MTM lease pay every 14 days?

Question

I have an inherited tenant who would like to make bi-weekly payments.

It would be something I am interested in doing namely because after a year, she will have paid an additional month's rent (26 payments/2 = 13).

However, just wondering if having 14 days payments in a lease will make it more difficult to proceed with an eviction process? I wouldn't have approved of this particular tenant, but when weighing the cost of turnover, I think its worth putting her on a month to month lease to give her a chance.

Any one else who does biweekly payments? How do you set this up in your lease?

Brent Coombs · Answer

@Timothy VanWingerden, in the twenty first century, I don't see why this should be a problem at all. There's no reason to not still require the standard month in advance, and then each subsequent fortnight you could get 1/26th annual rent (rather than 1/24th).

Or, if they prefer to pay the 1/24th fortnightly, why not give them the 12th month "free"?

[I'm sure that today's calculators can ensure that eviction could be equitable, dollars-wise!]

Timothy VanWingerden · Answer

When I sent them an application for my lease, I added the bi-weekly payment option; the tenant did not request this, but was interested in it when I made this option available.

As far as July rent goes, all my tenants are aware that I do not accept partial payments and rent is due on the first. Actually, I will be going by today to issue notice to pay or vacate for the ones who have not paid rent yet.

So in this instance, if I started her on a bi-weekly payment plan beginning Aug 1. I would request Full month rent due before the 1st, then every 14 days she can start paying bi-weekly. That means rent is paid in full at the beginning of each month.

If she cannot keep up with her payments, would these half payments slow down the eviction process? I know that whenever there is a partial payment, it slows things down because the tenant is "making effort" to pay. I know others do bi-weekly payment plans, so how do they protect themselves in their lease?

Nathan Gesner · Answer

It sounds like you bit off more than you can chew.

When a tenant starts negotiating payment plans, I get worried. If they want to make payments, have them pay the first month in full and then every 14 days after that. They will always have their full payment in before the 1st of the month.

I suspect your tenant wants to pay half of the July rent on July 1st and the other half on July 15th. That's unacceptable and, as @Thomas S. points out, an indication they are living on a tight budget.

Timothy VanWingerden · Answer

I should have been more descriptive in my post above. The main reason why I am "giving her a chance" is because I am not in a good position to handle this turnover at the moment.

I just acquired 2 quadplexes (first properties), and I will begin renovating a house I am under contract on while renovating another unit of the quadplex at the same time. With a full time job, and just entering into real estate and beginning to build my team, my bandwidth and capacity is maximized.

My thoughts were that I could get her on a MTM lease to kick the can down the road a bit while a regain some footing in the next few months.

Thomas S. · Answer

You do not prioritise "giving tenants a chance" ahead of your business. Cost of turnover is built into your business plan do not determine viability of keeping a tenant that is clearly at risk to avoid planed for expenses.

Asking for bi weekly payments is a indication that she is approaching her financial breaking point. You would be better off getting rid of her now and take the immediate expense of a turnover than face a more costly possible eviction. From this point forward you can anticipate payment issues, request for time extensions and ultimately falling behind and stop payments. Do not become a charity landlord.

You need to heed the signs and find a new tennat that you would approve.