Real Estate Investing Training: How to Handle A Non-Paying Tenant
Welcoming a new tenant? Most of them are just fine, but a few might keep you up at night. Its part of every landlord’s lives, and there’s no avoiding it. In fact, as part of your real estate investing training, knowing what kind of tenants you may attract and what to do in certain cases is like walking on a tightrope – believe me I know.
So as a landlord who is just welcoming in some new tenants, here are 5 common issues that you may encounter. And how you can effectively handle them and keep your investments secure.
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Your tenants refuse to pay or ask for extensions upon extensions with no end.
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Causing damage to your premises, and refusing to pay damages.
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Complaints and more complaints.
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Accusing you and your staff without any proof
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Making their issues your issues.
Today, we will be tackling one kind of a tenant – the non-paying one. But first, here’s the golden rule to follow in all these situations.
Act as Their Ally
Act as if you are on their side, but always be firm yet fair in your dealings. For example, your tenant might not want to pay the month’s rent, and will likely try to make up all sorts of excuses to avoid it. You can get on their right side by saying:
‘ I know how you feel. And also know how hard is this. However, we have to follow the lease. For legal reasons you know, and we can’t make an exception in your case otherwise we’d have to make one for all. I hope you understand.’
This example may end up calming the most difficult tenant.
Tenants that refuse to pay
They say that prevention is better than the cure, and it could not be any truer in this particular case. To avoid taking on a non-paying tenant, always make sure you screen them and then screen them more.
You might consider making a policy for situations arising out of nonpayment or payment plans. This is why it’s important to have a system in this case. In fact, the absence of a policy regarding non-payment may end up making you fall victim to whatever sob story your tenant cooks up. And it will probably never end.
For starters, make the rent due on the first of every month. If people are late by the 5th, charge them a late fee. That might prove to be an effective deterrent for most. But for special cases, you might consider bolstering your nonpayment policy by stating that on the 12th day, a 72-hour eviction notice will be sent unless they pay all dues. Tell them that you, the landlord, are within their legal right to evict them if they do not pay up. Make sure you put all eviction charges on the tenant’s balance.
Also, make sure that for a 1-year lease, you make it clear that only one payment plan is acceptable. If the tenant does not intend to comply with the rules you’ve put in your policy, you can file an eviction order against them. Make sure you check in with your attorney regarding the state’s laws and to ensure that your policies and lease comply with local laws.
As harsh as this sounds, having a system like this in place is not only essential but pretty much Landlord 101. Because as the crucial link between a real estate owner and a tenant, your role as the landlord is crucial in ensuring that all cases are handled professionally, and without incident. Not only will the owner thank you for it, but you will have far fewer headaches involving a fussy tenant.