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Posted almost 4 years ago

How to Handle an Eviction and Why it Pays to Have a Property Manager

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WHAT IS THE BIGGEST FEAR FOR MOST FIRST-TIME LANDLORDS?

The answer is usually along the lines of, “What happens if my tenant doesn’t pay the rent?”

We’ve all heard horror stories about lengthy, drawn-out evictions. The good news is that evicting tenants for non-payment is rarely necessary with proper upfront screening. There is the occasional loss of job, serious accident, or illness that may cause rent payment delay, but it is still very rare to have to evict. Properly executed lease agreements should be clear about the rent due date, specifying the penalty if not received by the 3rd and state the eviction will start on the 10th if not received.

Some states are more “landlord friendly” than others.

For example, Texas, Arizona, Indiana, Florida, Tennessee, and Georgia all have laws that favor landlords in the event eviction is necessary. Conversely, states such as Massachusetts and California have laws that favor the tenant. It makes sense for the beginning investor to only purchase in landlord friendly states.

The eviction process is typically triggered by a specified date in the lease where if for any reason the rent has not been received, for example by the 10th, the eviction process will begin. The property manager should be monitoring this closely for you and will contact the eviction attorney to proceed if it’s unavoidable. Before it gets to that point, your property manager will have already sent the tenant a notice indicating the intended action. Commonly referred to as a “3-Day Pay or Quit Notice,” this communication alone is often enough to encourage them to pay and avoid the additional costs of attorney’s fees and wrecked credit.

The amount of time the eviction process takes varies by state from 3 days to 3 weeks. Conversely, in California, the process can take on average 3 to 6 months. It is important to remember that the property manager usually is holding at least one month’s rent as a security deposit, so you will probably not be out any money aside from significant repairs if any. The key to not having to evict is doing a good job of tenant screening upfront. Typical fees for attorney eviction can run $350.00 or more.

We always recommend having a professional property manager in place for many reasons, one being that they will do all the work and you don’t need to be there.

Property managers typically have an attorney that specializes in evictions and assign all their work to them. The tenant is responsible for court filing fees and attorney fees. If they plan to stay, the tenant must pay the past due rent with late fees and any court filing fees on or before the trial date. Another significant benefit to hiring a property manager is that they assume most of the risk by communicating with the tenant and not you, and they know the state laws like the back of their hand.

The upfront screening process that property managers use looks a lot like a loan application. It goes way beyond running a criminal/background check and credit report. Additionally, they will request copies of the last two paycheck stubs, verify employment, check previous landlord references, and look for any previous judgments or evictions. Property management will also examine debt-to-income ratios and the prospective tenant’s history of making on-time payments. Checking with the last 2 or 3 landlords is a common practice to determine tenant quality. If the debt-to-income ratio appears to be in line, they usually require a ratio of at least three times the rent compared to their gross monthly income to qualify the prospective tenant.

To recap, eviction is rarely a problem with proper upfront tenant screening. In the event eviction becomes necessary, it is best handled by professionals. Good property management is the key to successful rental property ownership!



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