Help! Tenant just informed me that they lost their job!
Rental Property Investor · Westfield, MA · Member since 2013 · 23 posts · 16 votes
Help! Tenant just informed me that they lost their job!
Most Popular Reply
Dawn AnastasiPro Member
Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votesYou might suggest to the tenant that if they can't afford the apartment, the best thing to do is move in with family for a while to get back on their feet again. If they leave the place in good shape they'll get their security deposit back which will really help financially.
26 Replies
I used to try to work with tenants because I was afraid of vacancies. Well that did nothing but bite me in the *** even with the good tenants.
Now it's no pay no stay. If she is late with rent I would post a pay or quit notice. Hopefully she finds another job and you will have nothing to worry about.
- 10yDawn AnastasiPro MemberRental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
You might suggest to the tenant that if they can't afford the apartment, the best thing to do is move in with family for a while to get back on their feet again. If they leave the place in good shape they'll get their security deposit back which will really help financially.
- Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes10y
If she can't find a job, and can't find funds for rent, you will have to (gently, if possible) suggest to her that she will have to move in with someone else, as you have payments to make and must have the rent on a regular basis. You don't have to be an *** about it, you just need to be realistic - unless your gig is to provide charity, you are running a business. If your good tenant cannot afford rent any more, she is no longer a good tenant, just maybe a good person.
Skyline Properties - Kalamazoo, MI · Member since 2014 · 224 posts · 129 votes10y
suggesting a move is not a bad idea. If there is a lease, you can work with this tenant by saying you will let them out of the lease if they need to move. It spares you the headache
- Investor · Juneau, AK · Member since 2015 · 980 posts · 741 votes10y
You are right--her pay check is generally your rent check..
Sounds like you are on the right track (staying informed) and she is paid through the month now. Depending on the economy (local job market) and her skills, it could be a variable time before she is re-employed.
I worked with a long term tenant (several years when lost job and still there today--five years now), but her spouse worked so they could pay most of the rent for a couple of months of unemployment (with remainder coming mid month with late fees).
So my facts are different, but we talked (alot), weekly at least. For a good tenant in your case, I would probably want to see at least verified employment (even get permission to call HR of the employer or supervisor if yours is not still in effect or dated) by the end of the month to give any leeway on the rent.
But, as stated above, I would prepare for an orderly winding down of the tenancy--like a mutual lease recission and full deposit for the keys on a set date (or notice to pay rent or quit) if it is not looking promising later in the month...
In my case, we actually talked about the reality of moving out (I could not have them there if they could not pay). I express the situation in their interest--getting behind on rent, risking a possible eviction is not helping you, but moving out and finding a safety net and getting your deposit back and a decent reference is..
And we had a plan to move out if they could not get back on track, but luckily they did...
Prepare for the worst --a move out date and procedure or even eviction-- but hope for the best--the call she got a job next week and rent will be on time or a couple of days late, with the late fee of course! Good luck...
- Investor · Cincinnati, OH · Member since 2013 · 2k+ posts · 1k+ votes10y
@Corey PascuzziI agree with @ryan b. and @Dawn Anastasi - it's pay or leave but phrased nicer. Any other scenario is a slippery slope.
- Indianapolis, IN · Member since 2015 · 125 posts · 50 votes10yI disagree with dawn. Unless the term is up, do not give them their security deposit back. That is your damages for them not paying. You could go after her for the entire lease term but that takes time and money in court and is usually not worth the effort. Keep the deposit which should cover the vacancy for a month while you try to fill it again
- Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes10y
Originally posted by @Corey Pascuzzi:
Hello BP, my tenant just told me today that she lost her job over a month ago. She has always paid on time and paid rent today for this month. She says she is getting financial help from family and is looking for a job, interviewing. I told her to keep me in the loop as to the situation and I don't remember my exact words but told her something to the effect that I would work with her and try to get through this difficult time. Is there anything I should be doing, or could do in the meantime? She has been a good tenent and I am hoping she finds a job soon, but I can't help but think what would happen if she can't find a job for several months. Any thoughts or advice is appreciated!
She has not been late with the rent, nor indicated that she can not pay the rent. That is good. I think your approach is spot on. Don't add strain to her situation by talking to her about moving out. Don't assume she will not be able to pay the rent in the future. It sounds like she has the supports she needs and is actively looking for a replacement job, already to the point of interviewing. Good for her. The only thing I would do at this point is exactly what you did, plus check with the utility companies to see if she is current on her utilities. Then, relax. Jobs come and go and people do bounce back.
- Rental Property Investor · Ankeny, IA · Member since 2015 · 38 posts · 7 votes10y
Hello @Corey Pascuzzi
I would agree with @Marcia Maynard while it is good to have a plan in place if you need it, but I would not worry about it too much until it happens. Stay in contact. It shows good character that she approached you with her situation so it would seem that she has respect for you and your business. That is better than the alternative.
I had a tenant who lost her roommate, then had her hours cut at work. She paid the rent on time and in full for several months until she almost exhausted her savings. Then she told me about it. Her concern was not trying to stay until evicted, but being let out of the lease. She tried to find another roommate and a second job.
You're in good shape for the moment, since your tenant is communicating and paying. Maybe you can let her know that you will let her out of the lease with no repercussions. My tenant was very cooperative with showings, and kept the unit clean.
- Rental Property Investor · Westfield, MA · Member since 2013 · 23 posts · 16 votes10y
thanks everyone for the great advice and different perspectives! I have to go over to the house this week for a few things and plan to have a more in depth conversation with her. I'll update with how it works out.
- Investor · Leominster, MA · Member since 2011 · 1k+ posts · 589 votes10y
@Corey Pascuzziserve the 14 day notice if she gets behind. Explain that you have to protect yourself and that the 14 day notice is not an eviction. If she works something out and pays late you stop the process. If not you continue the process. It can be stopped at any time. Good luck.
- Real Estate Agent · Pittsburgh, PA · Member since 2015 · 2 posts · 0 votes10y
What happens if the situation worsens and the tenant squats for 6 months during an eviction and then doesn't have any money even if you win judgment for rents owed? Also the squatting tenant stopped taking care of the property and maybe vindictively decides to leave water running all day since you pay that bill and starts breaking things etc. As the saying goes you can't squeeze blood out of a turnip so good luck getting money out of someone hat doesn't have it.
Wouldn't you rather let the person out of their lease and rent it to someone else ASAP versus trying to fight them for money they don't have? I'd go as far as to "bribe" a tenant out by waiving late fees and refunding security deposit to avoid a long painful drawnout and expensive eviction. In a perfectworld yes you go after them and get your money for their failure to fulfill the lease, but the law is on the tenant's side. Be mindful of that and be willing to work with a tenant to help get them out quickly and replace them with a paying tenant. It's the less costly option and the game is about making money. Good luck!
- Investor · Bakersfield, CA · Member since 2015 · 161 posts · 46 votes10y
Originally posted by @JD Martin:
If she can't find a job, and can't find funds for rent, you will have to (gently, if possible) suggest to her that she will have to move in with someone else, as you have payments to make and must have the rent on a regular basis. You don't have to be an *** about it, you just need to be realistic - unless your gig is to provide charity, you are running a business. If your good tenant cannot afford rent any more, she is no longer a good tenant, just maybe a good person.
Great tact and thoughtfulness! Agreed.
- Investor · Bakersfield, CA · Member since 2015 · 161 posts · 46 votes10y
@Dawn Anastasi@Ryan B.@Rob Beland@Michael Boyer@Joe Fairless@Tyler Herget@Wells Lange@Jason Lint@JD Martin@Marcia Maynard@Account Closed@Corey Pascuzzi
This situation details one of the potential risks in buy and hold investing. We've had a rental before and not had this issue, but here's food for thought: Buy and hold is a sure fire investment as long as people can pay, but what if the economy crashes again (perhaps an argument of when, not if) and many of one's tenants cannot pay all at the same time?
This can be a business crushing situation. Additionally, what could happen if the currency continues to be devalued at an ever increasing rate, making it hard for our tenants en-masse to pay their rents since the bulk of their worthless cash would be going to food and energy costs. This would also effect the ability to get future tenants once the non-payers are out since they would be in the same boat.
This is currently happening in other areas throughout the world and many argue this scenario will soon come to pass on our US of A. Thoughts on these subjects anyone?
- Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes10y
Originally posted by @Account Closed:
@Dawn Anastasi@Ryan B.@Rob Beland@Michael Boyer@Joe Fairless@Tyler Herget@Wells Lange@Jason Lint@JD Martin@Marcia Maynard@Account Closed@Corey Pascuzzi
This situation details one of the potential risks in buy and hold investing. We've had a rental before and not had this issue, but here's food for thought: Buy and hold is a sure fire investment as long as people can pay, but what if the economy crashes again (perhaps an argument of when, not if) and many of one's tenants cannot pay all at the same time?
This can be a business crushing situation. Additionally, what could happen if the currency continues to be devalued at an ever increasing rate, making it hard for our tenants en-masse to pay their rents since the bulk of their worthless cash would be going to food and energy costs. This would also effect the ability to get future tenants once the non-payers are out since they would be in the same boat.
This is currently happening in other areas throughout the world and many argue this scenario will soon come to pass on our US of A. Thoughts on these subjects anyone?
I'm sure other people have different ways of approaching this risk, but here's mine:
- Diverse holdings. I have SFHs in different neighborhoods and towns (all nearby, but still). It's unlikely all neighborhoods will decline at once. By having SFH's I guarantee that one house has no effect on the others, wherein one bad tenant in an apartment can create a domino effect.
- Cash reserves. If everything went vacant all at once, I could weather the vacancies for a very long time. If it all went bust, I would probably sell at some point, but I could last almost indefinitely.
- Under-leveraged. By having a mix of free & clear and somewhat leveraged properties, everything easily pays for itself (unless everything went vacant at once, see above). Additionally, I can afford to drop rents to ridiculously low levels if I had to in order to maintain occupancy because I am not over-leveraged.
- Other investments. I don't only invest in real estate, though it is my primary focus.
- Marketable skills. I have a day job that I am not too far from retiring from with a pension. I could live just off the pension if necessary, even with the rentals vacant, but I could also go back to work very easily; I have a doctorate degree in a high demand field with many years of experience.
This is not to say that a total disaster couldn't happen, the perfect storm, that would wipe out all of my contingency plans; economic collapse where I couldn't find a job and my other investments were wiped out, the state's inability to pay my pension, etc. If all of that happened at once, however, there's a whole lot more to worry about than whether I can rent (or hold on to) my properties. I liken it to where I live, which is on top of a mountain. Theoretically, some massive flood could submerge my house, but if it does 90% of the rest of the country will already be underwater and it really won't matter.
Skyline Properties - Investor · Juneau, AK · Member since 2015 · 980 posts · 741 votes10y
Originally posted by @Account Closed:
@Dawn Anastasi@Ryan B.@Rob Beland@Michael Boyer@Joe Fairless@Tyler Herget@Wells Lange@Jason Lint@JD Martin@Marcia Maynard@Account Closed@Corey Pascuzzi
This situation details one of the potential risks in buy and hold investing. We've had a rental before and not had this issue, but here's food for thought: Buy and hold is a sure fire investment as long as people can pay, but what if the economy crashes again (perhaps an argument of when, not if) and many of one's tenants cannot pay all at the same time?
This can be a business crushing situation. Additionally, what could happen if the currency continues to be devalued at an ever increasing rate, making it hard for our tenants en-masse to pay their rents since the bulk of their worthless cash would be going to food and energy costs. This would also effect the ability to get future tenants once the non-payers are out since they would be in the same boat.
This is currently happening in other areas throughout the world and many argue this scenario will soon come to pass on our US of A. Thoughts on these subjects anyone?
My thoughts. I know as a landlord you really want to be aware of the demographic and economic realities of your renters... One study that really opened my eyes was this one from last year on the "Financially Fragile American Renter": http://www.finrafoundation.org/web/groups/foundati...
Or just google "FINRA American Renter and Financial Fragility" to find it..
And, of course, the key: what to do about the reality and data.
Of course the figures vary by location (and you may be in an area with stronger renters, financially) but with only 11% of renters making over 75K household, I actually focus more on the middle, lower income, with 74% of the renters making under 50K.
Schumacher's classic (blogged on it today): Buy and Hold also opened my eyes to thinking about demographics and economics as a buy and hold investor...
So one strategy there is affordability.... and to target the larger market for affordable rentals (read don't price out the majority of renters). And be rigorous but realistic (in screening for example) about the reality of renters...
Still we could be vulnerable to a many tenants not able to pay rent, as mentioned.
This study mentions 58% of renters cannot come up with $2,000 in 30 days, for example.
On doing the best you can to prep for such a scenario: I am actually against too much leverage; for having a small mutliplex (e.e.g, with a sf one vacancy is 100% vacancy, but only 25% with fourplex); I am pro reserves, of course, to extent possible; and also pro diversification, with other assets, too (though some dire economic conditions could sink all boats, from international stocks to commodities).....
- 10yDawn AnastasiPro MemberRental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
If there was a market crash, I could lower rents on each of my units by $100 per month and still clear expenses and put away reserves each month. So that will help ensure that I don't have to scramble.
- Specialist · Austin, TX · Member since 2014 · 109 posts · 95 votes10y
As others have said, as long as she can continue to pay rent, she's meeting her obligations under the lease and you should work with her. The fact that she's being proactive and communicating with you, and getting financial help from family, is a big plus. Many tenants just stop paying and don't say anything to the landlord until it's time for eviction. I certainly wouldn't let the tenant stay if she can't pay rent, but considering she just lost her job I'd try to be flexible about if and how she needs to move out.
If I were you I would give her a call toward the end of the month after Thanksgiving to see how things are going. She'll likely volunteer some info about December's rent or where things stand. If she does need to move, I see no reason not to work with her to let her out of her lease early if you're able to find someone to take it over as soon as she leaves so you don't have any vacancy. I've had to do this twice when I was a renter myself when changing jobs for various reasons, and the landlord/property management companies allowed me out of my lease a couple of months early because they found someone to take it over without vacancy (obviously I would have still paid the rent if they couldn't have found someone). I know January 1 isn't the best time for a turnover, particularly in Massachusetts, but it's not terrible.
Regarding the security deposit as some people have mentioned, make sure you follow your local laws when it comes to deductions for damages and/or unpaid rent. Massachusetts is a tenant-friendly state and you don't want to do anything that would raise any red flags. If she's willing to move out and you can get another tenant in there, and there's no damage, I'd give her full deposit back to her. Sometimes it's good karma, and you really haven't lost much, if any, money in that case. In the end you're running a business and you need to do what's best for your business, but it's also important to remember that these things just happen sometimes.
- Lender · Tyngsboro, MA · Member since 2009 · 3k+ posts · 2k+ votes10y
Originally posted by @Doug N.:
The tenant just posted on SmallerPockets.com:
Halp! Landlord just informed me that he won't subsidize my job loss!
Ha, good one! I just went to smallerpockets.com and it redirected to biggerpockets. Good job, @Jos
@Joshua D.undefined
- Hartsdale, NY · Member since 2015 · 874 posts · 218 votes10y
I would do many of the things suggested by BP members. In adition I might suggest she/he apply for a temporary Christmas job in a department store or home depot type of store while she continues to apply for a job in her field. I would also suggest she apply for emergency food stamps and public assistance.
This is probably, before Chistmas, a diffficult time to get hired for a new job in her field. If she does not pay her rent I would proceed with an eviction notice.
- Saint Louis, MO · Member since 2015 · 3 posts · 0 votes10y
Wow, at least she's communicating, which is good. This question goes out to anyone:
Would switching the lease to month-to-month be a possibility?
- Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes10y
Originally posted by @Diana Gladney:
Wow, at least she's communicating, which is good. This question goes out to anyone:
Would switching the lease to month-to-month be a possibility?
You cannot "switch" a lease to month to month. A lease is a binding contract that cannot be amended unless both parties agree
- Saint Louis, MO · Member since 2015 · 3 posts · 0 votes10y
@Greg H.
Hey Greg! Yeah, definitely not referring to just "switching" without speaking to the tenant. Definition of shady and illegal lol
My thoughts were more-so sitting down with the tenant and discussing amending the document in that way so that it's mutually satisfying. Just asking to see if it was an option a landlord could take, or is it only an option at the end of the current lease?
Join the conversationCreate a free account to reply, vote on answers and follow this thread.