Education and news for smart DIY landlords!
A landlord could feel very peaceful running his rental property business... until a couple of tenants don't pay rent. One of the things to keep in mind in landlording is that problems are inevitable.
With that, you need to have a plan of action to deal with the situation effectively. So, what are your options if a tenant doesn't pay rent? Keep reading to find out.
Before you take any action, it's important to confirm with the lease agreement. When was the rent due and do you have a 3 to 5-day grace period? You'll also want to check for a late rent fee specified in the agreement. Once you have confirmed that your tenant has missed his payment, you can proceed with the other tips mentioned below.
When there's a problem involving a tenant, it would be good to discuss it with the tenant in a calm and fair manner. Be sure to ask your tenant what his reason was for not paying the rent. If this is the first time it happened, let your tenant know that you understand his financial situation. Then ask about when you can expect the payment.
A Pay or Quit notice is a legal document that you send out to a tenant to address his lease violation. This notice lets the tenant know that while he has not paid rent on time, he can still fix the issue within a specified number of days. If not, you will have to start the eviction process. Inside the Pay or Quit notice, include these details:
Cash for Keys is an alternative solution to an eviction. Evicting tenants can be too much of a hassle for landlords, and so a landlord may opt for a "cash for keys" agreement. As the term implies, a landlord offers to pay their tenant to vacate the property within a certain number of days. Landlords who've had experience with cash for keys report paying a minimum of $500 and a maximum of $5,000 for a tenant's keys.
If you have talked with the tenant, offered Cash for Keys or sent a Pay of Quit notice, and he still refuses to pay, file for a formal eviction. Make sure to keep all pieces of evidence pertaining to the case. Evictions leave a negative mark on a tenant's records. They will reflect on the tenant's credit report and rental history report.
Remember that when dealing with problem tenants, keep your cool. Never harass a tenant or take matters into your own hands. Most importantly, set clear boundaries right from the start.
If you’re ready, make Landlord Prep your go-to resource for landlording education. Here, we offer a complete DIY landlording course to get you on the right track. Join our academy today. If you want, you can check out Flavia’s real estate investing webinar first!