What To Do If A Good Tenant Stops Paying?
Q: Gerald. My tenant missed a rent payment–he’s a good tenant and he’s always paid on time. He’s only 5 days late, but I’m worried. What should I do? Curt, Washington, DC
A:Great question, Curt. Should you give more slack to a good tenant? Hell yeah, you should! Why? It’s not just for sentimental or to maintain good Karma reasons–although I have no problems with letting those things enter your mind. Remember my 1st real estate commandment: ”Real estate is more about people than it is about bricks & mortar.” (You can check out my other real estate commandments here: http://www.performanceproperty.com/about/)
As CS Lewis said, “In our hearts we all know what’s right.” There’s nothing wrong with having empathy as a human being for your tenant like you should for all your fellow human beings. This doesn’t mean you have to let yourself get railroaded or taken advantage of either. The first thing you have to determine is whether your tenant has the financial capacity to be able to pay the rent. If the answer is no, then you probably can’t let them stay unless they get assistance from a 3rd party (charity for example). However, if it’s a temporary situation or expense that caused a good tenant with proven long term on-time payments to fall behind, you’d be stupid not to at least consider cutting them a break, because at the end of the day, you risk not getting as good a tenant the next time around. In addition, you have to start over from zero again, paint, advertise etc. for the possibility of getting someone as good as this tenant that’s proven themselves.
I had a good tenant once who came to me and because she knew she was about to fell behind because her father had just died and she had to pay for the funeral. Without hesitation, I thanked her for coming to me first rather than me having to chase her down and I worked out a payment plan with her. If you manage expectations the way you’re supposed to as a landlord, there won’t be many surprises with your tenants. My tenant came to me because I’d been clear about the rules of the tenancy up front and we were able to work something out.
Thanks for your question, Curt, good luck.
For more real estate tips and information visit my blog at geraldlucas.com.