Chicago, IL · Member since 2018 · 546 posts · 227 votes
7y
@Cameron Riley- Sorry to hear that you and your partner are dealing with that. If you're going through a situation where you've had to chase down tenants to collect rent (especially if they've been repeatedly late or unresponsive to your attempts at contacting them), then it is time to evict. I'm not an attorney; I will say though, at the end of the day, treat it like a business. If they've violated the terms of the lease on more than one occasion, then that's a pretty good indicator the relationship is probably not headed in the right direction and it might be time to start searching for a new tenant.
- Do you instantly jump into the eviction process? ( Late More than once, they have also passed the 10 day period of grace )
- Do you ever BEG or Repeatedly Text A Tenant Asking For Their Cash/Rent Money? ( my partner does this )
- Advice? Tips? Best possible professional way to handle it?
For us rent is due on the 1st and accumulates late fees after the 5th. If I have not received rent on the 5th, I will contact the tenant via text and state "we have not received rent yet, just checking on status and a reminder there are late fees as of tomorrow". The next step depends on how the tenant replies and which tenant it is. Usually the tenant apologizes and say they got it in the mail late. Then they agree to pay late fees. Occasionally someone asks for an extension with late fees and we will agree if we feel the tenant can be trusted, provided they stick to their agreement. If we feel the tenant is trouble, repeat late payer or lost ability to pay, then we serve notice to pay or vacate. I know some landlords just throw the notice up as fast as possible, but we try to talk to the tenant first.
I never beg tenants, but by the same token, I am on them like a "fly on sh1t" when they are late. I never blow off late payment and my tenants know it.
Investor · Chicago, IL · Member since 2016 · 1k+ posts · 930 votes
7y
I work with urban properties. You should never beg at a property u own. U let them know rent is late and the consequences. Call every day, even if they made a promise. Annoy the hell out of them. Call at 10pm, 5am. It's not harassment.
We have all B class now, but previously had C class. If you have a C class tenant who has trouble paying, I would recommend getting payments on pay day. Most people are paid twice a month, so you get half the rent on each pay day. You get the money on pay day, so they don't have a chance to spend it on something else. I had good success with that.
@Cameron Riley I would never beg for the rent. Talk to them and find out why the rent is late. If it is a one off, tell them to pay immediately. If this is a repeated behaviour, you need to take a different approach. Explain to them if they can't afford the rent, then they need to find a new place to live. I had one tenant who was horrible at handling money. They said it was easier for them to pay twice a month, on the 1st and 15th. Once we did that, they were never late.
@Cameron Riley I would never beg for the rent. Talk to them and find out why the rent is late. If it is a one off, tell them to pay immediately. If this is a repeated behaviour, you need to take a different approach. Explain to them if they can't afford the rent, then they need to find a new place to live. I had one tenant who was horrible at handling money. They said it was easier for them to pay twice a month, on the 1st and 15th. Once we did that, they were never late.
Agree with this. I don't think there's a one-size-fits-all approach to tenants. I had a (new) tenant recently who called me the day her rent was due and said she had a car issue the previous week and needed an extra 10 days to pay the rent plus late fee. Since it was a first offense, I gave it to her. She did follow through and meet her new deadline. Was this a one-time issue? Time will tell. However, the cost of eviction was going to suck for me whether I started it on the 5th of the month or the 15th. So it was in my best interest as a landlord to try to work with the tenant, rather than just moving right to eviction. If the tenant had less equity with me though, then I probably would've just put the 3-day up immediately.
Another consideration: I can see if you were someone who managed many, many units that there's a point to where the tenants become far more replaceable than it does to a small landlord like myself (3 units). So perhaps if you own like 20 units or something, then I can see just taking a no tolerance on tenant shenanigans.
Investor · New York City, NY · Member since 2017 · 65 posts · 32 votes
7y
@Cameron Riley - it depends on the scenario but as a general rule I won't jump into the notices & eviction process right away, typically I encourage all the tenants to get in contact as soon as they know they are going to be late (most of mine do) and for those that don't, I follow up after 2-3 days to find out what the status is. For better than 90% of the issues, this has addressed it & gotten the late rent + fees paid promptly (I have no grace period), for a folks that have a year of on time payment I offer a little leeway on the fees, for those that don't I either get paid on follow up or get a plan which they need to adhere to before jumping to the eviction process. The exception to this was a group of non communicative tenants, i inherited after taking over a property they didn't respond to any posted notices, phone calls or messages requesting information to resolve issues so that process moved pretty quick into eviction, but that's not the norm.
2. Keep it business-like cordial, even if it comes to eviction. It is never personal. If they haven't paid, have late-fee, notification, and eviction processes in place and follow them.
2. Be consistent. "For liability reasons we have to treat everyone the same. We cannot play favorites." (This has the nice effect of making them feel like they are one of the favorites, regardless of the whether they are or are not.)
3. We are always happy to work with tenants, even during eviction, though they will incur extra costs / penalties.
4. Okay, sometimes rules are bent. This is easier when you are able to present a good cop / bad cop. The good cop may be the manager not following the process of the bad cop, the owner.
Before all of this, you need to treat both your tenants and properties right. Respond to repair requests. Keep things in good condition, etc.
When rent is due on the 1st it is late at midnight. Tenants should be receiving a pay or quit notice on the 2nd. This is how a landlord reminds a tenant that they are late and need to pay. They then pay, based on the notice, or the landlord proceeds to evict. Assuming they do pay they need to be informed that late payment is not tolerated and that a repeat may result in eviction.
Like base ball 3 strikes and they are out. When a tennat has not learned the lesson after a 2nd late a third is their last. They get evicted for being to dumb to learn.
Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
7y
@Cameron Riley follow the guidelines of your local landlord/tenant laws. Also don't "beg" a tenant to stay. This is a business. You are providing a service and it is not free. 5 day notice(or whatever your local laws dictate then follow the process. I've taken partial payment in the past on my rentals. So there's that. But it's a slippery slope with that approach as well.
Investor · San Diego, CA · Member since 2017 · 29 posts · 16 votes
7y
@Cameron Riley
I went through this with my first rental in Indianapolis last month. The tenant was 10 days late, payment was due on the 1st of the month. The tenant promised to make payment on the 12th. My property manager gave me two options. One was to pay $375 to start the eviction process and option two was to wait until the 12th for the tenant to pay. I opted for option 2 especially since I had just paid my property manager $350 for getting a lease signed two months ago. Thankfully the tenant made payment on the 12th including late fee. I'm hoping that this does not become a recurring issue.
"I'm hoping that this does not become a recurring issue."
In this business "hope" is another word for delayed disappointment. when it happens again next month evict. You may also want to think about replacing your PM.
Investor · San Diego, CA · Member since 2017 · 29 posts · 16 votes
7y
@Thomas S. Yes I thought about the eviction and replacing my PM if I experience this again. It will be costly but it I'm sure will save me in the long run.
Real Estate Agent · San Antonio, TX · Member since 2017 · 814 posts · 466 votes
7y
No eviction right away, no begging.
I would follow your lease, and a good lease should give tenant the chance to pay late rent with a fee.
The way I personally handle late payments, is #1 late fee acceptable if they pay within 7 days constantly. If they are late more than 7 days, then fee + 1st notice. If they are late for more than 7 days the second time, I gave them the notice to vacate, following the State eviction process, etc. My experience is evictions sometime takes time, and could be very expensive at the end.
Real Estate Consultant · Whitestown, IN · Member since 2014 · 547 posts · 933 votes
7y
We are a fan of keeping tenants and working with them to get them current, but you have to be sure to not let your tenant get too far ahead of you. In our office, we send a 10 day quit notice on the first business day after the 5th. We text and email daily and call 2-3 times weekly. Depending on the level of communication, payment history, promise to pay history, etc. we give the owners our recommendation regarding evictions around the 15th of the month.
Never deposit a partial payment. I'm not sure about other markets, but it will delay the eviction process in Indiana.
We don't have very many evictions (15 last year) and we run about 8%-9% late each month. It's simply going to happen. I have a client who has 13 homes and 2 of them are always 1-2 weeks late, but these tenants have been there for a while. One is on his 3rd year and says that he'll never leave and the other is on his 9th year. Losing tenants, evictions, etc is costly. Most investors lose about around a years worth of cash flow during a turn. Lost rents (2-12 weeks), extra holding costs (lawn care, utilities, etc.,) make ready costs (frequently $500-$5,000), mortgage, insurance, taxes, and tenant placement fee.
Every case is different. Professional communication is the key. Tenant's will certainly bully and railroad landlords unless they treat it like a business. Have set practices and follow them. In our case, it's also nice to have a secondary voice (good cop/bad cop as mentioned above) because sometimes the first one is towing the line and the tenant just needs someone to hear their story and wants help. Don't just waive late fees... it frequency sets a precedent and you will see an increase in late payments and requests to cut them a break. The second voice can sometimes provide flexibility that may allow the tenant to get current, but they have to work for it if they want a break. If you place good tenants in good homes, this drama should be minimal, but if you hold on to rental properties long enough... there's always a speed bump somewhere up ahead.
Real Estate Agent · Indianapolis, IN · Member since 2019 · 72 posts · 16 votes
7y
man, you guys are savages! If my tenants give me ample notice and its not a constant issue - I will allow them to be a little late BUT pay the late fee. By jumping the gun you run the risk of angry tenants that may cause you more damage and issues with your property plus legal fees in the name of them being a few days late. Its all about screening the tenants and verifying income and checking w/ prior landlords. Due diligence pays many dividends when renting...