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Have you ever had to evict a tenant? Well, I’m going to show you how to hopefully avoid ever having to evict someone (I’ve never done an eviction in my life).
Of course, the first thing you do is screen the crap out of your tenants to make sure a deadbeat never gets through your door. But that’s not what I’m going to talk about today. I’m going to talk about what to do when a tenant stops paying rent, because it’s happening to me right now.
The “Secret” of Dealing With People
Here’s what happened: I had a good tenant who always paid rent, even though it was usually late. Then, this month her rent check bounced. Now, before I tell you what I did, I need to tell you one of the “secrets” to success in life. The secret is to always try and treat people right, to never threaten them and to not get upset. Because when you get upset and threaten people they get defensive and nothing gets accomplished. Trust me on this one.
It’s not easy to remain calm. And I’ve lost my temper a few times, but nothing good comes of it. One time, my carpet guy was supposed to install carpet in one of my places. He was supposed to get it done earlier in the week but had kept flaking out on me. I had to have it done by Monday, and he promised me he would do it over the weekend. Well, of course it didn’t get done. So I called him and ranted on like a crazy man, threatening everything I could. I eventually did get the carpet installed, but it took even longer than it would have if I would have approached the problem in a better way.
The Right Way To Handle a Non-Paying Tenant
Here’s where I’m going with this. I know a lot of landlords call and threaten their tenants and yell and scream. However, it’s not what I did with the tenant who bounced her check on me this month. I called her up. I was extremely friendly and questioned her to what was going on. She explained that she had fallen on hard times and would not be able to make the rent payment. Then I calmly explained the seriousness of the situation, but that I had good news for her. If she would vacate the house by the end of the month and leave it in broom clean condition then our company would not come after her for the delinquent rent and we could part “friends”.
The tenant agreed, was very thankful for this and is moving out at the end of the month (I’ve used this tactic before and it always works. However, there is a lot more salesmanship involved than what I just explained).
Now, did I do this because I’m a nice guy? No. I did it because I’m a businessman. The last thing I want is some ticked off tenant who trashes my place and makes me do a formal eviction that takes weeks and months. Even though I live in Virginia which is landlord friendly (unlike many other states) it would still take weeks and I could lose several months of rent. But, this way I’ll hopefully have the place rented early next month.
Also, please don’t get “calmness” confused for “weakness”. Remember, as landlords, we are not a charity. As soon as a tenant doesn’t pay or their check bounces, you should start making arrangements to get them out of there. I was just reading a book and it was talking about people who lived in their place 18 months before being evicted. The sad thing is, I hear stories like that all of the time.
So, when it comes to a non-paying tenant, be ruthless but friendly. And if friendliness doesn’t work and you can’t get them to leave on good terms, just shoot em’………kidding.
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Article Author:
Jason HansonJason has written 73 articles for us.
Visit Jason's Website: http://www.PrimoCoach.com
Jason R. Hanson is the founder of National Real Estate Investor Month and the author of “How to Build a Real Estate Empire”. Jason specializes in purchasing properties “subject-to” and has purchased millions of dollars worth of property using none of his own cash or credit.
Joshua Dorkin
Charles Feldman
Ted Karsch.
{ 5 comments… read them below or add one }
I do exactly the same thing with a good tenant. I have one right now in that situation. The agreement is he leaves the place clean and cleans up the landscape “decorating” mess he made. Another tenant just lost her job and wants out of her lease a month early, but will be able to pay until she moves. No problem – she pays on time and the house is neat and clean.
Stuff happens to people, and you have to make the best business decision you can. You aren’t likely to get the rent anyway if you evict and get a judgement. The tenant is not likely to use you as a reference, because they can’t afford a new place, so you don’t have that problem. Get the place back in as close to rentable condition as possible, and get it rented.
Excellent post, thank you Jason. We really ought to talk some day.
One thing I would add; when you are interviewing a prospect, make it clear that the lease is a full commitment. It’s not, “pay me $700 each month.” It’s, “pay me $8400 in 12 monthly installments.” Carefully explain that if they leave early, they are still responsible for the full amount.
Now realistically, we will almost never go after a tenant for a full lease amount if they have to leave early. The primary exception is, of course, commercial tenants which have not gone out of business, but simply decided to move.
But when you present it this way – and then offer to let them go, no problem, as long as they leave the place broom-clean – the tenant thinks, “wow, I was really treated well.” And they are more likely to treat you well.
Business decisions may not always sound like the logical moves we’d expect folks to make, but if you’re doing a cost benefit analysis, you’ll see that getting a tenant to just leave is often times going to be a better financial decision than going through the eviction process. Great advice, Jason.
Jason,
Good post. One caveat I would ad is also allow you to show the home while she is in there until its vacated. that way you don’t have to wait until she is out.
Of course always get them to sign a general release which is easy.
I had a lease option home about 4 years ago. Tenant was 2 months behind (I know) and was filing BK on some other stuff. I told her that I would give her Option money back if they moved. They moved in 3 days. Everything cleaned. It took 3500.00 but her option price on the home was 89K and the values had gone up well over 170K during the run up. I was afraid she would had bought the home.
Great post.
Did she ask about the security/option money at all and did she understand that she will not be getting this back?
Also, what happens if at the end of the month she is not out and then you have to start the eviction a month late? Is this just a risk you’re willing to take?
Did you get this agreement in writing so that if you have to bring it to court eventually you have proof that she was suppose to move out by the end of the month and you were not letting her slide?
Thanks Jason, love reading your articles.