Non-performing Tenant: What Would You Do?

Question

Here's the scenario. One of my tenants has been 2 - 3 weeks late on rent (pays the fee though) ever since she moved in mid-march. In hindsight, I see what I did wrong, but can't change that now.

My tenant on the other side of the duplex is going to school to be a doctor and pays like clockwork. She's amazing, and referred me to one of her peers in med school. He shows promise to be a great tenant as he says he can pay 6 months rent up front and have a co-signer since he relies on school stipends for income. He's very different from the "riff-raff" in the neighborhood. He's available to move in end of May into the unit with the non-paying tenant (which is about when the eviction process would complete if I evicted the non-paying tenant).

Today is the last day of the grace period in my county/state. Should I offer to give her 14 days to leave, (or evict/  negotiate with tenant / cash for keys), assuming she doesn't pay today, and place the med student? Or work harder to keep the non-paying tenant to save turnover and vacancy costs?

What would you do?

Nathan Gesner · Answer

Follow the law and head toward eviction. If she pays everything and gets back in your good graces, rinse and repeat. You will either train her to follow the lease or scare her off.

I don't mean to insult anyone but "cash for keys" is a loser's game. I suppose you can come up with some hypothetical situation where I may agree it's a good idea, but the reality is I manage 230 rentals and never, ever pay anyone to leave.

Develop processes, keep them tight and legal, and follow them.

Stephen Haynes · Answer

since they do pay every month but late and they do pay the fee I would just ask them nicely to leave and offer cash for keys if they didn't want to move. I had a tenant like this before I moved the do date of the rent and they have not been late since that was four years ago they have been in the home almost six years and are one of my best tenants they keep it spotless and give me zero headaches. I talked with them to find out why they were late every month and it was that they got paid on the tenth and paid only once a month  so I moved the do date to the 11th with no grace period and it has been great since.

Thomas S. · Answer

You should defiantly be getting rid of this tenant. Had you trained her right from the beginning this would not be necessary but now is too late to worry about that .

As Nathan says "cash for keys" is a loser landlord approach. It is never necessary and just a waste of money used by landlords too lazy to do the job right. They will argue it is faster and less expensive but this is very rarely the case. Follow the proper legal process and you will probably find she leaves on her own. Give her a voluntary date that meets your new tenants requirements and tell her you will withdraw the eviction.

Also do not make the mistake of accepting any advance rent payment. Tenants pay by the month. You do not need to accept bribes and never should, there are legal implications making it unadvisable.

Nicole A. · Answer

You can always change what you've done wrong by starting a new behavior.

I think moving the due date, as someone above suggested, only makes things harder for you because that's one more thing to keep track of when really, it is no surprise that rent is due on the 1st....pretty much everywhere.

Also, in this instance I would not offer cash for keys.

Big question is, besides the late rent, how do they keep their unit? Is it clean and tidy? Not damaged? Are they a neighborhood nuisance? If these questions have the answers you want, I personally think it'd be financially better to keep her. You get late rent, but you also get extra money in the form of a late fee. And if you're filing for rent court/eviction, she is also reimbursing you for that (or she should be!).

Allan Smith · Answer

Yes, I am surprised to see that there's two strong opinion sides here. It actually makes me feel better that I was on the fence in the first place!

As a little update, against all odds, she paid within the grace period yesterday. She went from 3 weeks late to within the grace period over the period of 3 months. Very unusual. Looks like I have no choice but to keep her this month, thus, I'll miss getting the med student. Looks like I'll be working with her to train her better in the coming months. A good learning experience and hopefully she'll become like one of the cases described above where she ends up paying like clockwork.Thanks for the input, everyone! Each opinion was very useful to give me ideas.

Mike D. · Answer

I would keep giving them the late notice and collecting the late fee forever. Isn't that what the late fee is for? Push out the wear and tear on the paint, carpet and everything else for as long as possible. And with their bad payment history their options are really limited as finding a new place.

Steve Babiak · Answer

What type of lease do you have with the late paying tenant? If month to month, then you can just give notice that you are terminating tenancy in accordance with the lease and local landlord tenant regulations. If longer term than a month, then you have to deal with the tenant you have until the tenant breaches the lease and can't cure, or until the end of the lease term. But by then your other tenant's friend will probably have moved elsewhere.

Matthew Rogers · Answer

I think it comes down to what you are willing to deal with and what you feel is the best option. Reading the prior comments the decision is split down the middle. If your long term game is to try and rent all units to other med students and hopefully use them as a referral source when they graduate I think the best option is to move towards that goal as quickly as possible. See if she is open to vacating on her own within the 14 days and get it in writing.

You never know her situation until you dig deep with questions and find out why she is really late. Maybe she is looking to move but just is scared to talk to you about it. Have a civil conversation with her and make your decision from there!

Thomas S. · Answer

I would choose to get rid of the tenant, Why live with a tenant that will continually make your life more difficult.

Non-performing Tenant: What Would You Do?

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