How should I deal with a late-paying tenant???
Tenants who pay late are one of the biggest problems landlords deal with on a regular basis. With thousands of tenants behind us, Great Homes have developed several strategies to make sure our owners get paid on time.
The conflict for many owners is the balance between being a “good landlord” and keeping a tenant happy vs. getting taken advantage of by a tenant that just needs to go.
Here are a few guidelines to maximize your results:
Screen applicants right to avoid weak tenants
Don’t settle! Most late paying tenants and evictions are born in the screening process. You have to set qualification criteria that create a successful long-term tenancy. Once you know what your minimum criteria are, stick to your rules.
Set the right expectation at the lease signing
Let the tenants know right up front what your policies are about late payments, late fees, and enforcement. In the signing meeting, be very upfront about your commitment to them loving the home AND their commitment to paying on or before the first! It is the perfect time to say “I am sure we will never have to deal with this, but I want you to understand that I am very strict with my late fee policy…”
Enforce good habits
Most of the tenants we have ever worked with pay on time every month and end their lease with no issues. Having said that, if you are a landlord long enough you will have some problem tenants too. We encourage a very strict enforcement of the lease terms. Some tenants would pay late every month if you let them. The purpose of a strict enforcement policy isn’t to make tons of money on late fees, it is to get tenants to value an on-time payment as much as you do.
Don’t let fear of a vacancy drag out the eviction
This is one of the most expensive and common mistakes landlords make. Even with a professional manager, some owners want to give a tenant another chance, another week, or another payment plan. None of us want a vacancy, but if that is where you have headed it is best to yank that Band-Aid off instead of pulling it off slowly. We have signed up owners who have gone for months without rent because they were trying to avoid a vacancy! Get the property back, get it rent ready, and move on to a new tenant.
Follow the legal process every time to minimize losses
Every landlord wants to keep a great tenant happy and in the house for as long as possible. Once you are headed for an eviction though, take possession of that home as fast as the law will allow. Follow the same process every time. Be consistent and fair but protect your business. Your 5-day notice, forcible detainer action, and the writ should all happen with zero delays. “I can bring in the payment tomorrow” is a deadly game for landlords to play. When you remind a tenant that “tomorrow” they will have to include the penalty for the 5-day, it is amazing how many find a way to get to the office before 5:00 today.
Keep your tenants happy but they need to keep you happy too. You will have much less trouble with late payments if you follow the steps above. You can be a great landlord and still be firm in your expectations of the tenant. Any other path leads to lots of frustration for both you AND your tenant and kills your ROI in the process.
Should there be more questions about the steps, don’t hesitate to Contact Us