Eviction at Christmas: Scrooge or Good Business?

Eviction at Christmas: Scrooge or Good Business?

Sarasota, FL · Member since 2018 · 14 posts · 7 votes

I recently (late Sept. 2018) purchased a duplex in FL. The property was fairly run down, i.e. overgrown yard, the occupied unit has window coverings consisting of aluminum foil and/or bed sheets/blankets, additionally, there is work that could certainly improve the unit, although the tenants expressed no concerns to previous owner or to me when I took over.  Basically, it is filthy, smelly and difficult to tell what the apartment actually looks like. Their side, 2/1, was rented for 700 with landlord paying electric.  (The story was the tenants were there for 5 years and always paid their rent the first of the month.) The other side was vacant and in need of some TLC.  During the purchase process I mentioned to the owner I would be having tenants pay their own electric and I thought the rent was low.  She apparently relayed this to the tenant because the existing tenant moved the electric into their name (the previous owner let them keep the deposit with the electric company) and agreed to pay 725.00.  I did NOT sign a lease with the tenant and there was no existing lease when I took ownership.  (I was also under the impression it was a couple and two children, since that point a mother of the female tenant has been revealed as living there).  I have been working on improving the property and have a tenant moving into the vacant side next week.  That side is a 1/1.  The rent is 750.00 plus electric.  

The existing tenants paid 725.00 the first week of October. The beginning of November they paid 600.00 requesting a week to pay the balance of 125.00 (by Nov. 10th).  I agreed. I asked on the 18th if they had the balance of the rent and was told no (mother's social security issue).  I have not received or been contacted about the rent balance and in less than a week another month will be due.

Since there is no lease, I believe I can provide them with a 15 day notice to vacate.  I do not want to continue with rent issues and prefer to improve the overall property.  My dilemma is timing.  I would greatly appreciate input from readers on the best way to proceed.  I am inclined to give them a 15 day notice this weekend and allow them to stay through the end of the years provided they pay, in full, the rent for December and remainder of November.  Personally, my thoughts are conflicted because of the two young children and elderly mother, despite knowing this is a business and they are responsible for their actions.  Thank you!!

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Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
7y

Does the bank give you a break around the holidays and allow no payment in December how about the insurance fees and are your taxes free at Christmas ? The bills don’t just go away because it’s the holidays so why must your income be allowed to subside when the expenses stack up  ? This is a failing business strategy but I understand it’s a tough choice . Nobody said landlording was easy. When families are involved it complicates business decisions and that usually means less money in your pocket . 

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  • Patti RobertsonBusiness Member
    Property Manager · Virginia Beach, VA · Member since 2016 · 2k+ posts · 2k+ votes
    7y

    If I were you, I would have a heart, but only if there was a real way I could get paid at least most of my money and only if the tenant was honest and cooperative with me.  I’m willing to put in some effor to saving a tenant, which is good for them, but also good for me.  

    Have you had them complete an application? That’s always the first thing I do if I don’t get that from the person we purchsed from or if the tenant has been there a long time.  I explain we aren’t going to run their credit (no point since they are already living there), but I do verify their income and check our court records for criminal and civil activity.  Seeing their sources of income will generally tell you a lot.  Do they even have enough income to stay current?  Do they have garnishments sucking up their income? If they do look like they can afford the place, tell them you want to help them figure out a way to budget so you can let them stay.  Ask them to gather up their current bills and proof of income and schedule an appointment with them.  Have them review the list of their monthly expenses, and then question them about what they are missing until you feel you have a pretty accurate assessment.  Add up their income and subtract all expenses to see what you have left.  If it is more than a few hundred dollars, divide the excess in half and ask if they are willing and able to pay you this amount extra every month until they are caught up AND keep all future rent current.  If they say yes, I generally calculate out a payment plan that has them pay me something every payday and determine if every payment is made, what day they will be 100% current.  This keeps them on a shorter leash and is an easier way for them to budget. If they don’t make the first or second payment, you know it isn’t going to work, and can sleep soundly, knowing they were able, but not willing to pay you. Sometimes they will surprise you and get current.  Some tenants just don’t know how to budget and with a little guidance can stay on track. I have taken over management from owners with tenants as delinquency as 6 months who have been able to get completely current with this process.

    I know some people will call me soft.  I feel my choice is a good business decision.  It is worth the investment in a little time to try to see if a tenant has the ability to get current rather than immediately pull a trigger and create a vacancy and a need to prep a unit. We are renting to people, not animals.  Unless they have proven to be a liar, thief, or con artist, I feel people deserve the benefit of the doubt and am willing to invest a little of my time teaching them a life skill that doesn’t get taught in school and clearly is not taught in many households. I will not tolerate or work with liars though.  

    15 days seems like an awful short notice time.  I don’t think it is even in your benefit to have them out that quickly.  There is no way they can find a place, get moved, and get your place prepped for turnover back to you in 15 days.  No one could, much less someone on a low income.  Tell them to call the Red Cross and United Way.  They will help people who are getting ready to become homeless. Not in 15 days, but they may be able to at least get a promissory note saying they will send you money in 30ish days.

  • Escrow Officer · Yeadon, PA · Member since 2014 · 38 posts · 14 votes
    7y

    I would be inclined to contact the tenant directly and have a conversation with her about her late balance and her intentions on moving forward. Call the tenant or stop by for a visit if your call is unanswered. If this were a situation where she paid $125 and owed the $600, I could understand being more motivated to evict them.  

  • Member since 2016 · 13k+ posts · 12k+ votes
    7y

    My guess is that now they are paying electric they can no longer afford the rent. They will likely need to leave. The question is if you put them out immediately will you start the reno and get it back on the market or will it sit waiting for the work to start.

    It comes down to the money when making business decisions. I have found that trying to work with tenants very seldom is to a  landlords advantage. Once they fall behind they are already making plans to move and will try to stay as long as possible for free till moving day. 

    Bottom line....If you are not ready to reno can you get more money out of them with a dead line to pay in full. In that situation there may be a advantage to milk every penny you can out of them until you are ready to start the work then give them 15 days notice.

    If you can turn it around as soon as you put them out then keeping them has no advantage unless they pay. I would give them 5 days to pay then issue the 15 day notice. They can choose between spending their money on Xmas or having a roof over their heads. Chances are they will choose Xmas and you will be forced to evict.

    Keep in mind all my business decisions are based on viewing tenants in situations like this as money not as opposed to people. It is very rare that compassion will add to your bottom line, it is generally a negative. 

  • Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
    7y

    Does the bank give you a break around the holidays and allow no payment in December how about the insurance fees and are your taxes free at Christmas ? The bills don’t just go away because it’s the holidays so why must your income be allowed to subside when the expenses stack up  ? This is a failing business strategy but I understand it’s a tough choice . Nobody said landlording was easy. When families are involved it complicates business decisions and that usually means less money in your pocket . 

  • Member since 2016 · 13k+ posts · 12k+ votes
    7y

    Unless you are in retail December is no different than any other month of the year except when tenants think it is OK to prioritise buying presents over paying rent.

    December has a stigma in regards to evictions that it does not deserve. No pay, no stay applies to all 12 months of the year. If landlords want to be charitable they should donate to a homeless shelter. It's a tax write off.

  • Rental Property Investor · Midland Park, NJ · Member since 2018 · 38 posts · 13 votes
    7y
    @Amy Thatcher I would give them notice. All rent owed is due by Jan 1st or they must move out by that date. At least they are still in there for Christmas. You should really have a conversation with them though, in which you can direct them to services if needed.
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    7y

    It's a balancing act but here's what I suggest to get them out while waiting until after Christmas.

    1. Don't say anything about giving notice. Act normal and wait for them to catch up on rent.

    2. Get as much as you can from them. Hopefully, they will catch up on November and pay December. Even if they only catch up on November and pay part of December, something is better than nothing.

    3. Once they've caught up on rent, or paid most of it, hit them with the termination notice.

    This will minimize the amount of loss incurred. They aren't reliable for rent, they are slowly destroying the property, and they can scare away quality renters for the other side. Get rid of them as quickly as possible.

    The DIY Landlord Book4.7245 Reviews
  • Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
    7y
    Originally posted by @Amy Thatcher:

    I recently (late Sept. 2018) purchased a duplex in FL. The property was fairly run down, i.e. overgrown yard, the occupied unit has window coverings consisting of aluminum foil and/or bed sheets/blankets, additionally, there is work that could certainly improve the unit, although the tenants expressed no concerns to previous owner or to me when I took over.  Basically, it is filthy, smelly and difficult to tell what the apartment actually looks like. Their side, 2/1, was rented for 700 with landlord paying electric.  (The story was the tenants were there for 5 years and always paid their rent the first of the month.) The other side was vacant and in need of some TLC.  During the purchase process I mentioned to the owner I would be having tenants pay their own electric and I thought the rent was low.  She apparently relayed this to the tenant because the existing tenant moved the electric into their name (the previous owner let them keep the deposit with the electric company) and agreed to pay 725.00.  I did NOT sign a lease with the tenant and there was no existing lease when I took ownership.  (I was also under the impression it was a couple and two children, since that point a mother of the female tenant has been revealed as living there).  I have been working on improving the property and have a tenant moving into the vacant side next week.  That side is a 1/1.  The rent is 750.00 plus electric.  

    The existing tenants paid 725.00 the first week of October. The beginning of November they paid 600.00 requesting a week to pay the balance of 125.00 (by Nov. 10th).  I agreed. I asked on the 18th if they had the balance of the rent and was told no (mother's social security issue).  I have not received or been contacted about the rent balance and in less than a week another month will be due.

    Since there is no lease, I believe I can provide them with a 15 day notice to vacate.  I do not want to continue with rent issues and prefer to improve the overall property.  My dilemma is timing.  I would greatly appreciate input from readers on the best way to proceed.  I am inclined to give them a 15 day notice this weekend and allow them to stay through the end of the years provided they pay, in full, the rent for December and remainder of November.  Personally, my thoughts are conflicted because of the two young children and elderly mother, despite knowing this is a business and they are responsible for their actions.  Thank you!!

     Christmas, Thanksgiving, Hanukkah, Kwanzaa, Grandma's sick etc.....None of it matters. They don't pay, they don't stay. As a Landlord you cannot allow yourself to catch feelings. It's a business transaction pure & simple. Evict them the moment that it makes financial sense to do so.

  • Sarasota, FL · Member since 2018 · 14 posts · 7 votes
    7y

    Thank you for all the great feedback. To clarify, a 15 day notice in FL rarely means they leave in 15 days.  Our eviction process here starts with a 3 day notice and 2 months later it may be resolved. @Nathan Gesner that is my current path, I think I will stay the course.

    @Patti Robertson I understand having a heart, there is back story I didn't share. I have also spent weekends working on the property while the fellow complains repeatedly about having to work 4 days in a row. Where I come from you work and take care of your family, where I come from people usually work at least five days in a row

    @James Wise well said, the key being 'the moment that it makes financial sense to do so'.

    Make it a great day!

  • Patti RobertsonBusiness Member
    Property Manager · Virginia Beach, VA · Member since 2016 · 2k+ posts · 2k+ votes
    7y

    @Amy Thatcher - You can only help those who are willing to help themselves!  

  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    7y

    Make sure you have your landlord tenant laws down to a science. If you have questions contact your local eviction attorney to hopefully fill in the gaps.

    You have to be careful accepting any money as in some states when you go to evict it can be seen as an IMPLIED repayment plan approved by the landlord. Some states are tenant friendly and some landlord friendly and others neutral. If it is seen as a temporary payment plan the time to get them out can be much longer.

    Tenants sound like they are testing you the new landlord. When you bought did you get an estoppel signed by them? It sounds like you bought a problem property at hopefully a reduced price thinking you got a deal. Hopefully that is the case and the seller did not get a premium and sold away a big problem to you.

    In the past we would file like clockwork regardless of what the tenant said. The eviction process would proceed. At any time the tenant could pay in full what was owed including late fees, and filing fees and then as a landlord the current eviction could be stopped. Basically the tenant learned that no matter what type of story they told the landlord the eviction would be filed anyways. It helps force the tenant to know the landlord will not be manipulated and either they need to make the decision to find the money to pay in full or they need to move somewhere else where they can afford less rent or try to work their manipulations on another landlord and property. Their problems are not your problems. You did not decide what their credit score is, the schooling they went to, the partner they have, family they have, how they budget and make daily decisions, etc.

    We did not allow what I call (snowballing) which is they owe 800 this month as an example. They give 400 first 2 weeks and then 2 weeks later instead of the next 400 they tell you they have only 200. Now next month 800+200 is owed 1,000 plus other fees to bring current. It is a downward spiral the chances of them catching up are slim to none. Sometimes if the property is in a cold belt state or in a high crime area landlords decide to keep the tenants in the property until a better tenant comes along. The reason is if utilities turn off in a cold belt state massive damage can happen to the property with frozen pipes and other things that could far outweigh some temporary lost rent from a non or partially paying tenant. If a high crime area and the property goes vacant then criminals could try to strip it clean on the inside and cause lot's of damage. Additionally even if those other items are not the case if the current tenant has bad credit and other problems trying to evict them at Christmas might get them to trash the place in retaliation and cause lot's of damage that are not collectible even if you get a judgement against them.

    Residential land lording is very hard especially with lower to median income tenants and okay versus excellent areas.

    Good Luck. No legal advice given.

  • Contractor · Jacksonville, FL · Member since 2017 · 1k+ posts · 2k+ votes
    7y
    @Amy Thatcher I'm not sure the eviction process you are following but here in Jacksonville Florida from the moment I start the process until I am meeting the cops to get them removed it's about 22 days...not 2 months. And that's with me doing all the paperwork myself and not utilizing any professional help. A quick online search told me there is no difference in evicting where you are at in Florida and where I am at in Florida. You might wanna sharpen your skills on evictions. Regardless I would get them out immediately, holidays mean nothing in this business.
  • Sarasota, FL · Member since 2018 · 14 posts · 7 votes
    7y

    @Mark Fries I was using hyperbole related to a three day notice.  I have never had to evict anyone,  guess my tenant screenings skills are sharp.

  • Sarasota, FL · Member since 2018 · 14 posts · 7 votes
    7y

    @Joel Owens There was nothing signed at purchase.  They were living there month to month, which I was fine with because they underpay for the rental.  I factored in rehab money to clean and upgrade their unit when they left. My goal was to rent the other side first, which is done.  Thank you for the information and the new term 'snowballing'. 

  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    7y

    You need to also look at what the demand is for duplexes as rentals in the area for that age of building. Is the market oversaturated, under, or neutral?

    If the tenants have been living there for many years then likely the unit is not rent ready today. A new tenant coming in looks at a space with a FRESH set of eyes whereas the existing tenant usually gets used to seeing old carpet, scuffed up walls with paint, etc.  So to get the unit rent ready again you might have to spend thousands of dollars. The question becomes what are current rents in your unit and what are market? If the gap is not that wide maybe 20 to 40 bucks a month then it might take a very long time to break even from spending thousands to turn the unit.

    If the rent is hundreds of dollars a month below market then another new tenant might come in with just a little sprucing up and take the place. The benefit to the tenant is they might be getting below market rent in exchange for taking a unit that might not be as updated as others available in the market. Unless your market has way more renters than product available currently then in general rents cannot be pushed upward that hard as other landlords are competing to land the good tenants for their properties to keep market share and cash flow. For landlord references go back at least 2 because the current landlord they are leaving sometimes gives glowing reviews to get them out to another landlord.

    Look at reserves you have. A typical mistake I see here often on Bigger Pockets is investors buy their first  property and leave little room for error that everything is going to go right (have the perfect tenant that pays on time for the first year of owning with little to no repairs needed and cash flow stays strong). That rarely ever happens. If the investor has limited resources for when things go wrong then they get in a tough spot where they need some cash, any cash to service the mortgage instead of what might be right for the property and success in the long term. 

  • Attorney, CPA, Broker & Author · Scottsdale, AZ · Member since 2018 · 532 posts · 488 votes
    7y

    I understand this is a business, but one of the things both of my parents impressed on me when I was growing up was looking out for others.

    My parents owned low income weekly rental properties. On many of these properties, we would stop by on Fridays (as that was payday) to collect the rent.

    I can't tell you how many times the door was answered by a mother with small children who said the husband went off drinking with his buddies and hasn't come home yet with the rent money.

    On many of those occasions, the mother and children didn't have any food and my parents would bring them something to eat.

    Is that the way to run a business, probably not.

    Is it a way to have compassion for those less fortunate than one's self, probably so.

  • Madisonville, LA · Member since 2018 · 125 posts · 71 votes
    7y
    I would do what I thought was fair for both. If they pay up with full rent, I would let them stay. If not then I would move on. Basically I would try to make it work for both of us. And it does matter during the holidays. It's harder to find tenants and to find a place to live I saw a response on whether the bank gives u a break during the holidays... the answer is one has to get months behind on thier mortgage before they do anything and being short 125 wouldnt get much attention from them so it's a poor analogy. Obviously I wouldnt go that route but I'd just be fair. And that may not be the absolute best business decision but oh well
  • Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
    7y

    I'd evict my own mother on Christmas if she didn't pay the rent. I'm only kidding. I would never rent to my mother. She can't afford the rent on my properties. Anyway, it would never be my fault, nor would I feel bad for the tenant, for evicting them. People make choices. If tenants choose to not pay the rent, then they gotta go, as soon as possible, no matter what time of year it is. 

  • Specialist · Philadelphia, PA · Member since 2014 · 231 posts · 69 votes
    7y
    @Amy Thatcher Get them out!
  • Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
    7y
    Originally posted by @Anthony Wick:

    I'd evict my own mother on Christmas if she didn't pay the rent. I'm only kidding. I would never rent to my mother. She can't afford the rent on my properties. Anyway, it would never be my fault, nor would I feel bad for the tenant, for evicting them. People make choices. If tenants choose to not pay the rent, then they gotta go, as soon as possible, no matter what time of year it is. 

     Wow, people say I am a savage. You've got ice water in your veins, lol.

  • South Holland, IL · Member since 2017 · 376 posts · 432 votes
    7y
    @Amy Thatcher From my personal experience landlording for 17 years, tenants ALWAYS have another place to go. They just may PREFER to stay in your property. I agree with @Nathan G , get as much as you can out of them now with the intent on evicting when it’s more economically feasible for you. Ask yourself this question. How often have you seen families homeless on the streets? There are PLENTY of shelters, family and governmental assistance to help particularly WOMEN and CHILDREN. If Chase, Wells Fargo And Bank of America wont give me a reprieve because of my tenant‘s plight, I won’t/can’t either.
  • Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    7y
    @Amy Thatcher no matter the time of year, if they don’t pay you evict. Pure and simple. The minute you buy a rental, leave the emotions at the door.
  • Rental Property Investor · Lone Tree, CO · Member since 2017 · 18 posts · 13 votes
    7y

    @amy thatcher 

    @Amy Thatcher it's very difficult to not have compassion and empathy for tenants with issues, but they have a way of becoming habitual. I have learned that the old saying "give an inch, take mile" usually defines these situations. In the 12 years that I've managed my own rentals, I've decided that I make a very poor property manager, at great expense. So, I include property management expenses in every deal I do going forward. 

  • Property Manager · Syracuse, NY · Member since 2016 · 601 posts · 384 votes
    7y

    Amy, everyone else posting here has the right idea. Set systems in place early and do not stray from them. If they do not pay, they need to go. You're not a charity, you're running a business. I grew up poor and my parents were evicted often and not once was I upset at the Landlords nor were my parents. They knew they had financial problems, it sucks but that's the way things have to be.

  • Real Estate Appraiser · Isabella lake, CA · Member since 2018 · 628 posts · 491 votes
    7y

    Of course, you must have the rent!

    Just try not to be all Snidely Whiplash about it. LOL.

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