There’s not a landlord who’s been in business for long who hasn’t had a tenant fail to pay on time — or at all. When it happens, the speed and consistency of the landlord’s response will statistically dictate their success. State laws vary, but there are really only two types of actions a landlord can pursue: chasing the tenant for payment or eviction. Errors and mistakes abound, so let’s talk about some of them.
Download Your FREE Tenant Screening Guide!
Hey there! Screening tenants can be a tricky business, and this critical step can be the difference between profits and disaster. To help you with your real estate investing journey, feel free to download BiggerPockets’ complimentary Tenant Screening Guide and get the information you need to find great tenants.
6 Common Mistakes Landlords Make During Rent Collection & Evictions
1. Irregular Enforcement of Rules
One of the great powers that we have as landlords is deciding when to let something slide and when to really come down hard on a tenant. The response to a failure to pay, as well as the enforcement of late fees and such, should be consistently applied. Letting things slide rarely turns out well and can be dangerous. Give a tenant an inch, and many will take a mile. It also creates a bad precedent that may be used as a successful defense in court, particularly if you do it more than once for the same tenant.
2. Waiting to Start Eviction
It’s easy, especially if you like a particular tenant, to get strung along with a series of partial payments and/or excuses for no payments at all — and there are definitely (very rare) tenants who deserve that kind of treatment. But what you don’t want is to gamble with the odds or get strung along by a tenant you aren’t fond of or don’t think is being honest with you.
The easiest way to do that is to stick to your guns in all cases: deliver notice the day the rent is due, and proceed in all ways as though you’re going to go through with the eviction. You can always stop an eviction, but if you wait too long to start one, you’ll end up in a less advantageous position for no real reason.
3. Accepting Partial Payments
You have to know your state laws very well when it comes to partial payments. Taking a partial rent payment may force a landlord to have to start the eviction process all over again! Payment plans may cause the same issue. Check with a really experienced eviction attorney, and know your options.
4. Performing “Constructive” Evictions
Some landlords attempt to force nonpaying tenants out by doing things like turning off the utilities (called a “constructive eviction”). This is straight up illegal in every state in the Union.
Even if your tenant doesn’t pay, you are never allowed to make a home unlivable when there are people living in it. The penalties for doing this can be pretty steep, so go to court — that’s what the eviction process exists for.
5. Trying to Shortcut the Law
A father and daughter investor team was just shot and killed in Detroit trying to handle their own eviction on a property they bought at tax foreclosure. They were there when the occupants were moving out, and the situation escalated when they tried to stop the occupants from removing fixtures from the property.
They may have successfully done this numerous times in the past, but it only takes one bad situation. Use the eviction process and bailiffs so you don’t put yourself at risk.
6. Not Maintaining the Upper Hand
When a tenant fails to pay on time they in effect gain the upper hand on the landlord. To restore balance in the relationship, the landlord must pursue eviction. The longer you wait to do so, the further behind the rent falls and the greater the upper hand the tenant achieves.
Eviction notices should be mailed out immediately, no tenant excuses thwarting this act! Evictions have a timeline that must be followed, and the sooner a landlord starts that clock, the better their chance of regaining the upper hand in the relationship. This mindset should be carried forward through every step of the eviction process.
We’re not quite done yet! Come back soon for the last in our “Mistakes” series, when we’ll address the art and science of a property manager’s most boring, and too often overlooked, job: monitoring costs and balancing budgets.
What mistakes have you made (or have you seen being made) when it comes to rent collection & evictions?
Leave your comments below!