would you start eviction over $50? $160?
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Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
12ySince a number of people have posted the idea that it's not worth the $30 or $50 to go through an eviction. I say it's not about the money it's about who is in control. It was said to me early on "The landlord's in charge the tenant is not."
I say it's absolutely worth the cost of an eviction to maintain control over my property and investment.
There are plenty of tenants out there that will follow the rules. The cost of the eviction is my education in tenant screening. That cost reminds me during my next vacancy that "a vacancy is a blessing compared to a bad tenant". If I do let someone in who won't follow the rules that's on me and I should in now way compound that error by letting the terms of the lease slide. The longer I do so, the greater the peril.
As @Gerald K. said allowing things to slide can be construed as rewriting the lease. The lease governs and all things not in compliance get brought into line or the tenant moves on one way or another. What's the point of a lease if you let the tenant do whatever they want more or less? Where do you draw the line?
46 Replies
- Real Estate Investor · Kirkland, WA · Member since 2012 · 480 posts · 116 votes12y
More information would be helpful. What kind of rental agreement? A lease, or month-to-month? Are there late fees per your rental agreement? Is this causing you a lot of trouble constantly trying to get paid?
- 12yColleen F.Pro MemberInvestor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
I am curious why would you lose the rent until August?
I would start enforcing the lease. We had tenants who had a situation that made them pay the rent in installments for a short time but that is working with someone with an issue. This is them just paying when they please it sounds like. Let them know you are not the bank of mom or anything like that you are their landlord. They can borrow from someone else to pay rent but it is a pay as you go system. Rent comes first. If your lease says late fees enforce them. I would issue a pay or quit and then talk to them about their payment difficulties/pattern. Let them know you want the rent on time and will enforce a late fees or they need to find another place. Hopefully your lease says late fees become additional rent. Your other option is lower the rent but enforce it being on time.
- Owner / Investor · Oakwood, GA · Member since 2013 · 74 posts · 9 votes12y
You could go with the "cash for keys" route and actively start marketing for other tenants...
What area of Athens are you investing in? I am researching the area now, and would like to know what areas to stay out of.
- Agent/Investor · Murphy, TX · Member since 2013 · 542 posts · 304 votes12y
Start the process. If nothing else show up on the third of every month with a three-day notice to quit on their door. It's a win-win for you to do it. Worst case, you evict them and get a good tenant in there; best case you scare them into paying on time. Right now there is absolutely no reason for them to pay you on time since there are no consequences. You need to let them know how much they owe you and take that out of their security deposit when they do leave. Right now you are low man on the totem pole when it comes to getting paid. I'm sure their cell phones get paid for on time every month before you do.
- Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes12y
Originally posted by @Sheree H.:
They never pay the late fees, and we never chased them for it because it wasn't worth the $50 or so.My lease has this clause in it and I like it:
"Money received by landlord from tenant shall be applied to tenant’s account in the following manner: first, to outstanding late fees and dishonored check fees; second, to outstanding late fees chargeable to tenant; third, to outstanding legal fees, or court costs, or both; fourth, to outstanding utility bills that are the tenant's responsibility; and lastly, to rent."
When someone pays late, their rent goes to late fees first and I let them know that they are short on rent, not late fees. Nobody likes paying late fees. Let them know that their rent is short.
- SFR Investor · Dallas, TX · Member since 2011 · 604 posts · 243 votes12y
One of the easiest mistakes to make it not enforcing late fees. I give every one "one freebe" but after that I enforce late fees. At the same time I try to be fair. I had a family that the wife was in the hospital for 2 weeks with complications with a pregnancy when the rent was due, the husband was working full time and trying to take care of 2 other kids. When they called me and ask the penalties, I said under the situation I understood they had more important things going on, and waived the late fees,,other than something like that I enforce them.
I have one renter that pays late, they have been in the house for 2+ years, and pay late every month, and I get late fees from them every month. They are use to it, and don't seem to mind paying.
One time someone was complaining about a late fee, I told them that when I refinanced any property, the mortgage company had to see all payments from my rentals, and if they were late, they would question what happened to the late fee,,,,of course its a line of BS, but they suddenly thought of the mortgage companies as the 'bad guy' and never paid late again.
andy
- Rehabber · Smyrna, GA · Member since 2013 · 864 posts · 510 votes12y
Good advice so far. I used to be a sap for that kinda thing. Learned my lesson. You should have filed the eviction the first month on day 6 so you trained them they cant get away with that kinda thing. Instead, they've trained you that they can.
If it were me I'd sit down with them and work out a payment plan on the arrearage.
"OK Tim/Sue whoever, we're $500 past due." Dont differentiate between late fees and rent. Its all DUE. "We cant keep this up, do you want to continue living here? Yes, great, because I want you to, but if you dont catch up on rent, I have to file an eviction, which will get me a judgement, you wont be able to rent anywhere else or get credit for a car, or buy a house, etc., do you understand how that works? I really dont want us to go there, but we're at that point"
"I know you're struggling, but this needs to be a priority, what are you going to do if you dont have a place to live?"
Go through their budget. Point out the stupid stuff. Anyone that cant come up with $30 for a month's rent shouldn't have moved in in the first place, but lets face it, anyone that says they cant squeeze $7 week out of their budget just isn't making you a priority. You probably paid for their beer and cigarettes.
Once you get the rent payment in line, get $10-$20/mo on the arrearage. Make sure they know if they dont get that then you file an eviction and do it if they dont.
You'll fail at that business if you are afraid to enforce your lease.
You can have compassion, and I've been a sap and let people slide on things most people wouldn't, but not until they proved to me they absolutely couldn't pay.
Some of it is a financial decision on your part, too. I let a disabled vet live in a unit for free for over a year, but I wasn't full in the complex so didnt really need the unit during that time, kinda liked the guy and was making so much doing rehabs that his payment was nothing I'd miss in my company. If you cant pay the mortgage if they move out that factors in, of course, but hopefully you aren't in that boat.
- Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes12y
Somebody above suggested that you might consider lowering the rent to make it easier for the tenant to pay on time in full. IMO that would not solve the problem this tenant has, which I believe is they spend every "spare cent" and then discover bank fees or some other "emergencies" have eaten some of that "spare" money.
As already mentioned above, rather than you training the tenant that you will not tolerate late rent payment without the late fees being paid, the tenant has instead trained you the landlord to allow the tenant to get away with this behavior with paying late. Some tenants are like children and pets where they try to take an inch so that eventually they get away with taking a mile; unfortunately for you, you are now seeing this firsthand.
- Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes12y
Your other option is not to renew their lease. If you explain to them you won't be able to renew if problems persist they might straighten up. Sometimes if you tell a tenant you won't renew you run the risk of them getting to be bigger headaches. Diplomacy but firm are the two key words.
- Real Estate Investor, Flipper, PM, vacation rental, Wholesaler · Athens, GA · Member since 2013 · 260 posts · 210 votes12y
If you had a store, would you let customers walk out with merchandise without paying and then invite them back next month just so you can keep a store full of customers? I agree with everybody posting here - this is business.
Most all landlords fall victim to that "first" experience of leniency. I'm in Athens Georgia and have thousands in outstanding judgments against the same kind of ex-tenants that you are describing. Not proud of it, but that was essentially my cost of education - (Wish I had BP back then)... and it would have been thousands more if I had continued to be lenient to the excuses. Check out the Chris Clothier Memphis Invest podcast, where he discusses the way he deals with late payments. Multi-million dollar dude knows what he's doing in this regard.
@Colleen F. Athens lease cycles are married to the University of Georgia schedule. The bulk of peak rental demand coincides with the start of the new semester August 1 for 12 month leases. I have found that there is solid demand year-round in Athens if you know your customer segments and market appropriately. We just rented 10 units out of 11 available in November alone and were pleasantly surprised by the growing demand of other segments, specifically young professionals. Local economy has definitely moved up.
@Bobby C.
It doesn't matter what part of town you are in. Tenants that systemically thrive on landlord weakness WILL ACTUALLY FIND YOU. There is a local underground referral system where the bad tenants actually tell other bad apples about a landlord being "soft" so they can be the next to take advantage and skimp on rent. No joke! I have confirmed this. Your local reputation as a Landlord can either be one of your best deterrents or your own worst enemy. Unfortunately, kindness is perceived as weakness. This is war - OK, just kidding... kind of kidding. ;)
Consider good quality property management and at rates that will actually make you more money in the end because of these kind of issues. Local resource to manage: getting the deadbeats out, sprucing up, advertising, showing, screening, moving in and maintaining good tenants. If you would like a copy of my Pay Rent or Quit letter that has been effective and passed review in Clarke County Magistrate, just shoot me a PM or email. [REMOVED].
Time for a Tenectomy.
- Investor · atlanta , GA · Member since 2012 · 287 posts · 148 votes12y
I'm going through a situation now where a tenant signed a one year lease that began Nov. 1st. She called last week and said, "Oh I'm sorry, I have to move out because I'm pregnant and the apartment won't be big enough for me two kids and a baby." I said no problem, just pay the balance of the remaining lease, the rent you currently owe, and you won't be getting your security deposit back. She moved out and told me I was crazy if I thought she was going to pay all that.
We now have court in two weeks.
Once she saw I was serious, she told me I could keep the security deposit, she paid all of January's rent, even though she moved out this past weekend, she's now trying to negotiate the remainder of the lease. I refuse to let people steal from me. The moral is, kick them out and get better tenants and enforce the rules upfront each and every time. Good luck.
- Investor · Middletown, NJ · Member since 2008 · 2k+ posts · 1k+ votes12y
Our tenants pay the late fee within 3 days of the rent being due, or they get a Pay or Quit Notice. I have worked with tenants that have a history of paying on time, so an occasional issue is understandable.
But there are others who will not say anything when they know they won't be paying on time, and expect it will be ok to pay....whenever they feel like it. When we get a new tenant, we tell them before they sign the lease (and it's in the lease anyway) what is expected as far as timely rent payments, and what happens when it's not on time. We are very up front about the late fees, and so far no tenant has ever expressed surprise at having to pay them.
And as others have said, as a landlord you're not the bank. They can, and will, borrow from others when faced with a Pay or Quit.
- Real Estate Investor · Lincoln, NE · Member since 2013 · 584 posts · 353 votes12y
Give them an inch and they will take a mile.
We just evicted a tenant we had inherited with the building that has been a problem. We let her pay her Dec rent half on the 6th (the day I showed up to ask where the rent was) and half on the 15th (which she actually got the church next door to pay). On Jan 6 when I showed up at the door I handed her a 3 day pay or quit notice. She complained hard and wanted to pay half again but I refused. Once we notified her of the scheduled court date for the eviction hearing she got her stuff and was out within 24 hours.
We repeatedly told her, "you are stealing from us."
I don't have time to chase people down for their rent. Pay it per the lease, or get out.
- Lakewood, OH · Member since 2013 · 193 posts · 60 votes12y
Evict ASAP, I lost a lot of rent, time, and patience with a similar circumstance this year. It's one thing if they had some believable event happen and they have a solid plan for repayment, but if they keep jerking you around, just give them a 3 day notice to vacate, and tell them you don't want an eviction on your record.
Fine better tenants, could this have been screened out?
- Rental Property Investor · Atlanta, GA · Member since 2013 · 67 posts · 26 votes12y
Thanks to EVERYONE for your replies. It was exactly what I needed to hear. Athens is an hour drive away for me so it puts a kink in things, but I did put the quit or pay letters in the mail this morning. No more annoying partial payments allowed, even if its $0.01 less!!
We had a PM in place, but there was too much mutual dislike between the PM and tenants so the PM quit. And the PM was more lenient than I would have liked; yes, the tenants have "trained" us instead of the other way around. This is the first month I'm handling this myself.
@Gerald K. It's a 12-month lease that started August 1. Rent is $1k and late fee is $38 + $5/day, but they've basically ignored that part of the lease.
@Bobby C. It's in the University Heights area right between UGA main campus and the new Vet school, definitely not a bad area but most of the houses are rentals to students. Dealing with students, wandering artists, and the sort that Athens GA attracts just comes with the territory.
@Rob K Hey, I love that! I didn't notice our contract saying anything like it, but I'm going over it again and you can be sure it will be on our future contracts.
@Darrell Shepherd The two tenants are both working. There is no way they can't afford the rent. I just don't understand these people - if they can pay $970, what is an extra $30?
@Jack Tucker Good quality PM in Athens? Does that even exist?
- Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes12y
@Sheree H. this would be my tact. Start fresh with the tenant since the "evil" pm is gone. Tell tenant, lease and late fees will be enforced from this point forward. Put it in writing and have them sign it. If they refuse to sign the notice, tell them you will enforce all previous late fees. Figure out home much it is and share the $ figure with them. Consider the past "lost" late fees your tuition in the school of hard knocks.
This is also a great opportunity to use a debiting service to collect rent. ClearNow is one service that advertises here (I get nothing from them but their great service over the past 8 years in case you are wondering). TAKE the rent from their account. No better way to go. It costs a bit but IMO it's some of the best money I spend each month. Have all the paper work for this ready when you have them sign the notice above.
Another option, since they obviously have problems managing their money, offer them a payday payment plant. Reconfigure your lease so that they pay you on the day they are paid. You can do this weekly or every two weeks. Be sure that the weekly rent is monthly rent divided by 4 and biweekly is monthly rent divided by 2. Now you know that means you get 4 extra weekly payments a year or extra biweekly payments. Be sure to disclose this but don't sell your service short. It will blow you away but some folks will actually choose the more expensive route since it helps them manage their money.
- Real Estate Professional · Lees Summit, MO · Member since 2013 · 57 posts · 21 votes12y
Not much I could add to the excellent advice posted here. I think most of us have learned "the hard way" (this seems to be may favorite way to learn). We all want to think the best of our tenants and none of us want to go through the hassle of eviction. I heard years ago that once someone is 10 days late, they likely will NEVER get back to "on time". Some folks just live their lives this way. One tenant of ours was genuinely baffled when we were "hassling" them because "they weren't even 30 days late" (yes I have an email to prove this). It was all in their perspective. Other people give them 30 days or more (banks, credit cards, car payments, etc.). As landlords we need to train them that on time means on time. Ours now get a 3 day notice on Day 6, unless they have made arrangements with me that I am willing to accept.
- Chicago, IL · Member since 2014 · 710 posts · 200 votes12y
Depends on the tenant....In this situation I would possibly invoice them every month to make them aware they owe the fees but if they kept the place up and paid 95% of the rent I would not evict them. You will lose 2 months rent at least in downtime plus repairs.
I'd take the $1000 in cash flow and waive late fees any day of the week over an eviction.
My goal is always long term tenants so if I can help someone out and waive late fees and they still pay eventually I'll take that over losing a tenant over a $30 late fee.
Don't be Penny Wise Dollar Foolish when it comes to being a landlord.
Who cares about $30 care about the $1K in Cash Flow you seem to have collected every month. When they move out take the late fees from the security deposit.
- Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes12y
We too designate an order by which we apply payments. Ours is:
"PAYMENTS. All payments made by Tenant to Landlord after the tenancy commences, no matter how designated by Tenant, will be applied as follows: First to any outstanding amounts for damages/repairs, utilities, etc.; second, to any outstanding service charges and fees from prior months; third to any rent outstanding from prior months; fourth, to any service charges or fees due in the current month; and lastly to the current month's rent."
I serve the notices in a timely manner. If the tenant is attentive and makes good on the amount due, they get to stay. If it goes past the 15th of the month or they are avoiding me, playing games or disrespectful, I move forward to get them out. I tell them, it's not personal, it's business. I also give them information on community resources and we talk with them about a move-out plan. Note, we use month to month rental agreements and our state allows for tenant or landlord to give the other party 20-day notice prior to the end the rental period tenancy to end tenancy, no cause required. We can move forward sooner with 3-day (pay rent or quit) and 10-day (non-conformance) notices when we can show cause. Of course if there are extenuating circumstances why the tenant is late and we put in place a solid plan for repayment, then we may be more lenient.
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes12y
Sheree my guess would be the tenants are not going to move. They are going to pony up the money once they see you are serious.
Their only other option is to move in with someone elsewhere or get another similar place to yours with the same rent and first and last months upfront with security deposit.
So the cost of doing that ( in the thousands plus moving expenses) is way more than just paying rent on time. Now if they actually couldn't afford the rent then they would move to a cheaper place if available. I have seen where regular tenants (not students) could afford a higher place but then over the years their situation changed and they were holding on but had to move to a cheaper place.
Are the parents guaranteeing the lease for these students?? If not that is something you need for the next time. If the parents are paying the rent for school you could offer a small discount for paying 6 months in advance etc. or 1 year and let the parents deal with their kids trying to collect the money owed them etc.
I can tell you I have been there with the per day late fee (we used 10 dollars). When you go to court even though it's in the lease my experience in GA has been the judge's deem the fees excessive depending on who you get. So they would give me a judgment for back rents, late fee initially of 100 past the 5th, court filing and admin costs and then they would dismiss the per day as excessive and not grant it. The per day we put more in there as an incentive for most tenants to get scared of a mounting balance and pay it.
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Thomas,
"I said no problem, just pay the balance of the remaining lease"
Thomas you cannot go after the tenant for the balance of the remainder of the lease in GA UNLESS you leave the unit empty for the complete time of the lease after they have left. The minute you re-lease the property they do not owe those future payments.
This does not mean you can't win a judgment IF they reply to the eviction court proceedings. If they do not or were not personally served the judge can only grant eviction and you would have to go through small claims court to get a judgment. You do not want the property to sit vacant because of vandals, pipes freezing, squatters, etc.
You can't double dip meaning say the tenant owes you for 6 months they have not lived there and get a judgment for 6,000 in future rent and then release on top of that right away to get cash coming in. GA landlord tenant law doesn't allow for that.
If they have paid you all the money up until now and left the place in clean condition and vacated then you need to just move on and re-rent the place.
No legal advice.
- Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes12y
I don't know that I would evict someone for not paying the late fee. But what you could do is raise the rent $50 a month on them and either a) hope they move out or b) you'll be getting the late fee and then some.
And if they do move out, I would deduct all the late fees they owe out of their security deposit. Mind you, I wouldn't tell them I was doing it until AFTER they were out though.
Unfortunately, the people that don't pay the late fees are the same ones that use their security deposit for the last month's rent. If they try doing that, I would definitely deliver the pay or quit notice.
One other thing I'd mention. What an investor will do is also very dependence on what the area's eviction laws are. In texas, I hear it only takes 30 days to get a tenant out of the house. Here in Illinois, it varies by county. Cook county can take 4 to 5 months. I'm not losing 4 or 5 months rent for $30 late fee.
Kankakee/Will counties (where I've done all my investing the last few years) is about 2 months. I still don't know if I'd evict for failure to pay late fees. But I would raise the rent on them.
I had one in cook county that was a trouble payer. And they would never pay the late fees. Wasn't going to go through a 4 or 5 month eviction to get it. But I did raise the rent so now I'm getting the extra $50 every month regardless. And, if they're late and don't pay the late fee, I tack it on to their late fee tab.
At some point (they've been here over 3 years now), they're bound to move and when they do, I will be getting my late fees.
- Investor · Middletown, NJ · Member since 2008 · 2k+ posts · 1k+ votes12y
My leases have basically the same verbiage as @Rob K. and @Marcia Maynard. They didn't at first; we learned the hard way.
@Sheree H., I would suggest having someone local to your property tape the notice to the tenant's door and photograph it. I've found that tenants will almost never pick up a certified letter when they know they owe money, and will say they never got it in the regular mail.
- Real Estate Investor, Flipper, PM, vacation rental, Wholesaler · Athens, GA · Member since 2013 · 260 posts · 210 votes12y
Sheree,
We had the same question about quality PM in Athens, which is why we self manage and frankly got good at it. OK, full disclosure - my accountant wife got good at it. She's great with numbers and thinks in black and white. Yes, I'm biased. Now we manage for other frustrated owners in Athens.
Unfortunately there are a multitude of apathetic PMs in this market, I think because of the extra effort involved with managing college rentals. Especially for the "small fish" owners that mathematically is not worth their attentions. The PM job in this market could be compared to parenting immature young adults learning why they should respect someone else's property or paying the rent on time. That's why we focus our recruiting of young professionals and grad students. We don't approve undergrads unless parents cosign. That takes us out of the role as "parental units". This is probably similar with most college markets.
There are other PMs in addition to us to whom I would be happy to refer you. Just shoot me an email to discuss.
- Real Estate Investor · Kirkland, WA · Member since 2012 · 480 posts · 116 votes12y
@Sheree H. , You have received a lot of good advice here. When a tenant is allowed to repeatedly pay late, not pay late fees, you have basically allowed them to establish new rules for the lease. In fact, if you allow this to occur, and you end up in court in front of a judge, the judge may consider what's been accepted by you over a period of time as the established agreement - it's called lulling the tenant - and you could lose the case. Also, serving the lawful notice to pay or vacate must be done according to your state's landlord tenant laws. In WA state, we cannot simply send a letter in the mail. Timing is also very important. Other's in your area may weigh in on exactly what the proper procedure is in your area as I am not familiar with it. I'm not a lawyer, so this is not legal advice. Good luck.
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