Not paying rent affecting my goals
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Rental Property Investor · Annapolis, MD · Member since 2014 · 214 posts · 140 votes
12yThe way I prevent/reduce this "game paying" or at least make my time at the courthouse worthwhile is by:
For example, if the rent is $1000 in our unit, than i write the lease for $1200 and the Tenant gets a discount if they pay by 4th of the month. My lease was looked over by a Maryland Judge and he was fine with it. According to local laws, late fees are here in MD about 3-5%. But I do not have late fees, just rent discounts for timely payments!
Each time i "file for failure to pay" rent i just write in $1200 and no late fees. And if the tenant plays with me until eviction this way i get an extra $600.
Good luck on your next one!
82 Replies
- 12yRoy N.Pro MemberRental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
Generally if they are late on the second month of the lease, things do not get better.
However, there is always the exception. We once had a group of students in one of our houses whom we sent a Notice to Vacate, on the seventh day of the second month of their lease - with copies to their parents who were all guarantors. This proved effective and we have not had a problem with them since (now in their third year).
- Contractor · Atlanta, GA · Member since 2012 · 176 posts · 103 votes12y
Sometimes the tenant will have to be trained to behave in the proper way. Hopefully filing a notice will help train him.
On future properties, I'd suggest rent is due on the 1st, late on the 5th, then immediate notices and late fees apply.
Good luck.
- Rental Property Investor · Baltimore County Maryland and Tampa Florida · Member since 2013 · 2k+ posts · 2k+ votes12y
Yeah, I only agreed to due date of the 5th because he said he doesn't get paid until the 3rd, so I was okay with that. Paid or not, I'll be going up to check on all the units this weekend. It's weird because the tenants upstairs say they're pretty sure he's in there, but he won't answer his door when anyone knocks.
Since I can't reach him, I'll start by showing up and just knocking on his door (but not entering). If he's unreachable for much longer, I'll send a letter informing that I will be checking out the apartment.
- Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes12y
If you can't get in touch with the tenant post the pay or quit on the first possible day and follow through with the eviction process as soon as possible. Some folks need that wake up notice to get their attention. Charge and enforce late fees. Charge and enforce any fees you outlay for the eviction.
This is just part of the business. If this is interfering with your business plan, your business play is flawed. It is irritating and you hope it doesn't happen. But it will. You have to expect it, plan for for and just roll with the punches when it does.
- Rental Property Investor · Baltimore County Maryland and Tampa Florida · Member since 2013 · 2k+ posts · 2k+ votes12y
So you're saying if I can't get in touch with them, go ahead and file on the due date rather than waiting out the grace period? I can do that.
I know these things happen; it's still frustrating. It just puts me a little behind on my goals, that's all. I'll still reach my goals, just not quite in the timeline I hoped.
- Investor · San Jose, CA · Member since 2012 · 2k+ posts · 3k+ votes12y
Ah, the unglamorous side of landlording. Sorry this is happening to you. If your contract said due on the 5th and late after the 10th, you will have to post the 3-day notice to pay rent or quit on the 11th. Then start the eviction on the 15th.
As Mark said above, rent should be due on the 1st and late after the 5th. Your tenant should still have time to pay you if he gets paid on the 3rd of each month.
- Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes12y
If I can have a chat with a tenant and discuss the rent being late, I'll give them some slack. More than once I've had a tenant tell me the rent is going to be late. We agree on a specific date and the amount that will be due, with the late fees.
OTOH, if the rent didn't appear (I have tenants deposit it directly) and I couldn't get in touch with them I would follow the process. Here in CO you cannot post the pay or quit notice until the rent is late five days. So if rent is due on the first, I can post the notice on the fifth. Then I can start the eviction three days later, or Monday if the third day is on a weekend. At the same time I post a pay or quit I would also post a notice that I will enter the property in 24 hours. The one time I got this far when I entered I found the property abandoned. Almost everything gone. Just a few cleaning supplies and some mini-blinds left behind. I videoed the place with my son, then cleaned and re-rented it. It they hadn't chosen the "quit" option, I would have started the eviction ASAP on the 8th (or Monday).
Have you read about the 50% rule? That is, 50% of the gross scheduled rents go toward expenses, capital and vacancy. Then the remaining 50% has to cover your debt service, if any. That's the P&I part of your payment. What's left after that is your cash flow. Any plans your making should use only that cash flow. You should be accumulating anything that's left between 50% of the rent and your actual outlays (or rent that's not collected) into your cash reserves. Realistically, IMHO, you should be dumping ALL your leftovers into the cash reserves until you have six months rent per property accumulated. Then you can start accumulating money toward the next property.
Those reserves are essential to surviving this business. Whether that's to cover the expenses when you tenant doesn't pay (I'd guess you're not getting October rent on this unit at all) or like the $6200 I spent a couple of months back on a sewer line. A hiccup like this should not affect your goals at all, if your goals are based in reality. If they're affecting your goals I suspect you're assuming something like "cash flow = rent - PITI" and that's not a realistic planning assumption.
- Rental Property Investor · Baltimore County Maryland and Tampa Florida · Member since 2013 · 2k+ posts · 2k+ votes12y
Hi Jon.
I just went over ever single expense as well as savings for repairs, vacancies, and property management fees (even though I am the PM right now), business expenses such as UPS box, etc. I split them into the two categories you said and I do fit within the 50% rule.
All of the renters were all existing when I bought the properties (from the same guy both times). I've learned that the previous owner just lets anyone move in. I've been slowing ridding of them as their leases end or one I asked to leave or I'd evict, and they left two days before the eviction after saying they weren't going anywhere. I lost a few months' rent because of that. Then I had a vacancy for 3 months. Several repairs to keep the place from becoming a slum.
I'm covering all the expenses and savings areas, but I guess with the drawbacks, it's taking longer than I knew.
In Baltimore County, after 5 days, you can file the Failure to Pay Rent. This schedules court probably 2-3 weeks later. If they haven't paid by then, they get a judgement. After I think 5 business days after court and still no payment, you can file for eviction. To stop eviction they must pay everything including court fees.
After four court judgements, they can be evicted without "Right of Redemption". So even if they pay up by that point, they're out if the landlord chooses.
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes12y
"Some of my tenants were "grandfathered" in from the previous owner."
Did this tenant NOT have a pay history from the previous owner?
If the owner glosses over and says " I do not keep great records but he has been a model tenant" then the price starts going way down on the purchase.
Anything I can't verify that will create a problem for me I will get the property real cheap to handle those issues. A seller isn't going to get a premium and then I get stuck with his or her problems from improperly screening tenants.
You should do an analysis on each tenant before you buy and if they meet your screening criteria. If they do not then you either make the seller get the tenants out before closing so you can assess damage and amend the purchase price or you agree to handle the issues for a steep reduction and plan for it.
Any seasoned investor that has been in the game for awhile knows when a seller is trying to drop something on them but get full price. This is why sellers love newbies so much as they hope they will miss these important factors.
Do not let this experience deter you but learn from it. Do not wait hoping for the best. File the notice. If they have the money or can get the money then you stop the eviction later on if YOU the landlord choose to. If they do not have the money you have already filed and shortened the process to get them out. Run it like a business and not a relationship and the tenants will know you cannot be manipulated. They will either shape up or ship out. Believe me I have had 20 tenants in one apartment complex. I have experience with this and you live and you learn. Be glad you are learning on a smaller scale so that things do not get amplified at a greater level.
- Rental Property Investor · Baltimore County Maryland and Tampa Florida · Member since 2013 · 2k+ posts · 2k+ votes12y
You're absolutely right, Joel. I have learned a lot about how to negotiate buying properties, how to verify things, and how to deal with bad tenants. I definitely do follow the golden rule of filing right when I can. Too many times they are just lying to you anyway; "oh I mailed it, it must have got lost" and a number of other excuses. I've also learned when to say "no" to "repair" requests. One of the tenants saw how much I was improving the property and then started requesting the smallest things be replaced such as a doorknob with a slight imperfection in it.
Thank you everyone for your input and for listening. I'll keep you posted if anything interesting happens.
- Investor · Middletown, NJ · Member since 2008 · 2k+ posts · 1k+ votes12y
It depends on your state as well. In FL, I can file the Pay or Quit notice as soon as the rent is late. The lease says it's due on the 1st. Our 8 tenants mostly pay by the 3rd, and I know that several of them get paid every other Friday, not specifically on the 1st or 31st. They're mostly good tenants, so I let it ride until the 3rd. Some pay earlier than the 1st. After the 3rd, it's a $50 late fee, then $5 a day every day after that, and the Pay or Quit goes up on the 4th.
I will work with a tenant that communicates and has a good track record. I had a fairly new tenant tell me on the 2nd of this month that she had unexpected expenses and would be paying the rent on the 11th. I told her that I also had unexpected expenses, plus a mortgage and maintenance fees to pay, and that the Pay or Quit would be filed if she didn't pay the rent the next day. She did. Some tenants need to be reminded that keeping a roof over their heads is the priority; their other expenses can be paid late; paying the rent after expenses is not a choice.
But definitely keep as much in reserves as possible. The 50% rule is a great guideline.
- Chandler, AZ · Member since 2013 · 113 posts · 25 votes12y
Yeah, scumbag tenants try to test your landlording skills :-), normally during the first few months. you need to show what you can do, and do not appreciate games. Sending 5-day pay or quit notice is one of the effective ways to stop them from doing it again if it's just a game or drama.
- Rental Property Investor · Baltimore County Maryland and Tampa Florida · Member since 2013 · 2k+ posts · 2k+ votes12y
The past couple of days has really been a test of my ability to do this and handle the stress....or better yet, not let it consume me so much. Now my renters (2 roommates) above the non-paying renter I mentioned earlier have got into a big fight seemingly out of nowhere.
One roommate calls me and says the other must move out because he thinks he's doing cocaine because he found "white residue" on a knife. They fight like teenagers, but are grown men much older than me. I can't just kick someone out on a suspicion...especially first complaint, ever. I guess their fight boiled over that night and he locked him out. The police came and said it was okay to kick the door in!! Great.
So the roommate who said the other was doing drugs said *he's* now moving out and would leave the keys with the renter downstairs (the one who's not paying). I said "no, you're not leaving keys with someone who doesn't live in your unit. Leave them in the kitchen." Well, this jerk then tells non-paying renter downstairs that I don't "trust him"....and non-paying renter magically is able to get in touch with me and leave me some angry voicemail about "slander". Yet, he could never find a way to call me about his missing rent.... funny how he determines his priorities on finding a way to contact his landlord.
His rent court date can't come soon enough.
How do you guys keep your stress down? How do you quiet your minds from these issues? Just mentally train yourself to not worry?
- 12yRoy N.Pro MemberRental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
Lions & Tigers & Bears .... oh, my!
Nicole - Welcome to the circus! These things happen every once-in-a-while to test your resolve. My advise is to stick to the business relationship. You have a lease, the two "roommates" are equally and severally responsible for the obligations of the lease. Remind them, they are adults and suggest they work things out themselves ... oh, and by the way, your personal issues do not absolve you from paying rent :)
As for the deadbeat downstairs, have you served a Notice to Quit/Vacate?
Now ... I'm off to see a wizard of my own ....
- Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes12y
You need to dig out your lease and read it. Then you need to quote it to the guy leaving just like @Roy N. said.
Also unless required by law. NO GRACE PERIOD. Due on the 5th pay on or before the 5th or collect late fees. Again read your lease. If your lease has a grace period you must honor it but the next lease you write, remove it unless required by law.
When you remove the grace period from the lease they it's also time add an early termination fee to your lease. Then you could quote that to your warring tenants. You need to leave, then pay $2,000 and be on your way. Take the fee and re-rent. Everyone is happy.
- Investor · Middletown, NJ · Member since 2008 · 2k+ posts · 1k+ votes12y
I like the idea of an early termination fee, but generally that's what the security deposit would be used for it we couldn't re-rent the unit and actually lost rent. I would need to check the legality of an early termination fee in my rental states (NJ and FL). A tenant is technically on the hook for the length of the lease if they decide to leave early, but I always feel that a problem tenant that leaves early is doing me a favor and keeping the security deposit is good enough.
And I've read sections of my lease to tenants, and had them flat-out deny what it says. Denial is a powerful thing so don't hesitate to post a Pay or Quit.
- Rental Property Investor · Baltimore County Maryland and Tampa Florida · Member since 2013 · 2k+ posts · 2k+ votes12y
Yes, I think I will put the early termination fee in there, but not expect it to be paid....perhaps it'll just be a stronger deterrent. I'm not dealing with the highest caliber people here, so like Aly mentioned, some times I'm actually happy with them leaving!
I do love the suggestion of no grace period. I double checked MD laws and it looks like a grace period is not required and even now with my grace periods, I can still go ahead and file Failure to Pay Rent the day after it's late...I earlier thought I had to wait out the grace period. But if I know a tenant won't pay, why waste time waiting out the grace period...I'm going for it. I was really getting tired of people treating the end of the grace period as the due date anyway.
And I do have a rent court date set for 28 Oct for the non-paying renter in the downstairs unit.
I noticed this duplex go up for sale last week and I'd love to seriously look at it...but don't think it's the best idea financially right now.
- 12yRoy N.Pro MemberRental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
If a tenant wishes for early termination under our lease {which happens to be the government 'standard lease'}, they are responsible for their rent obligation until the earlier of a) the end of the original lease, or b) the apartment is re-rented (and the first rent payment from the new Tenant is received).
That said, we do our best to work with the tenants to show the unit, affect repairs and re-rent. This often includes getting them out a few days early so we can clean and paint before the new tenant moves in.
- Los Angeles, CA · Member since 2013 · 555 posts · 261 votes12y
Yes, I do not have a late payment clause in my lease.
This allows me to serve 3 day notice as early as day 2 if necessary.
- Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes12y
This type of nonsense is pretty common in low income, Class C type areas. I try to avoid roommate situations at all costs. They rarely work out.
FYI - I've had great luck with retired and/or handicapped tenants in those areas. They keep to themselves, pay their rent, and bother no one. Maybe install a handicapped type toilet when the unit is vacant. It could be a nice feature to attract a good tenant.
- Real Estate Investor · chicago, IL · Member since 2012 · 1k+ posts · 231 votes12y
sounds like you've had bad luck and/or inheriting past bad landlords' problem tenants.
this business seems to go in waves...hang in there...you will get back on your feet and things will be quite boring.
I have been pretty lucky at to not been stiffed at all...but I don't press my luck...I throw everything into reserves until I hit 6 months PITA then I throw half in there and the other half into my personal savings/emergency account.
- Rental Property Investor · Baltimore County Maryland and Tampa Florida · Member since 2013 · 2k+ posts · 2k+ votes12y
Well, I have an eviction date of 03 Dec at 0930.
In Baltimore County, the landlord is not required to notify the tenant of that eviction date/time. They just get the "Warrant of Restitution" notice on their door, but I don't think it gives them the date.
Part of me doesn't want to offer him the info unless he contacts me asking about it. The only way I can contact him anyway is via regular mail or in person since he has no phone.
I personally hope this goes through and goes without trouble (him ruining the place). If he pays, we just get to start this game all over again. I've already filed for November's rent court to preemptively strike that scenario. After the 4th rent court judgement, he can be evicted even if he pays up.
- Investor · Baltimore, MD · Member since 2013 · 205 posts · 44 votes12y
@Nicole A. you can do a 60 day notice to vacate even if they pay. The notice to vacate doesnt have to specify a reason but you can. Also you can due a breach of lease for damages.
If someone is damaging my property I repair it and charge them. If they do not pay the charge I take away the grace period and make there rent due on the first. Let me know how it goes.
- Rental Property Investor · Baltimore County Maryland and Tampa Florida · Member since 2013 · 2k+ posts · 2k+ votes12y
So you're saying you can just end a lease whenever you want? I was under the impression that you have to follow through with a lease and can only make them leave for legally-granted reasons.
However, I received a large payment from him the other day of $2600. This covered Oct and Nov rent, late fees, and court fees as well as most of Dec rent.
Had another guy who owed $550 paid up after several claims that his rent kept getting lost in the mail. I at first gave him a chance because he usually paid on time. But after several failed "attempts" to mail, I figured he was lying. The mail system is not that bad! He wired me money via Western Union and paid some crazy fee to do it. I told him (again) that the mail works just fine.
I also told him no more extra grace periods. I don't have rent, I file right then and there. He lost my trust that he had built over the past year.
- 12yChris K.Pro MemberInvestor · Baltimore, MD · Member since 2012 · 1k+ posts · 655 votes
Originally posted by Nicole Williamson:
So you're saying you can just end a lease whenever you want? I was under the impression that you have to follow through with a lease and can only make them leave for legally-granted reasons.
That's how I understood it too. I guess it all depends on the lease, you probably cannot do that for a yearly lease but on a month to month you could. And I'm not 100% sure but I think with you being in Baltimore County you can give 30 day notice as opposed to 60 day notice.
I'm doing month to month with mine now so like he said even if they pay I can still give them a 60 day notice. If you have a year lease you're pretty much stuck with them unless you get the 4 rent court judgements in a 12 month period. Glad to hear you got that big paycheck lol. I bet you had a huge smile on your face and felt a huge weight off your shoulders when you got it. So they're caught up now?
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