the phone number I had sometimes worked and sometimes didn't. To me, that means they are having trouble paying their phone bill.

The reasons for continuing to rent to them were also clear. The holiday season is coming up and it may be hard to find a tenant. And, of course, the evil you know is better than the evil you don't. Who knows what kind of tenant the next person might be.

There was a middle course I could have taken. I could have offered to continue to rent to them on a month to month basis. This would get me through the holidays (assuming they agreed to this and continued to pay their rent) and still let me get rid of them easily if I needed to.

In the end, the tenants made the decision for me by opting not to renew. It's funny, but my first thought was to be offended. I felt like their decision was a reflection on me personally. That somehow, I didn't have a nice enough house for them to live in. Of course, this is not true at all. I remember from my days of living in rentals that the decision to move rarely has anything to do with the house, but more with financial and / or employment issues. And renting property is purely a business for me, so I need to keep all personal feelings out of it. Still, it's funny how that was my first thought.

So the bad news now is that I could be left trying to fill the property during the holiday season. The good news is I might be able to raise the rent for a new tenant. I've asked the management company to raise the rent if they feel the neighborhood and property warrant it. One thing in my favor, through a little quirk of scheduling, is that I might not even have to face a mortgage payment without rental income! Due to my refinancing, I gained a month without a mortgage payment. (Actually, I didn't. The payment was just made in escrow instead.) What this means is my rental income goes towards paying my next month's mortgage. In other words, the October rent I receive pays my November mortgage bill. So if the place rents quickly, I won't even see a blip in my cashflow. Of course, that's a big if...

Foreclosure Papers Filed For Louisiana Property

When I last wrote about the Louisiana commercial property I'm invested in, the buyout of "Joe's" interest in the property had fallen through and he was once again late on his payments. We (the other mortgage investors and myself) had decided to start the foreclosure process as soon as possible.

I received word yesterday that the process has begun. On September 15, Joe was officially late for the September payment and late fees started accruing. A 10 day courtesy letter was sent to Joe in September via certified mail telling him he was late and had 10 days to become current.

Later in September, a 10 day demand letter was sent, letting him know we will foreclose unless he makes his payments. That ten day period just ran out and yesterday our attorney filed the foreclosure paperwork. We can now legally pay the building management company, whom Joe has also not paid, and include that in the amount Joe owes us. Same thing goes for the utility companies, who have also not been paid and are threatening to shut off the power.

Our mortgage specifies a 45 day foreclosure period, so if all goes smoothly, we will own the property in a month and a half. It will not go smoothly. Joe will try to fight this with more delaying tactics, possibly including filing for bankruptcy. Whatever he does, financial control of the property is no longer his, so we can take steps to get everyone paid up and happy again.

Real Estate Slowdown Hurts My Cashflow

For the past four years, I've had some investments in four LLCs that flip properties in the San Francisco area. As you might have guessed, 2004 and 2005 were pretty good years for these investments and every couple of months, I was receiving checks for hundreds of dollars - and sometimes over a thousand. Now, however, the resale market has slowed down dramatically. Instead of the checks for $1,000 or more I was getting, the last check I received was for just under $20. And yesterday, for the first time since I've been invested in them, one of the LLCs did not distributed any money at all this period. The LLCs have not been able to sell some of their properties and so they have instead rented them out, so at least they are generating some positive return. But the particular one I got info on yesterday sold a property for a loss, so even the small rental income was offset by the loss.

I'm glad I decided to stop my investment at four LLCs. At this point, I think I can get a better return purchasing property and renting it on my own. (And, in fact, I bought Rental #1 instead of investing in another of these LLCs.) Now I just have to wait until the term of the LLCs is up (between one month and one year) so I can get my principle back for use in other investments.

Got The Bug

I'm feeling the urge to buy another rental property and the blame lies squarely at the feet of Trisha for recently posting about two properties available in Tulsa. The problem is I am looking at a lot of upcoming expenses in the near future - we need a new bed, we're traveling for Thanksgiving, Christmas shopping time is quickly approaching, and next year, we're going on a cruise. The cruise is a birthday present for my 40th birthday, which will also be next year, but we will be paying for the shore excursions, and those add up quickly. Not to mention the costs of buying souvenirs at all the places we visit!

But I want another rental! Santa, are you reading this?