Renter Moved out without Payment

Well, closed on my first fourplex last month.
I bought with 4 leases in place all month to month. I understand that most of you would, and have, argued that its better to buy empty than inherit someone elses troublemakers. But I made the decision to buy because the deal made sense, knowing that I would deal with the troublemakers.

Fortunately I have gotten rid of one of the troublemakers. But they didn’t pay rent! The deal rushed to close faster than I expected (one lesson learned) and I didn’t have property management in place, and got behind in dealing with every thing that needed to be dealt with (Trash, Utilities, getting ownership change notices out, etc). So when the renter told us, I just started another job, and will pay at the end of the month, I let it slide. Guess what?!? Yah newbie mistake. Another Lesson learned.

So my question is what is my recourse? Can I send the bill with late fees to the renter (assuming the set up a fowarding address), and when they don’t pay as I assume they won’t throw it to collections on the off chance that somewhere down the road that I’ll get it back?

Small claims court? Is it worth it for a $525 + late fees check?

People like this try to disappear. You can try to sue them in small claims court, but you have to find them first. If you can find them and get them served, you’ll get your day in court. If they don’t show, you win whatever you are claiming. The next challenge is getting them to pay. In my town, I can pay $65 and get an execution against their vehicle.
I had a couple move out owing a little bit of rent. They left the standard amount of trash in and around the house like sorry people do. They also decided they’d help themselves to the stove and refrigerator we provided for the house. I was able to find them and sued them for all applicable costs which included a brand new stove and fridge. The ones they stole were used, but I had to get replacements so oh well. Anyhow, I filed that execution on their car and just happened to see their car parked at the county courthouse when I was there one day. I called and the cops had a roll back come and haul the car off. A few weeks later, I was compensated in full for our losses and the guy got his car back.
That’s a story with a happy ending from my perspective. I have others where I’ve got judgments, but can’t find the people or their car now, one person doesn’t have a car I can take, and there are others I can’t even find to sue them in the first place.

You can try to go after them, but it’s going to take some investigative work of your own. I file against people if at all possible. I may not ever get anything back, but I want something on their record to hopefully warn the next LL about them.
If you accept stories for payments, you run this risk. That’s not saying I don’t let some people go for a little bit. If someone has a good history and has a hiccup, I deal with it. If I’ve got no reason to trust them, I kick them out right away to mitigate my losses. That part is up to you, but I listed your options as I see them.


Focus on renting up the unit. Put the rent to collection and forget it. You won’t get the money, and the renter won’t respond to it anyway, but it will reflect negatively on the deadbeat’s credit report for at least three years.

You could file a small claims suit, and get a judgment, and then what? Spend more time and money chasing down a judgment?

When I was in my twenties, nothing got my juices going like a deadbeat. I was on them like a dog chasing a cat. I was tireless …and stupid.

Today, I focus on making money, not chasing after deadbeats. Unless you like working for free, or ‘for the principal of the thing,’ which just reeks “amateur.”

Now you know how to arrange and negotiate the closing so that you’re not caught flat-footed without getting compensation for assuming a risky set of tenants.

One thing for future reference, is having the seller assign you the “scheduled rent” at closing, not the rent receipts. Otherwise if you’re only getting the rent receipts, it’s a crap shoot, what rents you’ll get credit for at closing. Also if the seller isn’t assigning you the scheduled rents, he has zero incentive to make sure the rents are collected by the closing date.

You’re doing exactly what I suggested that thedonaldjr, with $2M in cash, should do. Now, you’re on your way. :beer

Have you considered using a collection agency? I’m wondering if that’s a less intensive way to go about it. And we all have heard how aggressive they can be in getting debt repaid.

If you have thought about it, why don’t you use them? And if you have used them before, why don’t you use them now?

Yes, lesson learned. Stories dont help purchase the next building. And non-paying renters who don’t have a good history, are well, history.

Thanks for the Reply!


So, you use a collection agency? Great, that means I am sniffing in the right direction. I am doing this to get rid of the Job, and don’t have the time or willpower to focus on throwing time at lost money. And I definitely don’t want to be doing it when I acquire enough properties to leave the Job.

I figure my odds of getting the collection are better than being able to get a property through a tax deed sale. So why not try, right? :beer

So, do you use a local agency, or a national agency? And how did you decide on them, and what terms should I expect them to give me?

Funny thing about that, I told my realtor that that needed to be part of the contract, and he pshawed it, and said, “It’s standard practice.” Yet another lesson learned. And then the seller forced the close on the 5th of the month. Threatening to walk away from the deal if we didn’t close within 7 days.

But that’s okay, we make mistakes, and we learn from them. I learned a lot on the first deal.

I wish I had $2M in cash, I’d pick up enough 4plexes to cash flow me into a nice large apartment complex withing 12months. I’m sure I could find a Bank around here ready to offload enough of them to one seller. I’ll settle for closing on 4 this year, and leverage that into 4-6 next year off of cash flow.

So, do you use a local agency, or a national agency? And how did you decide on them, and what terms should I expect them to give me?

I use a local outfit. They charge me a flat fee to open a file, and then charge me 35% of what they collect. I rarely collect anything meaningful. However, I have forced BK’s on many prior customers. My objective is to report the credit history, not collect money. It also serves as an object lesson to anyone thinking about not paying me.

Frankly, a large majority of potential deadbeats just skip on me, when they discover what I’m willing to do. I prefer skippers over squatters.

Frankly, most all the collection drama and trauma is on newly acquired property with existing deadbeats. I don’t have these issues after a while, because I insist that all my (new) customers have something to lose in the event they decide to screw with me.

Again, don’t focus on capturing deadbeat money. Focus on the easy money from paying clients.

As an aside, I’ve got a simple system set up with my collection agency. I send them a name, a social, an amount to be collected and the last/latest known address, and a “processing” check, and then I forget about it. I spend at most 10 minutes on the effort.

Nowadays, Such kind of incident becomes common that tenant disappear without payment. You have to screen tenant properly and collect all necessary legal document from tenants.

Thanks for the Reply, but note, I had just purchased the property the previous month.

I had no control over:

You have to screen tenant properly and collect all necessary legal document from tenants.