Late paying tenants any advice ?

10 Replies

I have a small two unit property in a bad part of Brooklyn. I have had two tenants there for the last two and a half years. My problem is that they both keep paying late. One of them is month to month the other is on a lease. I am tempted to evict the month to month tenant , the problem is that New York is a tenant favorable state , the city  will pay to defend a tenant against the landlord, which means that I could be tied up in court for months . It took me eight months to get a prior tenant out, and he only left after the marshall's notice, I didn't recover a dime and it cost me over $6K in legal fees. My question is ,should I evict this tenant knowing I will be take a huge financial hit , and if not does anyone have any tips on how to make tenants pay on time. I have tried charging a $25 late fee but this doesn't seem to phase this particular tenant , she just ignores the late fee

If the stick is not working, try a carrot.   

Assuming you do not have rent control, raise the rent by $50/month, but rather than a late fee, offer a rent reduction - say $50.00 ;-) -  if rent is paid on, or before, the day it is due.

We always start the clock ticking on the required Notices in our jurisdictions right away with the assumption we are headed towards eviction until the tenant pays.

Personally, I would find a way to get them on track and then sell the property so I could invest in an area that doesn't favor tenants that violate contracts. You would be better off financially if you invested in a tenant-friendly state and hired a good property manager. More money in your pocket and far less stress.

@Michael Plante the month to month tenant sometimes goes up to three weeks, the most recent trick is to pay a portion so she is supposed to pay $1000 on the first she paid $400 on the 11th. Every month I have to email her , and she never responds directly , she pays what she wants when she wants. The other tenant also pays late , but he's better because he makes an effort to communicate and he pays it when he says , its just that instead of paying on the first he pays on the 23rd

@Marie-therese Tai If they tenants were to leave the property, how quick could you put in a new tenant? It all depends on what you really want to do.

It sounds like, if you were to get new tenants this problem would most likely to still occur. 

You need to  look at how much time you're putting into this property. See at how many hours you're putting in managing the property and chasing down the rents. If you're taking several weeks to chase down a couple hundred dollar's it might not be worth your time.

You might want to look into selling the property and freeing yourself from the headache. 

However,

If you think that you could get better tenants and it'll get better in the future then maybe hold onto the property.

You'll want to avoid evictions and they can be costly to you. 

An idea, could be to offer the tenant money to move out. Offer to pay them $350 +/- to move out by the 'said month'. Make sure you get it into writing. Odds are they'll love that you're offering them free money. 

You now have avoided the extra litigation and have saved yourself some money. Now you can go and get better tenant's.

This is just a suggestion that could be helpful. 

I hope it all works out for you:)

@Marie-therese Tai she pays "what she wants when she wants" because you accept it. Over and over again.

You need to reset the clock and start fresh. Make sure you know the law inside and out. Write your tenant a simple letter that states you are no longer allowing them to pay "what they want when they want" and that you expect them to pay on time in accordance with the lease. The first time they are late, hit them with their notice. If the law allows you to file a 3-day Pay or Quit on the 2nd, then file it on the 2nd. Even if the tenant tells you they will be in to pay on the 3rd, kindly respond that you appreciate them giving you notice but you will still file the 3-day Notice on the 2nd. Period.

Charge the late fee as soon as your lease/law allows.

Start the eviction process as soon as your lease/law allows.

Treat it like a business. Don't accept excuses. Don't call and ask the tenant where the rent is. Don't call and remind them when it is due (they already know). Don't email or text them.

They know when rent is due and they know where to pay it. Follow the lease.

Since you're in NYC you want to avoid the housing court system at all costs. It takes way too long and the tenants have way too much power. They can drag the process on way longer than 8 months if they wanted to. All they need to do it make an excuse to postpone the hearing or accept the deal given before the trial and make an excuse as to why they can't meet the terms of the deal and the courts will offer them a new deal. Its absolutely ridiculous. Even after you get a judgement unless the tenants have money in their bank or own something you can put a lien on you're not going to be able to collect. 

Since your tenants are at least paying I don't think they are at the point where they're trying to game the system. As soon as you start the eviction process they are likely to just stop paying altogether. Do you know if they own anything you can put a lien on, do they pay via check? if so you can try to collect from their account after the trial. Sorry I don't have an actual solution. Its just with NYC being how it is the landlord always get the short end of the stick.

@Matthew Baltzell , not much time, pretty much the end of the month is when it's a problem. They won't move, it's priced below market , I think they know they wouldn't get something within that range, I priced in low because this is one of the less salubrious areas

@Nathan G. You're absolutely right

@Bin Chen Yes, I've already been to housing court with one bad tenant, it was a nightmare, the only smart thing I did was refuse to renew the lease, this tenant is month to month, if push comes to shove I'm hoping it will make it a teenier bit easier to get her out. I just can't afford the hit right now

@Marie-therese Tai as @Nathan G. mentioned this is about training tenets on what you will allow.   Now I am not familiar with tenet rights in New York but I have found a couple of things that have worked well for these types of situation:

1) I write the lease with a fixed late fee $25 after first as well as a per day fee for everyday after the third at $5 a day.   This helps to align incentives as if you just have a fixed late fee what is there incentive to pay once it is late until the next month?

2) Be clear on process and follow it to a tee every time.   For my properties Rent is due on 1st late on 3rd, we post on the 6th and file on the 9th.   It is amazing when they see you following through how quickly it turns around.

3) Last step is we don't allow for partial payments to avoid situation of not being able to file for that month as we have collected rent.   This also helps us to make eviction process very easy on any tenets we have been having problems with by sticking to the process and having it work for us.

Hope this help,
ART