I've copied a facebook conversation below. This is the only renter or TB that I am friends with on FB - I normally don't do that. But, with this one it has given me some insight into their spending habits. The background to this is that I recently turned their account over to a property manager. And when I did, I increased their payment by $50 per month to cover my costs to the PM. Here's their response and my response below. I can't believe that she thinks I'm not "fair". If she wants's fairness, she would be out on the friggin streets.
Tenant-Buyer: Hey it's Joe, I was wondering why we are paying an extra fifty a month, if it's to cover your cost how is that fair for us to have to pay it?
My Reply: I'm sorry to have to increase your payment, but that's what my business partner required me to do. And, Here's how it's fair. You all are actually behind by over $1000. And you've been behind many times, and I've never charged you a late fee. When you get behind, it's a huge head-ache on me to keep track of it. And it stresses me out - a lot. And it causes me great difficulty to make my payment to my bank on the loan that I have on the house. And I don't need the stress in my life, so I turned your account over to a property manager. And that costs me more money. So, it's not fair to me to incur additional cost when the reason for those costs are because you all get behind from time to time. It's also not fair to me to be waiting on you all to catch up with your payments to me, when you all have the money to go to the beach on vacation and to build a nice new deck around your pool. I really didn't want this reply to sound mean, but I hope that you can understand. Also, the original land-contract that y'all signed with me had built-in payment increases after the 2nd or 3rd year (which you agreed to), which I also never enforced until now. When you can get a bank loan and pay me off, your payment should go down at that time.
I just about went through the roof when she accused me of not being "fair". I'm still fuming. But, my guess is that she doesn't even know that they are behind since most of my communication in the past has been with her husband.
I think your response was appropriate and to the point. You may also remind her they have breached the contract by being late on payments. You could certainly evict/foreclose for that. You could also keep any deposit they put down due to the breach. Not only are you being fair, you are being generous.
My next response will likely be: "you can move at any time, and please return the keys to the property manager"
I don't think you EVER need to rationalize your business practices to a tenant who's behind on rent. Or to one who's current, either.
Most tenants really don't understand the expenses behind owning/renting property, thus a $50 jump might seem a bit much. It's your call whether you want to try & explain the increase to someone who is realistically only interested in the bottom line (& rightly so) - i.e.; what's coming out of their pocket.
I'd be more concerned that they aren't being fair by not making their payments - they're essentially getting a very cheap place to live on your dime.
@Bryan L. -I'm going to sound harsh here. You get what you require. I'm not sure of all the back story but my advise is you really really need to stick the rental agreement. If you have a lease (which would state the rental rate) then you should follow that, including rent increases. If a tenant is $1,000 behind and that doesn't count late fees the only one to blame is you. If they are late, you post notice and charge late fees. If you don't collect late fees, then you might have lost the right to collect them.
The tenant is right, you can't just increase rent because you farmed out the work to a PM. Perhaps you are within the lease to do so if you haven't previous collected the increase called for in the lease but you might also have lost the right to an increase because you didn't enforce it.
You mention land contract which is not a rental agreement per se. But again by not following it you are jeopardizing the agreement and it becomes up to a judge to decide what is what.
I am surmising that you have a hard to rent property that you are trying to unload to a marginal buyer/tenant. The buyer hasn't performed but you don't want to move on so you have been allowing them to skate on a few issues in hopes that they will get their act together. This will only end badly for you in 98% of the cases.
I thought your response was very appropriate. You also had the grounds to remove them from your property if you wish.
Originally posted by @Bill S.:
The tenant is right, you can't just increase rent because you farmed out the work to a PM.
I would agree 100%. However if the lease allowed it, that is the reason I would have used, not the PM. It is a matter of perception. While the result is the same it will be perceived as more "fair" to raise the rent based on something they already agreed to, rather than your choice to hire a PM.
Ned Carey, Crab Properties LLC | http://baltimorerealestateinvestingblog.com/
I agree with Bill and Ned. You should enforce ALL parts of the contract, not just parts you pick and choose. I would have ignored her Facebook email because she already had the info regarding the rent increase.
If she is on a month to month, you have every right to raise your rents periodically. I would also be checking other rentals in the area to see if you are cheating yourself; one tool is rentometer.com and if you are less than 1/2 of the gauge, you should consider raising them, as it could lead to a better tennant who will pay on time. And do enforce your agreements... Good luck!
Christopher Winkler, Silverwood Capital, LLC | 1‑949‑791‑7904 | http://silverwoodllc.com
Part of my reason for turning this over to a PM is to have someone who enforces the rules better than I do. And they are on month-to-month, so yes, I can increase the payment for any darn reason that I want to and by any amount that I want to. And I did give them at least a months notice before I hit them with the increase. I just couldn't believe that she had the gall to say anything about being "fair."
I actually just wrote an article on this for my blog. While your justifiably upset the situation is a fault of your making. By not enforcing your lease and being nice, you created an environment where being late and lacked rules is okay. Than when you finally had it and snapped the tenant doesn't understand. I understand where you are coming from. In the future I recommend you charge late fees and start eviction over anything above $300. This would help prevent this from happening in the future.
Sorry you had to start using a management agency because of a tenants behavior.
In the future, all of my properties will be managed by a good PM who enforces the rules and lays down the law.
I would worry about putting that they are behind on payments on Facebook. I don't know all the ends or out, but you could get in trouble with the fair debt collecting act on that.
Originally posted by @Bryan L.:
Part of my reason for turning this over to a PM is to have someone who enforces the rules better than I do.
I hear you on that one. My partner and I are lousy landlords
I just couldn't believe that she had the gall to say anything about being "fair."
That's what tenant say when they don't have a legitimate reason to complain.
Ned Carey, Crab Properties LLC | http://baltimorerealestateinvestingblog.com/
It was a private message.
Personally, I understand where you're coming from "airing it all out" in the response to them.
Professionally I wouldn't have made the response as personal as you made it and would have given them a "softer" reason for your raising the rent. Even though you have a legit reason for doing it they may see your reasoning as retaliatory.
Can you just say the reason i had to raise the rent is because you are a degenerate and just leave it there:)?
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