DIY Landlord Tips: When They Don’t Pay On Time
You did the best that you can to encourage tenants to pay rent on time, but alas, they still pay late!
It’s easy, as a DIY landlord, to slip into a less-formal relationship with your tenants — and that’s not even necessarily a bad thing. In a lot of ways, a less formal relationship means a better relationship. But that falls apart rapidly when the business part of your relationship gets in the way, which tends to happen swiftly when the tenant fails, for whatever reason, to keep up their end of the lease — particularly when their failure costs you money and you have to collect…or worse yet, evict.
The Two Ways to Respond to an Unpaid Bill
Ultimately, there are two ways that may work successfully for you when your tenant can’t pay you a debt they owe.
The first is that you have a close enough relationship with them that you’re able to sit down and talk to them, figure out what the story is, and work out a plan for how they can manage their resources to catch up and keep up in the future. That’s clearly the best way, but it’s dependent on the tenant to openly communicate with you when things start to go south, which takes control out of your hands.
The second way things work out in your favor is by taking control of the situation. Going down this path involves simply sending them a Pay Rent or Quit notice the day they’re late on a payment, effectively forcing them to get in touch with you to work things out. It’s much more of a strain on an informal relationship, because it forces things to get formal real fast. Nevertheless, if you’re landlording over more than a handful of tenants, it’s almost the only way to go, because it gets exponentially more difficult to maintain sufficiently close relationships as the number of tenants you oversee goes up.
Upsides and Downsides
It’s funny, because those two options almost always have the same result: either you two sit down and work something out, or they get evicted. But what happens along the way is hugely different.
The first option prioritizes your relationship with the tenant at the risk of losing a lot of money if they decide to play you and see how long they can stay, paying the least amount possible.
The second one prioritizes your bottom line, but tends to alarm and annoy the tenants who naturally see anything of a legal nature as an attack. Even if your only intent is to make sure they get in touch quickly to work things out. This can strain their perception of you and can ultimately result in them treating both you and the property with less respect in the future.
With either approach, be sure a payment plan is agreed upon and it’s in writing to hold the tenant accountable. Remember, if they have “nowhere to go”, they will tell you anything to stay.
In the end, though, you’re the landlord, which means ultimately, you’re going to get your money or they’re going to get evicted. Of course, the process of evicting someone is its own challenge — which we’ll talk about in our next post.