Tenant Can't Pay? Don't Freak Out
As a landlord, there are a number of reasons to panic. Usually the freak out is due to un-planned repairs or a sudden infestation. Those problems just suck - there's no two ways about it. However, this week I learned that there is one particular issue that initially seemed panic worthy, but actually turned out to have a profitable ending.
I had a tenant come and tell me (respectfully and authentically) that he could no longer afford the $7,500 per month rent do to a job loss. We had a 2 year lease in place, so this would be breaking our contract. Some landlords may be tempted to be a stickler in this moment, panic, hold up the contract and say, “Sorry buddy.” But then you’re left with a tenant who doesn’t want to be there and an uncertain future. That’s a no-win situation.
Instead of walking towards the dark abyss of uncertainty, I opted to make a deal. We negotiated that he could break his lease and get the deposit back if we rented the condo for the same or higher. My rock star agent signed a lease literally 4 days later with a qualified tenant who is now paying $7,900/month! The initial problem now landed me 400 additional dollars per month!
The original tenant was thankful and in the end so were we! This was such a great lesson. Don’t immediately freak out when you learn a tenant can’t pay or is moving. There may be win-win opportunities – you just have to get creative.