We send them a note when they are 1 day late... We explain that they have 3 days to let us know the situation. We give them multiple ways to contact us(Phone, email, text)
We put the fear of god into them about what happens if we have to file eviction:
If you force us to use the court, expect the following:
** $114 court filing fee
** $250 per hour attorney fees, typically 2-4 hours = up to $1000
** Sheriff will deliver court eviction papers to your home and workplace.
** Your names will appear in the newspaper as SUED FOR EVICTION
** Your credit report will show an eviction, making it difficult to buy a car, higher insurance, higher utility deposit
** Court ordered garnishment of 25% of gross income
We tell them we aren't mad at them, and we know times are tough.. We tell them to call their friends, family, church, sell something, or lose the home....
We give them 4 ways to pay us.
If they tell us we will have it on the 6th, and we are okay with that(Owner approves), then we also tell them if they don't hold up their end, immediate eviction....
Most of all we "BE NICE!!!!!" https://youtu.be/ojPVOhHhwnk?t=1m40s
Now, if they don't follow through on their end, it's all over.. Off to eviction, and judgement hearing.. I don't want them ruining some other investors day without him knowing...
People who don't pay rent, become your charity... I prefer to give money to my own charities, not tenants.....
Finally-someone who gets it! What's the use of checking someones credit and history when there are so many people who subvert the system by letting a bad tenant extort money from them in return for a clear credit history!! Does that make sense, especially when there are so many posts about doing your homework and vetting prospective tenants thoroughly? It's nothing more than a selfish desire to make it easier on themselves and let them screw the next person they rent from! And when you don't create a public record of a deadbeat-that's exactly what you're doing; screwing the next landlord down the line. Thanks for pointing out the hypocrisy of some of the posters here.
We send them a note when they are 1 day late... We explain that they have 3 days to let us know the situation. We give them multiple ways to contact us(Phone, email, text)
We put the fear of god into them about what happens if we have to file eviction:
If you force us to use the court, expect the following:
** $114 court filing fee
** $250 per hour attorney fees, typically 2-4 hours = up to $1000
** Sheriff will deliver court eviction papers to your home and workplace.
** Your names will appear in the newspaper as SUED FOR EVICTION
** Your credit report will show an eviction, making it difficult to buy a car, higher insurance, higher utility deposit
** Court ordered garnishment of 25% of gross income
We tell them we aren't mad at them, and we know times are tough.. We tell them to call their friends, family, church, sell something, or lose the home....
We give them 4 ways to pay us.
If they tell us we will have it on the 6th, and we are okay with that(Owner approves), then we also tell them if they don't hold up their end, immediate eviction....
Most of all we "BE NICE!!!!!" https://youtu.be/ojPVOhHhwnk?t=1m40s
Now, if they don't follow through on their end, it's all over.. Off to eviction, and judgement hearing.. I don't want them ruining some other investors day without him knowing...
People who don't pay rent, become your charity... I prefer to give money to my own charities, not tenants.....
It just makes financial sense to give them a few hundred bucks to get out to retain a few thousand in lost rent and legal fees. Yes, it is frustrating to think about, but it is not about teaching them a lesson as much as it about making the best financial decision.
We get 50% who pay, 25% who just leave, and 25% we have to evict... The evict people wouldn't move out if you offered them cash for keys anyway....
In my market it costs me $314 to evict.. That's having my lawyer take them to court for occupancy, and then taking them to the judgement hearing... In most cases, I don't have to go... After we get the judgement I sick a collection guy on them, and he gets 35% of whatever he collects...
I understand what you are saying, but do you actually think that you are going to change their behavior? I agree it's just as bad as shoplifting and if the law would allow it I'd remove the tenants by the their neck myself, but it doesn't. For me it's a business and whatever is easier and cost effective makes sense. I could still be asked as a reference and tell other landlords then.
Unfortunately we live in a world where you wont be able to change the way society is. The entitlement mentality is getting worse and worse and like you said, some states have horrendous eviction laws. Im here to make money. Unfortunately its easier to see if someone will take the money and get out rather than destroy your house or live there for the next 3 months while they wait for you to do all the legal precedings
@Tracy D. I agree that the thought of living somewhere without paying is unimaginable to you and I, but it isn't to everyone. As Tim and Mike have also pointed out, once you are faced with a tenant that isn't paying, you have to make the best business decision. For us, that is to give them a little money to leave quickly and quietly. Avoid more missed rent, avoid potential damage to the unit, avoid headaches. Of course if they damage the unit, you can go after them for damages, but now you are looking at more time, more lost rent, contractor issues, scheduling, more headaches. Less money lost and less headaches most of the time outweighs the thought of paying someone that doesn't deserve it.
I've always figured it depends on the length of time and the cost it takes to evict someone. In my county it's cheap to file for the eviction (less than $100 for two tenants) and they typically get served notice within a week. They have another 7 days to respond and most don't (except to pay what is owed) so on the 8th day I go back and pay another $25 to schedule the actual eviction which typically occurs in about a week. So...I may be out perhaps a months worth of rent but I'm filing for a eviction because they aren't paying rent anyway and if I jump on the band wagon quickly theentire business is completed within the same month.
In other states that are tenant friendly I can see this entire business dragging on for weeks (or months) at a time with high filing fees and it could be understandable just to pay to deadbeats to get out, especially if there is a real concern about them doing great damage to the rental property with the treat of an eviction.
Gail
I have plenty of money sitting around. I wouldn't mind spending a few thousand on a bad tenants misery. Knowing their future rental prospects will slim (or they'll have to live in a slum) and that they'll possibly have increased liabilities from the judgment and lost wages from having to appear in court AND possibly a garnishment? Makes me feel all warm and fuzzy inside.
Hell, text them a picture from Costa Rica and wish them good luck in court.
@Sean Kuhn (and others who seem to be just out for the money) Read my post-if you do not create a public record-you are screwing the next landlord. It has nothing to do with pride. Why are you on Bigger Pockets? This is a network of landlords helping other landlords, not "every man for himself". Submitting to extortion doesn't help the next landlord-it just rewards bad behavior and creates an inaccurate credit record. It's the same as the deadbeat tenant who gets something for nothing. What does your membership get you? I only wish that the next tenant some of these extortion victims get is the one with the clean credit record who has milked the "cash for keys" to death!
Is the credit check the ONLY way you screen your tenants? If so, you need to up your game. Call the last 2 landlords and you'll get your answers. In high-cost states it is not wise to throw away years of profit for a unit to try and change society, particularly because the receiving landlord is on BP and has learned that proper screening is more than just a $35 fee...
Agree in theory, but in a tenant-friendly area like Chicago, you have to choose your battles. An eviction can cost you thousands of dollars and worse yet, the landlord might still have to pay for the tenant's legal fees. Not to mention the opportunity cost from having a non-paying unit. Screening is absolutely the best approach, but if you find yourself in a situation where you must get a tenant out, you can make a sound business decision or lose money based on principles. Also, if you're repositioning a building and looking to evict a tenant out of their home of the last 10 years, you're probably going to be met with some resistance.
As far as helping the next landlord, it's up to each landlord to call references and if anyone ever called me I would provide them with the relevant info they need to make a decision. If a tenant has gaps in residency on their application or don't list the landlord's contact info, that's a red flag. You don't need to see an eviction on their public record to properly screen.
99% of the time I put my business first. Compassion is not something I allow to effect my decisions if it in any way will impact my bottom line financially. There are may groups and types of applicants that I will not ever consider renting to because they pose a higher risk to my business interests.
However I have never and will never cave to extortion or consider bribery as a bases for any business practice. I consider any tenant that is refusing to pay me my money no different than someone who willfully steals. They are criminals that unfortunately the criminal justice system is not interested in perusing. I do not support or encourage criminal activity in any form. I do not support landlords that operate their business based on their justification for supporting criminal activity. When a landlord caves to extortion or resorts to bribery they reinforce that behaviour and make it more difficult for me to do business. Another tenant has been rewarded for criminal activity. I am forced to continually up my game to screen out bad tenants they are encouraging/creating through their actions. This is a difficult business made more difficult by this type of action on the part of some landlords.
I don't like what they create when they pay off criminals to protect their bottom line, I understand putting the bottom line first, but surprisingly even I draw the line at being a party to what I consider, in my business, as criminal activity.
No support from me for landlords with that mentality.
I have only offered to do cash for keys once and it worked out beautifully. The tenant had stayed for several years and I thought we had a good relationship. He gave proper notice that he was leaving but didn't move out when he said he would. When I called he surprised me with an ultimatum. He said he knew it would cost me a lot of money to evict him so he wouldn't leave unless I paid him. He said it was "just business". He was right. I don't recall what I agreed to pay him but I did agree on condition that he return the house in clean condition. We set a time when I would come by to inspect the house to make sure it was clean and, if it was, to give him the check. I arrived at the agreed upon time and found a moving van in the driveway. The house was clean but the tenant had not finished loading the van. He asked for his check. I pointed out that he wasn't out yet. That I would only pay him after he gave me possession. He said he would need a few hours. I instructed him to leave the keys on the counter after he had finished moving and to call me so we could arrange another meeting. When he called I thanked him for leaving the house clean and expressed my disappoint that he had chosen this path. He demanded payment. I explained that our agreement was that he would be out of the house at a certain time. I was prepared to honor that agreement but he did not perform. I did not pay him.
Is the credit check the ONLY way you screen your tenants? If so, you need to up your game. Call the last 2 landlords and you'll get your answers. In high-cost states it is not wise to throw away years of profit for a unit to try and change society, particularly because the receiving landlord is on BP and has learned that proper screening is more than just a $35 fee...
Whats the point in calling the last two landlords?
You can find burner telephone numbers across the internet, and you just need a friend to answer and pretend that they were the previous landlord.
How does that help you?
It doesn't. If you are forced down the eviction route, then it needs to be in public records.
Agree in theory, but in a tenant-friendly area like Chicago, you have to choose your battles. An eviction can cost you thousands of dollars and worse yet, the landlord might still have to pay for the tenant's legal fees. Not to mention the opportunity cost from having a non-paying unit. Screening is absolutely the best approach, but if you find yourself in a situation where you must get a tenant out, you can make a sound business decision or lose money based on principles.
You don't get it.
First you argue that it makes good business sense, and then you laud the fact that you need good screening - yet you fail to understand that you are undermining the screening process!!!
With the way I screen tenants, the public record is not the #1 weighted check. In my book, you're doing it wrong. If it costs an owner $5,000 to remove a tenant on a property that profits $200/month, they just lost over 2 years of that property's value. That is foolish. If you cannot glean that they are bad from the other aspects of your screening process then they are either AMAZING at conning, or you fail at screening. That is THE reason why you have multiple checks.
It's a bit ridiculous to tell others to ignore common business sense rather than improve their business. Once they reach the level of success that can support losing income in those amounts, then it may be useful. You mentioned charity. Right now, that landlord may choose to contribute their money to a charity that they choose rather than donate it to subsidize landlords that neglect the more important parts of the screening process.
Theoretically, your idea works beautifully. In reality, it's garbage for the low door-count investor.
With the way I screen tenants,
How can you screen tenants effectively, if landlords like yourself subvert the screening process for other landlords?
Sorry, but this gets up my nose. You tell everyone to screen yet when it comes down to protecting fellow landlords by getting an eviction on these people so that they can screen effectively - you run for the high ground on a dubious argument "good business sense".
You are laser focused on ONE piece of a 5 or more part check. If you feel that is the only way to screen and you aren't capable of doing the rest of it, then the problem is with you. This is business first, utopia second. Failure to have a screening process that overlaps areas of coverage is foolish.
I have never had the issue, and it is not expensive to evict in CO so I would likely follow the eviction process without offering cash for keys. But in those other States it is ridiculous to assume that people should pay that price.
Yes I am focussed on one piece of information - a public records statement that a prospective tenant was evicted. This is the MOST important piece of information in a new application for a house. To me, and many landlords, you could be Mother Teresa, but you show an eviction, and your application is shredded on the spot.
An eviction does not show that you did not pay - it shows that you did not LEAVE.
By not using the proper channels - you are merely stitching up the next landlord by depriving them of information.