Tenant hit a snafu, moving to weekly rent payment plan. Opinions?
Investor · Plano, TX · Member since 2014 · 188 posts · 149 votes
Tenant hit a snafu, moving to weekly rent payment plan. Opinions?
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Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
10yIn my experience once a tenant falls behind they never catch up and even if they do they end up falling behind again and again. It's a cycle no matter how creative you try to be with a payment plan.
See if you can work something out with him to get him out if he is reasonable.
27 Replies
- Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes10y
Assuming you vetted this tenant when he moved in and all was well then AND you would like to keep him:
- is this temporary and will soon recover?
- have you a timeline for him to get back on track? Otherwise, the balance due will just continue to grow.
Otherwise, consider a Cash-for-Keys surrender to get possession back with minimal losses (ie balance still outstanding).
- Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes10y
In my experience once a tenant falls behind they never catch up and even if they do they end up falling behind again and again. It's a cycle no matter how creative you try to be with a payment plan.
See if you can work something out with him to get him out if he is reasonable.
- Investor · Plano, TX · Member since 2014 · 188 posts · 149 votes10y
Thanks @Jeff B., you're right. Once a tenant is behind they never catch up. So my weekly plan (with the 12% upcharge) is designed to help him get ahead. After a month, he would've paid $150 more. After 3 months, he would pay me $450 more and any delay should give me grounds to evict for non-payment.
- Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes10y
You may be able to work with the tenant if it is indeed a temporary situation. For being flexible, it should benefit you too financially. For example, if the rent is $700 per month, you could consider setting it up as 4 weekly payments of $200 each. But don't change the rental agreement, just write an addendum with a clear time frame. Include the exact dates payments are due and the amounts due on those dates.
- Investor · Plano, TX · Member since 2014 · 188 posts · 149 votes10y
Yup! You're right @Marcia Maynard
The current rent is $1125 and I'm going to charge him $300 a week. which averages to $1200 to $1250 a month. I always think, what's my motivation to accommodate him. Good idea on the addendum with a timeline. I think there's a silver lining in every crisis!
- Investor · Cathedral City, CA · Member since 2014 · 481 posts · 170 votes10y
Originally posted by @Mike Makkar:
I'm trying something different with one of my tenants. He's been low-maintenance but has fallen behind on his December and January rent due to some personal issues. He got his December rent current (albeit 40 days) and got half of his Jan rent on track. I noticed that he lives on a weekly basis (expense reports and bonuses). So, given the humanitarian, I am, I'm trying to work with him for a weekly payment plan with a 12% upcharge.
Anybody have any opinions on this? Anything that I should watch out for with a weekly payment as opposed to monthly? I've sent a LATE NOTICE and threatened an eviction already, but weighing the economic downside of an eviction, I felt this would be easy on both of us. Thoughts?
Are you a landlord or a lender?. Landlords get rid of the tenant. Lenders chase the debtor. What are you?
- Investor · Plano, TX · Member since 2014 · 188 posts · 149 votes10y
@Jeff Gates, Haha, I'm a landlord. Why? Does my approach seem like a lender?
But I think of myself as an entrepreneur more than anything else. Although, this particular tenant was frustrating, I saw an opportunity in this to allow for a weekly payment plan. Also, since I own these properties free and clear, I'm also thinking of doing owner financing for these properties to allow my tenants to eventually move in.
- Investor · Cathedral City, CA · Member since 2014 · 481 posts · 170 votes10y
Originally posted by @Mike Makkar:
@Jeff Gates, Haha, I'm a landlord. Why? Does my approach seem like a lender?
But I think of myself as an entrepreneur more than anything else. Although, this particular tenant was frustrating, I saw an opportunity in this to allow for a weekly payment plan. Also, since I own these properties free and clear, I'm also thinking of doing owner financing for these properties to allow my tenants to eventually move in.
The world has many tenants. Find a good one!
- Real Estate Investor · atlanta, GA · Member since 2013 · 456 posts · 237 votes10y
Depends on how long he has been a tenant with you and the history. Most times when you help a tenant, you should expect to get kicked in the shins. It's hard when you have a good heart but remember, it's business. You don't want you renter thinking of you as their bank...and many of them will. However, if you spell it out in an addendum but also add a clause that if they fall behind again then the waive their right to an eviction and will immediately vacate & hand you the keys upon demand. No - it's not enforceable but they will usually agree to it. At that point, you tell them you don't want to file and eviction as it will go on their credit and keep them from renting another place.
We did about 12 workouts in 2015 and the majority of them did stay up with their payments and continue as renters with us. One, in a very high-end shared home, lied to us every time we saw her. We ended up evicting her and getting a judgment against her. This is all shared housing though so we tend to have a more personal relationship with our renters. When we did all single family rentals, our success rate on workouts was very poor. You have to be a cynic but it's smarter if you are in single fam rentals. It also pays in those situations to just pass yourself off as management and not the owner....you tend to find out the real deal when you work for the man...as opposed to when you are the man. Plus, you can always say you have to answer to someone. Let us know how it works out for you.
- Investor · Plano, TX · Member since 2014 · 188 posts · 149 votes10y
Hi @Andy Luick
Thanks for the feedback. I realize allowing for a weekly workout is inviting more trouble later on. However, my interest is two-fold. Beyond the "heart", I'm exploring ideas around weekly/monthly short-term rentals in certain segments in my market.
BTW, I saw the business model of your profile and its certainly impressive. I'm interested on how you sell-off a "stabilized" tenant occupied SFR. I'll PM you.
- Investor · Denver, CO · Member since 2015 · 570 posts · 521 votes10y
Originally posted by @Mike Makkar:
Yup! You're right @Marcia Maynard
The current rent is $1125 and I'm going to charge him $300 a week. which averages to $1200 to $1250 a month. I always think, what's my motivation to accommodate him. Good idea on the addendum with a timeline. I think there's a silver lining in every crisis!
I don't see any benefit to this. As was stated, once it starts... it's likely to continue. Raising the financial bar on him sounds like it is only going to create even more likelihood to him falling behind again and again. I'd keep it monthly, just do whatever work out you want to do to get him current and stick to your current monthly terms to deal with him if he gets late again and then consider a guaranteed solution if that keeps happening, which is eviction, Screw cash for keys and all the work arounds you're looking at. It's a pretty simple process to rent a property and to pay rent for it. Everybody does it every day. Once you change to trying to fit your tenant the square peg into your round hole of a rental process you're getting away from the norm of what works trying to make it work which is just a temporary solution.
Being paid weekly or monthly is his problem, he still ends up with the same amount of money every month, as a landlord it's not your problem and getting greedy with a markup on the rent to justify all this is just a rationalization making you lose focus on the real problem which is you have a tenant who is spending more than he makes and choose you to be on the bottom of the hierarchy ladder to who gets paid first.
- Visalia-Fresno, CA · Member since 2009 · 1k+ posts · 863 votes10y
Collecting rent 4 times a month would be like owning 4 properties. Stick with once a month payment and buy 3 more properties.
Frank - Investor · Plano, TX · Member since 2014 · 188 posts · 149 votes10y
@Franklin Romine, collecting rent?
My tenants just deposit into my bank account or they just ACH.
Hmm, I'm beginning to see how all landlords stick to standard rules when it comes to these things.
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes10y
Some people are just poor money managers. If it is not enough income that is one thing you can't solve as a landlord.
If it's they make enough but priorities are wrong then you can try to condition the tenant otherwise.
I once sold a 60 unit for a client. That part of town was factory workers. They get paid weekly. So even though most were on a lease it operated more like a hotel where rent was collected weekly.
If you waited until the end of the month the tenant would have spent some or all of the rent money on booze, entertainment, etc. So they had the money you just had to get it from them before they spent it all on stupid stuff. If tenants balk at the extra fees one way is to tell them for having to take multiple payments a month you have extra bookkeeping costs which have to be paid for.
- Wholesaler · New Westminster, British Columbia · Member since 2013 · 39 posts · 3 votes10y
People don't change their habits unless they change their psychology. And that is not likely to happen. That tenant will continue the same behavior regardless of the arrangement. In one of my SFR rentals a family of three adults got together to share the rent, and still were late paying it every other month.
- Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes10y
Originally posted by @Jeff Gates:
Originally posted by @Mike Makkar:
@Jeff Gates, Haha, I'm a landlord. Why? Does my approach seem like a lender?
But I think of myself as an entrepreneur more than anything else. Although, this particular tenant was frustrating, I saw an opportunity in this to allow for a weekly payment plan. Also, since I own these properties free and clear, I'm also thinking of doing owner financing for these properties to allow my tenants to eventually move in.
The world has many tenants. Find a good one!
The trick is to find a good tenant who doesn't go bad. As many landlords found out back in 2007/2008 and the years following, there's really no such thing, especially when the economy goes into free-fall.
David J Dachtera
"Success is not a destination. Failure is not an event. Success is a process, failure is a choice."
- DJ Benedict - 10yJennifer T.Pro MemberInvestor · New Orleans, LA · Member since 2014 · 1k+ posts · 944 votes
I don't necessarily see it as a bad thing if it results in more money for you. I have only had tenants once who paid by the week. I quickly saw the negative to that. It's not just once a month you are collecting the rent, it is 4-5 times a month you are collecting the rent.
Although they were good tenants overall and I was not out any money when they moved out, there were a LOT of weeks when I had to send reminder text messages on Tuesday (rent was due on Mondays) to bring the rent over.
It gets annoying and I started feeling like a nagging mother instead of a landlady, lol.
- Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes10y
I believe that sometimes you have to bend a little and work with your tenants. If he's been a good tenant and this seems to be a temporary set-back for him, but if you feel that the weekly payment into your account will work, then it'd be a win-win for everyone.
Also, if he can handle the weekly payment, he'll likely stay much longer, because it'll be hard for him to find another landlord to do it that way.
There's always cost involved in tenant turn-over, so this will save you money, if you and your tenant can make it work.
- Real Estate Broker · Columbus, OH · Member since 2015 · 205 posts · 62 votes10y
I agree with a lot of the points the commenters have made. The one thing you can never tell, though (even after you've screened well), is whether your tenant shows you their best side and then after awhile, begins to lie their way through the rest of the lease. A landlord friend had a doozie like that--great tenant on paper, steady job, apparently decent rental history. A good 4 months and then the wheels fell off. She wanted to change the rent payment date every month and gave loads of excuses why; the landlord agreed 2 or 3 times because, like you, she had a heart and realized we all go through personal crises. Then the tenant just stopped paying altogether and blamed it on the landlord's failure to do maintenance she'd allegedly requested. And the tenant had the same job the whole time. Long story short, it was an ugly eviction followed by the landlord's small claims court case, and the tenant kept texting the landlord afterward in a creepy manner. The point is to always be cautious when you consider giving a little to make it work. Good luck!
- Phoenix, AZ · Member since 2015 · 345 posts · 138 votes10y
Like David said above me, I agree with a lot of the points mentioned. To me what it comes down to here is trust and that is difficult to gain back after they break the agreement (not paying on time) no matter what caused it.. Sadly. For me personally I couldn't afford the risk and would be in overdrive getting the systems I have going to take care of that soon to be vacant unit (as long as I am within my rights of the lease of course).
If the tenant was a long term tenant with no blemishes in the past with me and my finances are excellent then we'll sit down and talk for a while to get a good understanding of what is going on and how we can help each other IF we can at all.. Super tough industry to be nice in from what I am reading. Still learning myself. Good luck!
PS: The thing that scares me is that this can go on for another 2 or more months if next week doesn't work out.... Possible unreliable income for that long and it still leading to an eviction/courts/expensive? Tough spot.
- Investor · Ponca City, OK · Member since 2016 · 46 posts · 15 votes10y
Originally posted by @Mike Makkar:
I'm trying something different with one of my tenants. He's been low-maintenance but has fallen behind on his December and January rent due to some personal issues. He got his December rent current (albeit 40 days) and got half of his Jan rent on track. I noticed that he lives on a weekly basis (expense reports and bonuses). So, given the humanitarian, I am, I'm trying to work with him for a weekly payment plan with a 12% upcharge.
Anybody have any opinions on this? Anything that I should watch out for with a weekly payment as opposed to monthly? I've sent a LATE NOTICE and threatened an eviction already, but weighing the economic downside of an eviction, I felt this would be easy on both of us. Thoughts?
LOTS OF VARIABLES TO CONSIDER... I would have to love the tenant to do it. Of course if he is taking good care of your unit, to catch up, you might just tell him "I need x% more per week and then by month y"; Create a schedule that he is confident he can do, and have him sign it. You could also try KEYS IN LIEU OF EVICTION so that if he gets behind by $xxx, he will move out and return keys.
I actually lowered rent for a tenant who had a job change. Three years in, they came to me and said they were probably going to have to move out, because she got laid off and new job paid less.... things i considered: They kept the place CLEAN. (They were into goth, black hair and nails, tatts, etc, but GREAT TENANTS... picture of them with grandma on the wall :) I had to consider the month or more rents lost if they left.. they leave end of month, i can't do a turnaround in less than a week or two, so by the time i advertise and get a new occupant, 30 unpaid days blew by. I have costs to clean/paint/whatever, OOPS WENT IN THE HOLE ON THAT ONE.
CONSIDERATIONS....Do you have a good security deposit? --If he pays weekly, you only hold "one week" advance rent, not four. I would re-write his lease for a shorter period of time and spell it all out so you aren't giving up any of your legal rights. Make sure he still has to give you 30 day notice if he's moving out. If you do the weekly rents, he will automatically need to pay higher rents to cover "nuisance" "additional book keeping" "time spent". BUT... Don't forget, if you divide his monthly rent by 4 to set his weekly payments, you already gross more... instead of $9600 ($800 x 12 months)for a year, since there are actually 4.3 weeks in a month, you now gross $10,400 ($200 x 52 weeks). To lessen your time required in this deal, i would try to do auto draft from his pay to my rents account, or make him deposit his rent in your account so all you need to do is go to online banking and you know it's there. I have also done a month where i did paypal for rent.
- 10yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Mike Makkar 52 weeks X 300 = 15,600...
12 months X 1200 = 14,400..
hm. maybe all your rentals should be by the week
shared housing is very tough unless its collage kids with parents personal guarantee any other venue and your asking for a cluster
- Investor · Plano, TX · Member since 2014 · 188 posts · 149 votes10y
Yup, short-term pricing markup strategy. Actually the monthly rent is $1125
1125 x 12 = $13500
300 x 52 = $15600 (13% markup for the service is more than fair)
@Bonnie Rakes, good ideas. Yes, i wrote up a new lease addendum and planning to give it to him tomorrow. Yes, I've considered the 1 week advanced rent vs. 1 month advanced rent. It will take 4 months to get him to a 2 week advance (for the up charge) and that will be covered through the security deposit. Any delay in rent starts the clock and grounds for eviction. Lets see, I wanna see how this arrangement works out. I have enough of a buffer to play this "rental speculation" idea.
- Investor · Century, FL · Member since 2015 · 950 posts · 603 votes10y
Ok, so let me get this straight, the guy is struggling to pay rent so you're taking advantage of the tenant and his situation by putting his rent up and making it more difficult to keep a home?
How do some of you sharks sleep at night? Yes, the tenant is most likely going to default, and I know we're not in the business of social housing, but don't any of you have any humanity left?
- Investor · Plano, TX · Member since 2014 · 188 posts · 149 votes10y
@James DeRoest, Hmm, read the first parts of the thread where I ask for other landlord's opinions. My "humanity" lies in the fact that I'm not going to evict him for delaying his January payment and pretty soon his February payment. The 13% ($19) markup is my "service fee" to act like a bank so instead of him advancing 1 month's rent, I'm giving him a break to advance rent on a weekly basis.
Sure I could demand him to get a payday loan to pay his monthly rent or else face eviction. For $1125, he would be paying payday loans, $170 in fees in one week. I.e if he pays them back in time. So in other words a whopping 600% apr!
The tenant has agreed to my terms and I have disclosed that instead of $1125, he'll be paying $300 a week ($1200 for 4 weeks) and he is fine with it. I think I should be able to sleep peacefully.
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