Your tenant calls to inform you that they were fired from their job. They promise they are looking for work, and as soon as they get a new job they will make up payments on their past due rent. That seems reasonable, right? Everyone has set backs and you understand where the tenant is coming from so you want to help and show some kindness.
That may be your initial reaction to the situation. But what happens when they don’t get a job in a month, or two, or three? Each month they are living in the rental property without paying rent, you are losing money. This scenario is not uncommon, and it may be difficult to put fairness over kindness, but it is important to remember to do so. Life happens, to both tenants and landlords. While a tenant may promise to pay rent once they get a job, they may also have the same promise to other debts of theirs.
When it comes to extending courtesies to tenants, many landlords struggle with where to draw the line. Sometimes a tenant’s troubles might draw on your heartstrings and cause you to make exceptions to your business practices. Your goal as a landlord is not to aim for kindness, but to aim for fairness. Of course, life happens to all of us, and a long-term tenant who consistently pays on time may deserve to be that exception to your rule.
In our experience with multiple landlords who have wanted to give their tenant the benefit of the doubt, we have advised them to always err on the side of caution. Serve that notice, even if you trust that this tenant will eventually get their payment in. Many times we have heard, “I get paid on the 9th, you will get my payment no later than the 10th.” And in many cases, we do end up receiving it by then. Even if you believe this tenant, they should still receive your legal notice on the 6th day, or on the day your grace period expires. If you receive that payment on the 10th, perfect! You can collect the late fee, and you do not have to file the legal notice. If, by chance, your tenant’s good intentions fall short, and you are now on the 10th of the month with no payment. You will then need to serve your legal notice much later in the month. As the end of the month approaches, the tenant will now owe for the next month, which will put you in an even less ideal situation.
Instead of giving the tenant extra time to come up with their rental payment, we have had success in advising tenants to seek help from a local charity. If the tenant is truly struggling but will be able to get back track with a little assistance, a charity can be a good option. With proof of a legal notice, some local charities will provide a struggling tenant with one month’s rent, or several months, depending on the tenant’s situation. Take this opportunity to discuss with your tenant whether their current living situation is actually an affordable option for them. Bring up their credit, and how multiple late payments and a possible file for eviction, will severely impact their future moves.
About the Author
Linda Liberatore is the founder and president of My Landlord Helper—Secure Pay One, a unique virtual assistant solution for DIY real estate investors. She also is a motivational speaker and author of the book “Daily Inspirations to Achieve Your Real Estate Investment Goals.” Her second book is due out Spring 2017. She has conducted more than 1,000 workshops focusing on setting goals and implementing technology and best business processes. Her ability to transform a property suffering from reduced collections into a flourishing one is displayed by a 98 percent client retention rate.
Contact her at email@example.com.