So – this is going to be a short article by my standards, but I feel rather passionate on the subject and thus – here we go…
I made an immediate and border-line impulsive decision to give a tenant a month free of rent the other day. And, I feel so OK with doing it that I am actually a little bit surprised.
When I did it, I thought to myself – this is really out of character for you Ben; I hope you know what you are doing… It certainly was out of character for me. I never mess around with things like this. If someone is late on their rent payment; they immediately receive a 3-Day Pay or Quit Notice, which most of the time is final for me. I very seldom will accept late payments and fees.
In fact, I have a process in place whereby with proper notice and a Payment Pledge any one of my tenants can be late on their rent without incurring any additional costs. Thus, if someone is receiving a 3-Day Notice from me it’s their own fault – I give people every chance to do things the right way.
For more on this, look up Tenant or Professional Bum – Do You Know How to Tell.
But this is different
This tenant is one that I inherited when I purchased my 10-unit in February of this year. We got off to a rocky start when I showed up at her apartment on March 6th with a 3-Day Notice.
She was surprised – “I have it right here,” she said pointing to the coffee table in her living room. “The other guy always came to pick it up.” No wonder he sold at a loss, I thought to myself…
I let that one go and everything was fine for a couple of months, but then she got very ill – I am talking “hospital ill” and some heavy stuff.
She was late on her rent. She needed help, so we went ahead and put her on a payment plan. She was doing the best she could, however, by August it became increasingly clear that she was not going to make it…
My General Philosophy
I believe that of all people who fail, some do the best that they can and still fall short, while others don’t even try. Those in the latter category can expect nothing from me – period. However, I am always up for helping people who truly do the best that they can, but come to a bump in the road whereby they could use a little thrust. I tend to always be there in those situations.
There are many ways to explain this behavior on my part – people helped me and I am paying back; I am paying it forward because I know that I will need a hand at some point; or, simply this:
I am not a religious man, but I am a spiritual man. I have a moral compass and it defines very clearly right from wrong. This compass is stuck in the direction of what’s right, and sometimes that parts ways with the mighty dollar. I NEED to be able to look in the mirror and see a guy looking back at me who did all he could – sometimes I pay dearly for that…
It’s Tough This Month For Me
My Cash Flow is at a premium. I have one long-term tenant moving out because she is now married and is buying a house, while another is moving out of state for work. Another couple had a baby and they want a less expensive place without stairs – I can certainly understand that. And then there’s this kid graduating from college and moving out of state. Bottom line – it is not a good time to be benevolent; it’s not a good time to be subsidizing someone’s rent…
I did it anyway. I let her stay for a month for free!
She could stiff me after all and I may still have to evict her
We’ll see – that’s all I can say.
There are a couple of thoughts I’d like to respectfully share with you:
- Real Estate is not about dirt, bricks, or money – it is about people!
- A property manager would have never made this call – in fact they are paid to do just the opposite. Is it important to you to be able to make these distinctions? It is to me – no property managers here!
It is one month later. I posted a 3-Day Pay or Quit Notice on her door this morning…
Now that you know the whole story, can we take a vote? How many of you have given a tenant one month of free rent? If so – why? If not, would you ever consider doing so?
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.