The most unsettling feeling you will have as a landlord is the first time you find out that your tenant is not going to pay you rent. I have been there before, and I would compare this feeling to an adrenaline rush. You become really fired up, and ready to take action. I had to calm myself down the first time this happened to me, as I could feel my heart beating faster the moment I discovered that they were not going to pay their rent.
I once heard an experienced real estate investor say, “If you have never had a tenant not pay you rent, you have not been investing in real estate long enough.”
These words are very true. The longer you spend as a real estate investor, and the more properties you potentially acquire results in your odds increasing that a tenant will be late with rent, or that a tenant will decide not to pay you at all. Fellow REIN member and real estate investor, Chris Davies knows all about kicking out dead beat tenants.
Tenants not paying rent is by far one of the biggest fears that newbie real estate investors have. I would have to say that this fear ranks number 1, second to the fear of property management.
As a new or aspiring real estate investor, there is one thing that you need to understand very clearly. If a tenant is not paying you rent, you have to be ready to kick some ass.
This may seem like a harsh statement. I don’t mean to come off as an aggressive or mean person, clearly I am not. However, there is one thing that I do understand, and I understand this very well, and that is, no one is going to take v9 rolex day date m118348 0090 mens rolex calibre 2836 champagne jubilee dial gold tone advantage of me and compromise my real estate business.
As real estate investors, you have a lot on the line. You have invested your money and time in order to buy real estate. You have hundreds of thousands of dollars on the line. Your rental properties are assets that you have to take care of. If you don’t take care of them, no one else will.
So what do you do if a you are a new real estate investor and your tenant decides not to pay you?
Here are some suggestions:
1) Leverage on your property manager
Despite what some people might tell you, I believe that having a good property manager is very important. Your property manager should know the ins and outs of the rules of your local Real Estate and Tenant Board. When the you know what hits the fan and your tenants decide not to pay you, your property manger can step in and issue all of the appropriate forms and documents to the tenant pertaining to their non-payment of rent. The property manager is your ally. Leverage on them. They are experts in dealing with this type of situation.
2) Don’t be a wimp
I have heard so many stories from real estate investors who didn’t have the heart to evict their tenants because it was the winter. I have heard of a couple of occasions in which Små Vapes real estate investors did not evict their tenants because they “did not have another place to live”.
Plain and simple, you can’t be a wimp. If you do, you will get eaten alive. You are running a business. You are not running a charity. If tenants have not payed you, it is costing you money out of your pocket, and they are living for free in your rental property. When the time comes, in which you are legally able to evict them, do it. It doesn’t matter what the time of the year is and it doesn’t matter what excuse they have given you. If they have not paid you, you get them out of there!
Real estate investors run into big problems when they lose sight that they are running a business.
It is fine to be a nice person, but business is business. Don’t get being nice confused with being a smart business operator.
Best Regards,
Neil Uttamsingh
PS: If you want to learn about other challenges that new and aspiring real estate investors face, subscribe to my blog.
Great advice Neil. Keep them coming.
Thanks Todor. I will keep them coming. 🙂
thank you for the info.rein member.
No problem Valerio.
Best Regards,
Neil.
[…] How To: Deal With Tenants Who Don’t Pay Rent Posted by: mandy | Category: Real Estate Investing […]
Neil
Great advice that I wish I had followed sooner. I have had two dead beat tenants in my property that left without paying rent. I have since gotten over my fear of hiring a property manager (my first one was a complete loser) and agree that having a good property manager is key. As an owner I felt that I was emotionally invested with my tenants and now with a PM, I do not have that connection, and yes I am treating this as a business.
Hi Al,
Thanks for your comment. It is great to hear that you are treating your real estate investments like a business. Many people unfortunately lose site of this.
Continued success to you!
Best Regards,
Neil.
This is perhaps the hardest lesson of all to learn when you are a newbie. If you have a property manager, I completely agree that you should let them handle the matter quickly.
I am friends with several landlords that manage their properties in-house. All of them send a monthly statement to the tenant. When the rent is ONE day late, they get a 7 day letter. If they have not paid in 7 days, the eviction letter goes out and the process starts. One of my good friends calls this “training” your tenants. He has almost no problems, because he begins to “train his tenants” with the very first late payment.
Hi Sharon,
Thanks very much for your comment.
You raise a really good point. That is…people can definitely manage their own rental properties. However, as we know, if they do they have to be completely on top of things.
If they are not fully in control, when issues arise with their tenants, things can spiral out of control very quickly. Which equates to money lost
I still have a few properties that I manage myself in addition to others that I have a property manager for.
For the ones that I manage, I make sure that I am on top of every issue when it arises.
Thanks again for the comment Sharon.
All the best,
Neil.
Tenants have all kinds of heart breaking stories. Unfortunately, you cannot be their bank/lender. If they don’t pay the rent, have a definite process to go through to start the eviction procedure.
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Tenants have all kinds of heart breaking stories. Unfortunately, you cannot be their bank/lender. If they don’t pay the rent, have a definite process to go through to start the eviction procedure.
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