Tenant not paying rent?

Posted by neil on August 04, 2012
General

 

Hi Everyone,

I hope that you are all doing well.  First off, I would like to say, thank you to all of you who have recently submitted guest blog requests over the past several weeks.  There have been so many requests recently that I have a back log of guest posts to publish.  I will be publishing these posts in the coming weeks.

Also, because there has been such a demand for guest bloggers, I will not be accepting any more requests until later on in the year. Thank you SO much for your interest!  Once I am ready to accept guest blogs again later in the year, I will make the announcement through a future blog post!

Now on to business….

Today’s date is August 4th 2012.

If you own a rental property, and if your rent was not paid on time, you need to take action if you have not done so already.  You need to  prepare the necessary paperwork required in order to notify your tenant of their ‘non payment of rent‘.

In Ontario, Canada where I am, the paper work that you prepare in the event of non payment of rent is called the N4.  I have no idea why the call it an N4 here.  It is such a weird name.  So weird, the form name was once mistaken for a type of gun!  🙂

You should know that novice real estate investors fall into the following trap…

Often times when the rent has not been paid by their tenant, they are given an explanation by their tenant as to why the rent was not paid on time.

In many cases, the novice real estate investor then delays in submitting the necessary paperwork notifying the Landlord and Tenant Governing body in their area of the non payment of rent.

This is a very common mistake that novice real estate investors make.

You must never delay in submitting this paperwork!

…But

There is always a BUT…

New real estate investors will make this mistake time and time again.  I see it all the time.

I do not blame the ‘newbies’ because I have also made this mistake myself.  I have delayed and delayed and delayed submitting paperwork because I was repeatedly told by a tenant that the rent is going to be paid.

Well, my real estate investing friends, I want you to know that you cannot delay in submitting this paperwork.  If you do, the process will eat you alive.  In many jurisdictions, legislation is in favour of the tenant.  As such, as a landlord, if you delay in submitting paperwork, you are doing a disservice to yourself.

No matter what, if a tenant is late in paying their rent, you have to file the initial paper work notifying the tenant of their ‘non payment of rent’

Don’t FREAK out!

New real estate investors always freak out when a tenant does not pay rent.  They also freak out about the paperwork and about WHEN they are supposed to submit the paper work.

When is the right time to submit the paperwork?

Not knowing the answer to this questions literally kills a lot of novice investors.  They have no idea when they are actually supposed to submit their paper work to their tenant and to the governing body.

The RIGHT answer!

The right answer is that you should submit your paper work notifying the tenant and the governing body of the non payment of rent as soon as you are allowed.  That means, that you always submit the paperwork on….

The 2nd of the Month

What Most people do…

What most people do, and when I say ‘people’, I am referring to experienced real estate investors.  What they do in reality is NOT submit their paperwork on the 2nd of the month.  This is a generalization as I am sure that some actually submit their paperwork on the 2nd.  However, most people don’t submit on the 2nd.

Why don’t people submit on the 2nd

People don’t submit on the 2nd of the month for a number of reasons.

-some people are lazy

-some people don’t know the rules surrounding how to deal with non payment of rent

-some people like to give their tenants some extra time to pay the rent

Which day do you become a real estate wimp?

You become a real estate wimp if you do not submit your paperwork by the 5th of the month.  This is already too late, however, in my books, it is the absolute LAST day to submit the paper work to your tenant.  There is absolutely NO reason why you should be delaying any further past the 5th of the month.  If you do, you are asking for trouble.  If you tenant has decided not to pay you rent again, or is unable to pay you rent, you need to begin the eviction process.  Waiting, staling, hoping is going to do you no good.  You have to take action and submit your paperwork on this day, or BEFORE!

How do I know this?

Believe it or not, but I once waited over 4 months before submitting paperwork to notify the tenant and the governing body of their non payment of rent.  This was a huge error of judgement on my end.  A huge error of judgement that almost cost me a little over $5000 in unpaid rent.  Fortunately, I was able to recover the rent at a later date.  However, I came VERY close to losing out on $5000 in rent just because I was not following the process.  I almost lost $5000 in rent because I was a real estate investing wimp!

What I learned

I learned to never again be a real estate investing wimp.  I learned that NO MATTER WHAT, if rent is not paid on the 1st of the month, the ‘notice of non payment’ must go out by the very latest by the 5th of the month.  (The 5th of the month is my personal preference, currently.)

Bottom Line

You got into this business or are looking to get into the businsss of real estate investing because you are not a WIMP!  You are willing to take risks that other people are not willing to take.  Real Estate investing in full of risks and rewards.  You must learn very early on to manage the risk that you are exposed to.  The only way to manage the risk of a tenant not paying, or not paying on time, is to file the necessary paperwork with your governing body as soon as the rent is not paid.

Don’t be a wimp.  If you are a wimp, you may very well lose lots of money in  rent and be wiped out of this businesses due to your inaction.

Best Regards,

Neil Uttamsingh

ps: All real estate investors need support, whether you are new or experienced.  To learn step by step guidelines on how to deal with non paying tenants, read my post on how the Real Estate Investment Network can help you!

 

 

 

 

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9 Comments to Tenant not paying rent?

  • Bang on Neil, couldn’t have said it better myself. You (the RE investor) is taking all the risks and doing everything according to the regulations (hopefully). The system is there for a reason to protect tenants AND to give landlords a process to follow – Don’t Delay!!
    Love this post! keep doing it Neil…

  • Great post! Really driving home the point about filing the paperwork ASAP (between the 2nd and 3rd of the month, realistically) will motivate a lot of current and future investors into getting their butts in gear!

    • I agree 100%. So many problems are avoided when real estate investors/landlords learn to be proactive and deal with situations immediately.

      Thanks for your comment!

      Regards,
      Neil

  • Also wanted to say that as a property owner, you need to look at this from a business perspective, as much as you possibly can. You’re inevitably going to feel some sort of emotional connections to your tenants if they give you sob stories, but don’t let that deter you from filing the paperwork. Doing that ASAP doesn’t mean you’re a bad person!

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