I was speaking with a landlord recently about getting good tenants and what to do with late-paying tenants while avoiding the eviction process. Jack has been in the business for close to 20 years and has a couple of dozen properties.
He explained his very effective method to deal with late paying tenants.
After conducting the background screening but before the lease is signed, Jack sits down with the applicant and clearly reviews the rules regarding rent payment.
1. Rent is due on the 1st
2. If the payment is not received by the 1st of the month there is a $50 late payment.
3. If the rent and late payment is not received by the 3rd of the month they will a receive a 3-Day Notice.
4. There are no exceptions.
A 3-day notice advises tenants that they are being asked to leave or that an eviction action will be brought against them. They are also advised to seek legal assistance if they have any questions or concerns. (This landlord’s properties are in Ohio and laws do vary from state to state, so please check with your attorney or state’s landlord tenant laws) You can also check out https://www.rocketlawyer.com to see a sample and learn more.
Once the 3-day notice is delivered, he calls the tenant and tells them, “You are more than 3 days late with your rent and I want you out as I warned you about this before you signed the lease.”
Jack then makes the tenant the following offer, “If you are out by the week-end I will pay you $250. If you agree I will meet you at the property with your check. If the property is clean and in good shape, I will give you the check in exchange for the keys. If you do not agree, I will immediately start the eviction proceedings.”
Over the years, he had only one tenant that declined this offer.
He knows his ex-tenant is probably at a bar buying drinks with his new-found money bragging about getting over on his landlord. But Jack is the one that has come out ahead.
Jack has avoided paying the costs associated with filing the eviction. The property was left clean and in good condition, which would be very unlikely if the tenant was evicted. And he has the security deposit, which covers the cost of the payment and some of the lost rent.
Jack spends very little time chasing down the rent from late-paying tenants by being very clear about the rules before the lease is signed and strictly adhering to them.
TenantMagic provides comprehensive application and tenant screening at no cost to real estate agents, property managers and landlords. Applicants pay the fee
Jay Apple is co-founder of TenantMagic, LLC www.tenantmagic.net
Please note that this post relates to an approach to dealing with late paying tenants and is not meant to be considered legal advice.