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How to Be Ruthless With Your Deadbeat Tenants

by Jason Hanson on January 16, 2011 · 16 comments

  

I got a call from a friend of mine early last week. He told me a story that’s probably been told a thousand times and I’m sure you heard it too. A while back he picked up a property that was already tenant occupied and now the tenants aren’t paying their rent.

Like many people (especially those facing in foreclosure) he wanted to bury his head in the sand and hope things got better. However, I told him that even though I know it wasn’t the answer he was looking to hear, he must get rid of the tenants immediately. And that in the future if he hasn’t received his rent by the 5th of the month, to send his tenants a “pay rent or quit notice” and start the eviction process.

However, since the tenants were a month and a half behind already, I told him to send a letter that covers the following: “Dear Mr. Tenant: You’re behind on rent and on January 19th we’re starting the eviction process. We’ll try and garnish your wages, ruin your credit and anything else we legally can do. But if you move out within the next week and leave the house in broom-clean condition we can part as friends and no legal action will be taken.”

Of course, the letter is a little more eloquently written, but you get the point

I’ve had to use this type of letter once before and it worked. This enabled me to get the tenants out of the house ASAP instead of spending weeks going through the eviction process. And if the letter doesn’t work then you simply start the eviction process anyway, so you’ve got nothing to lose by sending it.

But if you’ll notice, I started this post by saying the guy inherited these tenants when he picked up the property. It doesn’t matter if you inherit tenants or choose your own, you still need to “run them through the ringer” and make sure they qualify to be in your house.

This becomes difficult with tenants already in a house…

Because legally you have to honor the current lease from the previous landlord. But you can still ask the tenants questions and ask to run their credit and see pay stubs, and all they can say is no.

But if they say no and act difficult in any manor, that’s probably your first clue that you don’t want to take over the property. Because remember, when you’re taking over a property from a landlord you need to find out the real reason he’s getting rid of it.

Is it because he’s moving or is it because they’re nightmare tenants who haven’t paid rent in 6 months? Also, make sure and ask to see his checking account statements that show the tenants rent payments for the last 3 months or so.

If you do your homework and verify everything, then it’s tough to get screwed by tenants – because 99% of tenant problems can be eliminated during the tenant screening process.

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{ 16 comments… read them below or add one }

Jeff Brown January 16, 2011 at 11:23 am

Surely we’re brothers with another mother. :)

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Bill Patterson January 16, 2011 at 1:50 pm

Good info, Jason. You will hear all sorts of stories, but in the end either they pay the rent or you pay it for them. You need to run it like a business. Although I’ve gotten a bit “soft” a few times on my properties, I hold a hard line on properties I just managed.
Bill

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Steve Dexter January 16, 2011 at 7:15 pm

Great points Jason. Your friend got lured by a deal w tenants already in place. That doesnt tempt me at all. Isnt it better when you train your own tenants from the getgo?
Ck out this article the local paper ran on me
http://lansner.ocregister.com/2010/10/02/83310/83310/

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Mike Cummings January 16, 2011 at 9:44 pm

I liked the strongly worded letter – it just makes sense! As a Real Estate Broker that has worked with many investors, I have heard of others many bad and good experiences. As a Rehab Investor, I have never had to rent out a property – until now – working on two of them. Learning from others, I am favoring an extensive application (free of anything against Equal Opportunity laws of course) and require the potential tenant to provide a current copy of their own credit report. Funny… I only get about 15% of the applications back. Are my applications and requirements a little intimidating? Probably and that is fine if it weeds out potential “bad apples.” I think that being thorough IS the key as you screen your tenants. All too often, I have heard of landlords that do hardly any screening and then cry about it later. There are people out there, despite ones best efforts, that do know how to “work the system.” For these people, you really need to be proactive without doing anything illegal (because the courts really, really frown on this!). Maintaining good communications with tenants may head off problems. Any additional advice or tidbits? Thanks!

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MH January 18, 2011 at 9:25 am

Agree with Mike – the strongly-worded version works just fine! You definitely gave your friend the right advice.

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Marcell Zamora January 20, 2011 at 1:12 pm

Excellent points Jason. It’s easy being a good-hearted person to go soft at times as Bill mentioned so these types of letters are a great way to avoid the “soft” label because you only need to drop off a letter as opposed to having a personal discussion. I work with trustee sale investors and from time to time I drop letters like these to non-paying tenants who refuse cash for keys agreements. More times than not they are effective because the deadbeat tenants usually don’t have any money and going to court or possibly incurring judgments does enough to scare them off.

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Ann Kosloff April 2, 2011 at 8:34 pm

I’ve had rental property for 49 years. I’ve seen it all. The best eviction I ever had was one in which the tenant called the codes department to complain. The codes department sent me a letter (by mistake ) saying the house could not be occupied and gave me a date.for it to be vacaated. I sent this to the tenant They moved.

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bill fisher July 25, 2011 at 10:14 am

Always get SSAN’s from your renters . When the rent is not paid, it is the same as income for the renter. Send the renter a 1099. Let the renters explain to the IRS where all that unreported income came from.
Sometimes I just lock them out by changing locks .
You can also have the electric company disconnect the service, You can shut off the gas yourself and also the water.

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Terri Fucci October 14, 2011 at 12:42 pm

I have a tenant who is $11,600 behind in his rent. Although we have pursued him by legal means, he is himself an evictions attorney and knows all the loopholes. He keeps finding “legal” ways to prevent court action. Now he has asked for a jury trial, and I am convinced he is going to perjure himself and bring in false witness to make specious claims in order to garner sympathy from the journey. My lawyers seem hamstrung. Meanwhile, I have been told he has done $15,000 in damages. This in addition to the legal costs and lost rent. Can anyone suggest a way to put an end to this stalemate? returned no results.

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Tony Rocco December 28, 2011 at 1:20 am

Terry, I have heard that when you have such a situation, the only solution is to solve this
problem using mediation. There is one kind that is unpopular but very effective! I understand that the way it works is that a “private contractor” will settle the dispute all together within a few days. They are called “Fixers” and they are usually located in the biker club population. For a fee they can persuade the “eviction lawyer” to leave in a hurry, and keep his thoughts to himself! I don’t recommend doing this, but it is an option so I’ve heard!

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charles c January 20, 2012 at 5:53 pm

Are you kidding me, most of these tenants have garbage credit ratings to begin with. Do you really think a harsh letter is going to scare them into giving up a rent free apt. Furthermore, be very careful how you write that letter because you could get arrested for aggrivated harassment or extorsion

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Nifty July 21, 2013 at 5:29 pm

I am dealing with a professional looser now. She is just about 1 month late, & eviction has started. One tactic I will use with her is to see if she has any warrents. I used this before & the deadbeats left so fast they left a fridge full of food & clothes still hanging in the closets. The next one will be to turn her in as a tax cheat. She told me (stupid) that she “works under the table” & this is why she can afford the house. I have already alearted other landlords in the area to run when she inquires about a property. I had one call back to thank me, as she camp over to see the property using her daughters name. For my laywer friends out there, this is not laegle advice, it’s common sence advice.

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Mike Kowalski December 17, 2013 at 9:40 am

Always get a SS number; Serve the 7 day notice on the day rent is due but not paid. This gives you a leg up on eviction. If they pay the rent within 7 days, you lost nothing. If they dont pay, start eviction on the 8th day, as according to law. No one get a break: professional loosers look for weak landlords. For our leagal friends treading this, this is not leagal advice, it’s common sense advice.

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Leslie December 12, 2013 at 11:44 pm

We have a tenant who has refused to pay rent for the last 2 month saying that she legally has a right to be their for atleast 3 months she recently damaged the plumbing system and began to move out she still has some things in their and today she decided to have a birthday party at the unit and threaten us to fix the pluming or else she’d call the city on us and wasn’t going to completely move out until we did fix it ..she is pretty much just staying in the unit now out of spite is their anything we can do ?

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Joanne May 14, 2014 at 7:04 pm

We have a slacker tenant who hasn’t paid rent since October, busted the pipes this winter, always has cigarettes and always smells like she has been drinking. Unfortunetly she has been blessed, why I don’t know, with an incredible 10 year old son who has to live with this low life. I told her if she doesn’t move out, I’m going to call family services. I like the IRS threat better, since I know she cleans houses.

The worst part is she does this to people all of the time. Moves in and doesn’t pay rent, while humiliating this poor kid! I wish I could keep the kid and throw her ass out!!! Help!!!

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Bob July 23, 2014 at 5:41 pm

That did not sound very ruthless.

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