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The following article comes from a situation that recently occurred with one of our own tenants. How would you have handled it? And really think about it as if you were in our shoes because it’s easy to say “Evict ’em” when you’re on the outside looking in, but put yourself in our shoes and think about how you’d handle it and how you could prevent the situation from recurring in the future!
Here’s the Scenario:
08/01/2007 – Rent is due
08/06/2007 – Rent is officially late. When you finally reach the tenant, you get the sob story: “I had surgery. My mom went to the hospital. My dad panicked. My son’s trying to get me the money and I’m out of work. I promise to have the rent to you by Wednesday… Thursday at the latest”
08/09/2007 –
Guess what? No rent check. The tenant’s willing to drive it up, but the funds aren’t in the bank anyways! Tenant promises AGAIN to call you right after ‘therapy’ tomorrow morning and get it straightened out. VERY, VERY SORRY!
08/10/2007 – No call, no rent. (Big Surprise, huh :-)) Tenant finally calls back AFTER the 4th voicemail that says ‘we’re on our way’!
“The wire still isn’t in my account”
So what do you do as a landlord? See… it’s easier said then done when the tenant knows you! They pull on your heart strings and drag you into their little distorted web.
So you have to make a decision. In this case, we gave her flexibility until Thursday to get the rent over with all of the late fees added on because we didn’t really want a vacancy and she’s paying the high end of market rent.
In “home study courses” the answer is simple. In the real world, it’s not always that easy. You’ve got bills to pay, mortgages to make and a huge pool of rentals on the market, so what do you do in a case like this?
Surely, if you’re in a lease option, it makes it a bit easier cause you simply start the eviction process on day 5 (or whatever your ‘grace period’ is). But, what do you do when all you’ve got is security deposit?
Plus… there are tenants that know how to play the game!
Here are 5 things to help make your rentals and lease options less stressful.
- Pre-screen your tenants. I know it can be a headache, but do it. Let them tell you first about anything that may show up and give them a chance to explain. Thingshappen, but how honest are they?
- Don’t let them know you’re the owner. You are always the property manager. Period. It’s not personal that way. It’s just business.
- Follow your state’s process from Day One. (Don’t let them slide). You can always write a letter as the property manager stating that you know the late rent was an oversight, but the property management agreement forces you to send the paperwork on X date. Let them know that as long as they have the money with late fees added, everything will be just fine.
- Document everything with paperwork. Every phone call that you have with your tenants, send a confirmation letter detailing your understanding of the resolution. Send it certified so you have a record of receipt.
- Do not let tenants deduct repairs from rent unless they have written permission and provide you with a receipt for the work done and 3 estimates from different handymen. At the end of the day… tenants are headaches! They’ll call you with stupid things if you let them (like, “My son broke the sliding glass door. We need it fixed ASAP”)
Yes, that happened. I about fell off my chair on that one!
Truth be told… my strength is not landlording! I know there are systems that you can put in place and processes you can follow, but you WILL have to deal with issues from time to time!
But I do realize that to be successful, you need to have a whole arsenal of weapons in your tank. In changing markets, you need to be able to deal with tenants (or tenant/buyers) in the event that you can’t move the property. I encourage you to learn as much as you can and protect yourself with as much paperwork as you can so that your headaches are minor – not throbbing migranes!
I also encourage you… if you’re no the “landlord” type to go ahead and get real good at other methods of making money in real estate like: wholesaling, rehabbing, private notes, options etc. And if you MUST rent out a place, try like a dickens to get a lease option. At least the headaches have higher rewards and a light at the end of the tunnel!
FYI – If you didn’t get yesterday’s email… you definitely want to make sure you get signed up for Preston’s 8-week telebootcamp starting just 2 weeks from Thursday! http://www.RealEstateTrainingAcademy.com/adtrackz/go.php?c=preston812 (You can hear the audio and also download the PPT)
This is the single easiest way NOT to have to deal with the tenant headaches!