Your applicant sails through the screening process with flying colors, moves in, pays the rent in a timely manner and treats the rental with loving care. All is well in your world! Yes, all is well. That is, until:
- His car suffers a major, expensive repair issue
- He gets laid off, or loses his job
- He becomes ill or has an accident that requires hospitalization
- He goes through a divorce
- He develops alcohol or other addiction problems
- He gets into credit problems and has to file bankruptcy
All of these events have a negative effect on your tenant’s ability to earn income and pay the rent. When these things happen, the proverbial “writing is on the wall.” He may feel he can get caught up, and ask for some time to remedy the situation. So, what do you do?
I have a friend in the business whose tenant suffered an illness causing loss of work > loss of income > loss of rent for my friend. Mark agreed to give his tenant time to catch up on the rent. Three months later, he’s only seen $300 of the $1000/month rent he is supposed to be collecting on that property. (Whaaat?)
IF you’re willing to allow time for your tenant to catch up on monies owed, make a written contract signed by both of you, detailing time and amounts of payments to be made, and consequences (eviction) of missed payments. And be prepared to get them out quickly if they don’t deliver on the contract!
When eviction is imminent, I tell my tenants that if they can be out before the court date (two weeks following the day I file, here in Indianapolis) and leave the property clean and empty, I won’t pursue the case through the court system. If they don’t owe me much money — and I always file BEFORE it gets to that point! — it saves me time and money if I can get them out early. Quick exit on the tenant’s part, quick turn-around for the unit, and I’m back in the money. And in the case of a good tenant who has just had a terrible turn of rotten luck, it saves them having an eviction on their record. A win/win for all.
So, when it’s time to go, make a written plan to make things right quickly, or make the move to get them out. Although we’re witness to a myriad of sad situations, this is an income-producing business — first and foremost — and our decisions have to focus on that priority.
A Bit About Barb Getty: Graduating Purdue and marrying soon after, Barb settled in Indianapolis in 1980. In 1992, after the loss of her son and the ending of her marriage, Barb bought a fixer upper and moved in with her daughters. With her first project successfully completed, Barb purchased her first duplex with little money, no credit, and no experience as a landlord. Today she proudly owns over 27 single and multi-family units as low and middle income rentals. Her book, The Landlord Chronicles, Investing in Low and Middle Income Rentals, offers common sense advice to all types of investors. She is financially and emotionally invested in her work with a positive attitude and a strong sense of humor. Barb Getty is making a difference in her tenants’ lives, the neighborhood, and the city as well. To learn more about Barb, follow her blog, or purchase her book, visit: http://www.thelandlordchronicles.com/