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Author Topic: Hard Nose Tactics When Dealing With Tenants ?  (Read 19661 times)

Offline rvestor

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Re:Hard Nose Tactics When Dealing With Tenants ?
« Reply #30 on: December 14, 2006, 02:06:12 pm »
Here's an easy one for you.  As a former Real Estate Broker and landlord for the last 10 years, here's some advice.

Your state has a Landlord and Tenants act somewhere in the state regs.

  1. Understand it completely.
  2. Follow it completely when dealing with tenants.
  3. Do not take security deposits without the 15 day notice to te tenant or as required  by the prescriptive regulation.
  4. Avoid retaliatory acts that could in some states, lead to treble damages against you.
  5.  Do not take partial payments from you tenant.  In many states this either delays prevents the landlord from taking any accelerated evicted procedure related to non payment of rents.
  6. Treat all tenants the same.  Never forgive a late payment, even from your prettiest or most needy tenant.  Always require all payments in full and always charge late fees.  Forgive a late fee just once and every tenant will start being late.
  7. Follow eviction procedures to the letter and always evict tenants that can't pay up in full.

I have empathy for any tenant that is struggling and can't pay up.  But I realize that the only difference between them and me are the choices they made that drove them to where they are and the choices that I must make to ensure that my mortgage payments, taxes, insurance, utilities and maintenance expenses and reserve accounts are always up to date and fully funded.   I haven't found any of the above parties to my obligations that will give me a break.  And the very tenants that want a favor such as a break on the late payment are the first to complain when somethiing breaks.

This makes my choice unequivocal to me.  I must err in my favor to succeed and I hope that you will make the right choices for you.

A business associate does something a little different with his late fees.  He charges a rental rate at the top of the market, then gives a $50.00 discount when payments are made on time.  He seldom has late fees although they are written in the lease if a tenant is late.

Offline kigray

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Re:Hard Nose Tactics When Dealing With Tenants ?
« Reply #31 on: December 14, 2006, 03:54:16 pm »
I agree with most of what you wrote.  But I have a different view on late payments.  I have been successful in my real estate ventures.  I usually get my rent payments 0 - 15 days late.  I have never missed a payment.  I have never evicted a tenant.   I have saved alot of time by not wasting time on people until they are 15 days late.   Im sure I could have made 15 or 20 dollars more here are there if I was more aggresive about late payments but,  first its not worth my time.  And second I have found my tenants respect me and my property more due to my respect for them.  In the few instances where people are late I usually call and base my words on the assumption that there was a simple mistake.  Instead of calling up and being angry I simply say "Hey <name> I havnt received Octobers payment.  I know you always have paid on time in the past and I assume you simply forgot about it."  The response has been I forget Ive been overly busy I will put it in the mail today.  Basically I have found when dealing with people if you assume that they are responsible tenants they are more likely to be responsible.

Its the same way I have handled other business.  I have a friend and whenever he thinks a project will be late he calls up and starts yelling.  The vendor starts giving a 1000 excuses for why it will be late.  I usually call up and say you have done great work for me and I am 100% confident this will be done on time because you said it will be done and I have confidence in that.   I have had much better luck than my friend.

Offline propertymanager

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Re:Hard Nose Tactics When Dealing With Tenants ?
« Reply #32 on: December 14, 2006, 04:00:30 pm »
kigray,

You can get away with that when you only have a few rentals.  It simply will not work when you have a lot of rentals, especially if some of them are in apartment buildings.  Not following the lease is OK if Real Estate is your hobby, but won't work if you're running a rental business.

Mike
www.1MinuteToRentalPropertyRichs.com 
This No-Hype, No-Nonsense Book is a step by step course in making money and building wealth with rental properties!  Everything from buying properties at a discount to dealing with terrible tenants.  Now In Paperback!

Offline gallo06ss

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Re:Hard Nose Tactics When Dealing With Tenants ?
« Reply #33 on: December 14, 2006, 05:09:40 pm »
Thats right people, send your 3 or 5 day landlord notice, personally and in the mail, according to your state law, make sure u keep copies of your notices, and everithing, dates, etc, etc, just in case they say u didnt send anything, and if you got to court u have proof of everything

Offline kigray

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Re:Hard Nose Tactics When Dealing With Tenants ?
« Reply #34 on: December 14, 2006, 05:17:53 pm »
First I want to be clear I think there is a time and a place to go after people.  I certainly have no problem with going after people in a situation where something important is at stake.  I have no problem with being a mean and nasty SOB and have no problems calling lawyers and business partners and whatever is required if someone has wronged me thinking I will not pursue them.  My approach to rental properties is not that I want to be considerate its that my approach has worked for my rental properties for the last 5 years.   In the beginning alot of people said that we needed to have a very hard nose approach or we would fail.  5 years later I have never missed a rent payment.  I dont have exact numbers but I would estimate that about 30 percent of my rent checks have been late.  

There are certain situations where a solution no longer works as the scale of the operation increases.   But I dont see why that would apply in this situation.   There would be a problem if the solution required more time but that is not the case.  In addition I know of landlords who have a similar approach to mine with vastly more rentals that have been successful.  

While I dont agree that the solution doesnt scale.  I might agree it doesnt work for rentals under 600.  In general my units have rented for over 600.  

Offline propertymanager

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Re:Hard Nose Tactics When Dealing With Tenants ?
« Reply #35 on: December 14, 2006, 05:52:28 pm »
kigray,

Here's why it does not work if you have a lot of rentals.  Tenants have the right to expect that you will follow the lease and treat them fairly.  When you have more than a few scattered rentals, some of the tenants will know each other.  When you don't expect one tenant to pay on time, the other tenants should not have to pay the rent on time either.  If your lease says that the rent is due on the 4th (or whatever) and you don't even call Mrs. Jones until the 15th, then Mr. Smith certainly should not have to pay on the 4th either.  In apartment buildings, every tenant knows what every other tenant is doing.  Before long, almost no-one will pay on time and they should not have to.  The very first time you try to make a tenant pay on time when the others have not, you will get sued and you will deserve it.  In fact, if the offended tenent is muslim, is black, is a woman, is an alcoholic, a drug addict, has any disability, or in any other way could be considered a minority - you will not only be sued but you also will be charged with discrimination (and you will deserve it).  

When you sign a lease, you are agreeing to abide by the terms.  Failing to insist that the lease is followed is a poor way to do business and invites lawsuits.  

Mike
www.1MinuteToRentalPropertyRichs.com 
This No-Hype, No-Nonsense Book is a step by step course in making money and building wealth with rental properties!  Everything from buying properties at a discount to dealing with terrible tenants.  Now In Paperback!

Offline kigray

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Re:Hard Nose Tactics When Dealing With Tenants ?
« Reply #36 on: December 14, 2006, 08:40:11 pm »
Hmm.  Alot of my tenants know each other.  In fact because of my approach, being a treat people well, when places go vacant current tenants often recommend their friends.  When I have places across town go vacant I will frequently tell my tenants its vacant in case they have a friend looking.  Now if I dealt with tenants differently you are correct this would be a poor strategy I could get sued for.  But I never proposed this strategy.  I treat all the tenants the same.  I dont go after anyone for being a day or two late and never have.  For instance this month I went to the PO Box on the 12th.  All my rents were there.  I took them across the street and deposited them.  Since I was in the neighborhood the whole experience took about 10 minutes.  A few of them were late based on the postmarks.  Now I could have gone on the first.  And wasted alot of time on the phone.  Then gone back to the PO Box on the third.  Wasted more time on the phone listening to someone tell me it was in the mail.  Then gone back on the 6th.  My approach which has worked for years on multiple rentals has worked well for me.  

I am not saying your approach does not work.  Im simply saying my approach has worked well for me.  Im not proposing to treat different tenants in a different manner.  Im basically saying I check my rent box usually around the 10th.  And over the years I have saved countless hours by doing that.  

Offline DannyTheGreat

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Re:Hard Nose Tactics When Dealing With Tenants ?
« Reply #37 on: December 15, 2006, 10:04:16 am »
kigray,

You don't collect your rents until the 12th of the month?!? What would you do if some rents were not in your PO box? What if when you called or stopped by they said they just don't have the money? Then you'd decide to evict them. But how much water would your case hold if your not enforcing your lease agreements until the middle of the month?

Technically, if you aren't enforcing your contracts to the letter, the entire thing becomes voided. You can't break a clause and enforce the rest whenever you choose. Therefore the judge may be inclined to say that the tenant doesn't owe you anything. Since your tenants know eachother, the following month, you might go to the PO box in the middle of the month again and it be totally empty. You call the tenants to ask where your money is, they all give you the one-finger salute, you take them all to court, the judge says "Too bad, kigray." All because you didn't want to waste your time asking about money that is contractually yours.
"I fear all we have done is to awaken a sleeping giant and fill him with a terrible resolve."- Isoroku Yamamoto, Japanese Admiral- After the attack on Pearl Harbor

Offline kigray

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Re:Hard Nose Tactics When Dealing With Tenants ?
« Reply #38 on: December 15, 2006, 10:49:25 am »
I have talked to lawyers in my state about tenant related laws.  There are alot of reasons a contract can become null and void.   I doubt that if someone decides not to pay they can win a case simply because I started eviction a week or two later.   Additionally we use contracts that say we can collect late payments they dont say we have to collect late payments.  So I am not violating the contract.  I usually have most of our tenants on month to month leases.   So with notice they can be kicked out whether they are paying or not.   In my opinion year leases put too much power in the hands of the renter.  

Again Im not saying other strategies dont work.  But when I started this years ago everyone said if you dont freak out on people when they are late by a day or two they will never pay rent.   After having multiple rentals for over 5 years this has not been the case.  Im sure some day someone will not pay.  And I will evict them and either recover lost rent or ruin their credit.  (I run credit checks to make sure their is a credit score that is worth ruining).   But I cant imagine a case being won based on the fact that I didnt collect late payments that are optional in the contract.
If all my tenants decided to gang up on my they would all get evicted.  

Now Im always open to different viewpoints.  If someone can point to a court case where a tenant prevailed based solely on the fact that eviction proceedings where started on say the 15-20th of the month instead of the 2-5th  I would be likely to change my business practices.  

I have seen alot of cases where a lease becomes voided because a landlord fails to maintain a property.   I would be very interested if someone points to other court cases that deal with the issues we are addressing.  

Offline Rich_in_CT

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Re:Hard Nose Tactics When Dealing With Tenants ?
« Reply #39 on: December 15, 2006, 10:55:38 am »
In the meantime is your mortgage company waiting patiently for their check to come while you wait to get paid or do you pay it out of your pocket and hope for the best? :o

Offline kigray

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Re:Hard Nose Tactics When Dealing With Tenants ?
« Reply #40 on: December 15, 2006, 11:21:09 am »
As I said before in 5 years I have never missed a rent payment from a tenant.  Im confused about your comment.  My whole point has been that my strategy has lead to me collecting 100% of rent payments.  In addition I have low vacancy and turnover rates.  If anything this has made my business more profitable.  I dont know why this increased profitablity would have caused me to miss mortgage payments.

I guess someone might have such low reserves that they cant pay the mortgage until they collect the rent payments each and every month.  But if that is the case I would not be in the property business.  What do they do if the market goes down and they have more vacanies or when they need to replace a roof.  

Again Im really interested if someone can point to relevant court cases where starting eviction on the 15-20th was the sole cause of a tenant winning a case.   That would cause me to change my current practices.
« Last Edit: December 15, 2006, 11:23:43 am by kigray »

Offline DannyTheGreat

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Re:Hard Nose Tactics When Dealing With Tenants ?
« Reply #41 on: December 15, 2006, 02:51:30 pm »
kigray,

No one is interested in convincing you to change your business practices. If they work for you, great! Who are we to say what's right and wrong. Maybe a landlord has never lost a case for not properly enforcing the lease. But your leaving that possibility on the table. I'd hate if I was the landlord involved in that landmark court case.

At this point, you couldn't change your current practices if you wanted to. Your stuck with giving the tenants the option of paying late. It's not your forgiving strategy that allows you to collect 100% of your rents, it's good tenants and a bit of luck. Eventually a "professional" tenant with a good lawyer will mistake your kindness for weakness and you'll be explaining why it's your common business practice of not collecting rents or assigning late fees until the middle of the month. Just be cautious...
"I fear all we have done is to awaken a sleeping giant and fill him with a terrible resolve."- Isoroku Yamamoto, Japanese Admiral- After the attack on Pearl Harbor

Offline Cate

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Re:Hard Nose Tactics When Dealing With Tenants ?
« Reply #42 on: December 16, 2006, 09:23:35 am »
Hi Kigray,

I think you might want to consider the points about discrimination.  You may have been lucky for the last five years, but one case of discrimination can wipe out all of your profits.  

Here in liberal (translate as you will) Seattle, we have the Tenants Union and the Seattle Office of  Civil Rights, where tenants can receive free (to them, paid by us the taxpayers) assistance in going after any landlord they want for any reason.  As a property manager, I have been involved in discrimination cases, where there are no grounds for discrimination, and after months of hearings, interviews, depositions, statements, more hearings and more interviews, the property owners have paid tens of thousands of dollars in attorney's fees only to be found not guilty of discrimination.  

Whoopee!  No discrimination . . . but out the tens of thousands of dollars to get there.  That is the point of following the lease and your state's landlord tenant laws to the letter . . . to minimize your expenses (legal in this case) and maximize your profits.  It's a very simple equation.

Hope this helps.

Cate
"Life's a banquet and most poor suckers are starving to death."  Auntie Mame

Offline propertymanager

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Re:Hard Nose Tactics When Dealing With Tenants ?
« Reply #43 on: December 16, 2006, 12:27:48 pm »
Cate,

You are so right.  In fact, isn't that why so many newbies don't succeed?  They assume because they haven't had a certain expense yet, that they won't ever have it.  If you only have a few rentals, you could plug along collecting your pretend $100 per month (using guru numbers) for years without having a single lawsuit; or huge damage done by an angry tenant; or a discrimination claim, etc, etc, etc.  But then when it finally occurs, the newbie loses every penny of "profit" that they thought they had for the last several years IF THEY ARE LUCKY.  If they are not lucky and they lose the lawsuit, they could be wiped out completely  -  ALL BECAUSE THEY DIDN'T HAVE PROPER CASHFLOW!

Mike

 
« Last Edit: December 16, 2006, 12:46:01 pm by propertymanager »
www.1MinuteToRentalPropertyRichs.com 
This No-Hype, No-Nonsense Book is a step by step course in making money and building wealth with rental properties!  Everything from buying properties at a discount to dealing with terrible tenants.  Now In Paperback!

Offline dwj469

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Re:Hard Nose Tactics When Dealing With Tenants ?
« Reply #44 on: December 16, 2006, 12:38:54 pm »
If you walked out of a store without paying what would happen? Same principle. DONt take it. I have been waiting for rent from one of my properties but its the governments fault in setting up otherwise they pay first week of every month on rental assistance. Checks coe directly from assistance programs
My Daily Real Estate Investing Adventures
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