Tenant Troubles: Dealing with Late Paying Tenants

One of the toughest things to deal with as a rental property owner is collecting rent from a tenant who pays late – or, worse, doesn’t pay at all! When we were just starting out as real estate investors, my husband and I lost nearly $5,000 in unpaid rent and filing fees in an effort to evict one non-paying tenant. It was a nightmare.

Every state and province has different Landlord-Tenant Statutes, so it’s important to familiarize yourself with your local laws. Meanwhile, here’s some general advice:

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1. Act immediately. Issue a non-payment of rent notice as soon as the rent is late. Keep records of every notice.

2. Act consistently. Always charge the same late payment fees and file non-payment notices for every tenant who pays late or not at all. Consistent actions create a strong precedent should you ever have to defend your actions in court or try to evict a tenant. It also shows tenants that you are fair, but firm.

3. Move them out. If all else fails, try to negotiate a voluntary move out. Court-ordered evictions are expensive and time-consuming – but, if the tenant refuses to leave, you have no choice but to go through the process.

That said, the best cure for getting tenants to pay their rent on time is prevention!

Put some effort into finding and keeping good tenants, and you’ll find that most of your tenant troubles go away. Now, we follow a strict process for finding and screening tenants:

1. Show the property in good condition. If it doesn’t show well with the existing tenants living in it, wait until they move out. Good tenants have choices, and if the property doesn’t look attractive, why would they want to rent it?

2. Price the unit slightly below the market rate. $15 – 20 per month below competing units will attract more applications.

3. Run each applicant’s credit report and call their previous landlord – the landlord before their current one. If they have caused problems, their current landlord could be anxious to get rid of them and may not be truthful.

4. Verify the applicant’s employment. We usually ask for a recent pay stub and call the company to verify that they hold the position they claim.

(Adapted from articles written by Julie Broad for Early to Rise)

12 Comments

Filed under investing, problem tenants, Property Management, real estate, self managing rental properties

12 responses to “Tenant Troubles: Dealing with Late Paying Tenants

  1. Santiago B.M.

    Nice article!! Greets from Spain.

  2. Pingback: Posts about Real Estate Market Reports as of April 5, 2009 | Real Estate Market Reports

  3. Very good synposis of how to handle non-payers. Something I do as well is keep a tenant communication log of all the voicemails and personal visits I made to try and collect. Keep up the great info!!

    • Wonderful idea @Ryan Jones!! That is a very good thing to do – something we haven’t done but should!! We always kept email and letter correspondence but not records of phone calls. Great plan. Thanks for stopping by!

  4. Good points. I’m going to make sure we act quicker from now on.

  5. Awesome. I owned over 100 hundred houses, duplexes and such. This article is dead on. So many people that don’t follow these steps do get hurt by bad tenants.

    • @Stephen Davis – thank you for stopping by. Did you manage those homes and duplexes on your own? I can imagine you have some incredible tenant stories to tell!!

  6. I inherited a bunch of bad tenants that I could go on and on about. But I am proud to say that using the principles you are talking about, I never had an eviction in SF with people I put in. I moved to multifamily pretty quick. Within 3 years.

    Your point about “show the property in good condition” helped me attract the right people and be able to pick and choose. Not many websites mention that and it is so important.

  7. Many thanks for sharing to us, I would love this blog, and bookmark now.

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  9. I am 2 yrs new at wearing this property manager hat. Its more work than may appear on ther surface, but absolutely worth the additional time to limit the troubles caused if you don’t. This I will add to what I am currently doing in Va to grow my business. Love the tips, thank you much! MR T in Richmond VA

  10. Karen

    I made a big mistake I rented to a friend and that’s the last thing in the world to do. I will ever do it again. Once I get her out I can’t wait, she never pays her rent on time, I do keep all my letters I send her, but it’s like it goes in one ear and out the other. I tried to talk with her so many times, but that’s not good either.

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