What is your bottom line for rent payment?

[Superstitionist]

One of my tenants is always a good tenant, honesty, pay on time, maintain the property well, pretty much trouble free for the last few years.

Until a few months ago when she notified the PM that she is having some issue with her employment, then she start to pay late by as long as 2 weeks, but that is still fine with me as I still trust her would come back with the balance eventually.

But recently the situation has upgraded, the rent is paying late without the full amount, well, I still trust her that she has tried her best to come back with the rent. She also notified the PM that she has tried hard to sort out her employment issue, but doesn't sound promising...

Now if the situation is getting worst, when would you start to draw the line...

Super.

 

[alplant]

We have a similar thing happening. Tenants have been there for quite a while and have slipped behind by a couple of weeks. They are paying extra from time to time to try to catch up but then slip behind again. They reckon they will catch up completely when they get their expected handout from the Government. We are about to put the rent up by $10 and I can't help but wonder how they are going to afford that if they are having trouble now.

Their lease runs out later this month and we won't be too unhappy if they decide to move on, but given past experience they will probably just try to procrastinate about signing a new lease. No doubt they will have trouble with their bank getting the direct debits right as well like has happened before. Funny that, they used to pay through Centrelink and had trouble with them getting the amount right too. I guess these people are just plain unlucky.

I'm pretty sure our new PM won't put up with that. So that could well be crunch time. We have always let it go in the past because they did eventually pay up and the previous PM was hopeless and didn't even tell us what was going on. We never even knew there was a problem until we saw the statements and then when we asked about it we were always told they weren't in arrears.

This PM picked up on it straight away. She is very professional and keeps us up to date so we tend to take her advice on things like this. Yours sounds like she is keeping you abreast of the situation what does she think about it?

 

[Superstitionist]

She is very professional and keeps us up to date so we tend to take her advice on things like this. Yours sounds like she is keeping you abreast of the situation what does she think about it?

Unfortunately, my PM is pretty average. Wouldn't expect to have any advice from him. I must say I feel sad for the tenant as well, but lets' see how long I can bear with it. As others alway said, have to treat it as a business and kick all the emotions out (still learning on this)...

Super.

 

[Novar]

Tough situation

Sounds like you are on speaking terms with the tennant. I would be direct and ask what the situation is and what is likely to be the outcome. If the tennant has been there a long time and always pays etc, my guess is he/she has fallen on hard times and feels awfully bad about it all. They are probably as worried about it all as you, and wanting to rectify the situation asap too.

You can't let it go on forever obviously but you can allow some leeway with a plan of action agreed by both that needs to be followed through.
No exceptions. IMO

 

[Superstitionist]

The tenant would let us know when she can't make the payment on time, and will specify a date that she will pay, and always adhere to it. Since the tenant is quite frank, so I have notified my PM to take an easy on her as long as we are informed.

But sadly, at the end of the day, it still depend on the tenant whether she can come up with the $$$ to afford the rent... Hope the date for sending out the eviction letter would never come...

Super.

 

[buzzlightyear]

How far in arrears she is in? When you have deferred payment to and how far in arrears she will be at that time? Is she paying some amounts in the interim?

If this was a commercial property or other non-property business relationship would you be as forgiving? Would your banks be as forgiving if you were behind on your loan, couldn't keep up with any alternative payment plan?

At times, we get an emotional commitment to our tenants because we feel as if they have been looking after our property and paying on time. Well, I would expect that in any commercial relationship that each party follow their legal obligations.

Yes a balance between hard headed reality and compassion may be required, but it is a slippery path from cutting the tenant some slack to the point where they are substantially in arrears (ie more than the bond), missed payments, broken promises and have no way back.

Only you can make the judgement call about your tenant, but I would be cautioning about being too soft.

 

[alplant]

According to the lease agreement on our property, 17 days is when the letter to vacate is sent. I don't know if that is the case everywhere but when a tenant is two weeks behind they are getting pretty close to that.

 

[GoAnna!]

I think there needs to be a very clear plan to have the rent caught up within a set period of time. The arrangement needs to be in writing and signed by all parties. If they fail to meet the agreement and they are effectively living beyond their means and they do mean to move on. Continuing to live in a home they can't afford (if that is the case) is not the ongoing answer.

In the past I have been very soft on a number of long term tenants and I came to regret it in each and every case. In the end it does no-one any favours.

 

[Superstitionist]

How far in arrears she is in?

Well the longest is 2.5 weeks.

If this was a commercial property or other non-property business relationship would you be as forgiving?

I must say I don't know as I have never run a business before, I assume it would case by case, I think...

At times, we get an emotional commitment to our tenants because we feel as if they have been looking after our property and paying on time.

Part of the reason, besides, I just think everyone should has their down times, if they are in that situation and struggling for the surface, a bit of helps from us may solve their problem....I know, I know, investment rule No. 101, NO EMOTION INVOLVED....

Yes a balance between hard headed reality and compassion may be required, but it is a slippery path from cutting the tenant some slack to the point where they are substantially in arrears (ie more than the bond), missed payments, broken promises and have no way back.

Thanks, points taken, yes, I will set the bottom line as 4 weeks in arrear.

Super.

 

[Gee Cee]

I had a similar situation with a home that is only a couple of years old.
Originally when they moved in the wife worked and the hubby had a business.
Problem is Wife is pocket rocket.
Hubby lazy bludging B----d.
Changed some light fittings last year. She was unpacking the boxes and bulbs cooking tea, bathing the kids etc, etc after working all day.
Hubby laying on the lounge with a 6 pack watching the Plasma

So his business does little work. How can it . He goes fishing most days.
Anyway after 6 mths rent is late. Water use not paid.
The agent is good and issues a notice to quit. Then they catch up.
I tell her at the start not to be to nasty. They keep the place neat. Wife mows the lawn. And hubby is going to get a new job. (Eventually)
Long story cut short.
After 18 mths of this I lay the law down and say they need to look for something cheaper. And move on.
So now they have gone. Caught up with most of the arrears.
As well the rent has gone from $310p.w to $350 p/w.
Great new tenants with jobs.

So in the end.
I gave them heaps of chances.
But I am in business. I am not the Housing Commission or any other charity.


Gee Cee

Scrooging towards X/Mas.

 

[ethereal]

I try to make it as hard as possible for tenants to be late with rent. I think when people fall on hard times, they will take the path of least resistance with regard to not paying bills. If the landlord/PM is sympathetic and understanding and the phone provider or bank etc is not, they will choose to miss the rent payment, because it is easier. For this reason I contact tenants if they are late by one day even, just to enquire, "I noticed that you have not paid the rent......" and let them finish. So far this has always resulted in rent being paid within one business day. People will take as much as you are prepared to give.

 

[Gee Cee]

Ethereal:
After that best option =
Call in Friends or Relos from Melbourne coffee shops

 

[skater]

Part of the reason, besides, I just think everyone should has their down times, if they are in that situation and struggling for the surface, a bit of helps from us may solve their problem....I know, I know, investment rule No. 101, NO EMOTION INVOLVED....

You are right. Investing is a Business. You can't afford to let emotion get in the way, and if you are like me, I talk hard headed, but am a softy if I have to deal with the people personally, then USE A PM who is willing to do what needs to be done.

At the end of the day, the tenants are not your best buddies and even the best of them, if they fall on hard times, will put the Landlord at the bottom of the list of people to pay. With Christmas coming, you can bet your bottom dollar that they will have plenty of money for presents, grog, food etc. Try to remind yourself that you should not be suffering hardship because your tenants have other priorities. You are not Centrelink.

I But I am in business. I am not the Housing Commission or any other charity.

Exactly

Thanks, points taken, yes, I will set the bottom line as 4 weeks in arrear.

NO! NO! NO! Get the termination notice sent out as soon as you are legally allowed to in your State. A termination notice does not necessarily mean they will get evicted. It is a means to let the tenants know that they have a responsibility that needs to be met, and that you will not be walked over. If you leave it for a month and then you send the notice you will find the whole process (if it does go that far) will take much longer than it needs to and you will be the one who is out of pocket big time.

Some tenants smell a soft touch for a landlord and go to town on them. Let them know that you won't be walked over.

 

[BayView]

It sounds as though the beginnings of a mess has appeared.

This is where the PM is worth the money; they should automatically send an eviction notice as soon as the set period of arrears elapses before a notice is issued, and mine send out a notice immediately on the first offense. This shows the tenant you mean business and won't tolerate any cr@p. It may actually do them a big favour and force them to learn how to manage money better.

Your tenant may be total innocent and suffering at the hands of the credit crisis etc, but that's not your fault, and there are plenty more tenants out there right now.

As others have said; this is a business, and people who are, for want of a better term - needy, or a victim - you know the type - always struggling from week to week, year to year and so on - these people will always put the Landlord last and the xmas pressies first. Screw that.

The pendulum is too much in favour of the tenants as it is, so don't muck around with these types.

Yes, she has been a good tenant; but they are supposed to be a good tenant. It's in their contract.

If they turn bad - seeyalayta.

 

[skater]

It sounds as though the beginnings of a mess has appeared.

This is where the PM is worth the money; they should automatically send an eviction notice as soon as the set period of arrears elapses before a notice is issued, and mine send out a notice immediately on the first offense. This shows the tenant you mean business and won't tolerate any cr@p. It may actually do them a big favour and force them to learn how to manage money better.

Your tenant may be total innocent and suffering at the hands of the credit crisis etc, but that's not your fault, and there are plenty more tenants out there right now.

As others have said; this is a business, and people who are, for want of a better term - needy, or a victim - you know the type - always struggling from week to week, year to year and so on - these people will always put the Landlord last and the xmas pressies first. Screw that.

The pendulum is too much in favour of the tenants as it is, so don't muck around with these types.

Yes, she has been a good tenant; but they are supposed to be a good tenant. It's in their contract.

If they turn bad - seeyalayta.

Precisely. Very well said. Kudos to you. Hmmm.......Well, I would if I could. Apparently I need to spread it around a bit more first. Shows I haven't been around much for a while doesn't it.

 

[lizzie]

Precisely. Very well said. Kudos to you. Hmmm.......Well, I would if I could. Apparently I need to spread it around a bit more first. Shows I haven't been around much for a while doesn't it.

give me one then

actually - agree totally. i have a wrap purchaser who is similar - slowly gets horribly behind then comes up with mass money when the default/termination letter goes out. initally i would listen to her sob story and give her chances - all of which she reneged on ... so no more chances - basically a default notice goes out every 3 months giving her 4 weeks to catch up or she's out.

personally i wish she'd just hand the property back cause it's a great development block.

anyhow - just remember at the end of the day who's pocket the 4 weeks of lost rent will come out of if you let her get a month behind, ahnd bond runs out of coverage, before sending out the "you must leave in a month" letter and she doesn't pay ... won't be hers without a fight.

 

[Perp]

Get the termination notice sent out as soon as you are legally allowed to in your State. A termination notice does not necessarily mean they will get evicted. It is a means to let the tenants know that they have a responsibility that needs to be met, and that you will not be walked over. If you leave it for a month and then you send the notice you will find the whole process (if it does go that far) will take much longer than it needs to and you will be the one who is out of pocket big time.

This is great advice. Even if you don't follow through, you have to initiate the process ASAP. Not doing so may also jeopardise your landlord insurance if they turn into a problem requiring a claim, because the insurer could argue that you didn't act expeditiously to mitigate your losses.

Use your insurer as an excuse if you feel bad playing hardball, get the PM to tell them: "The landlord would love to give you extra time, but has found out it's a requirement of their insurance that they act immediately to evict in the case of non-payment, or their insurance could be cancelled"

 

[Superstitionist]

Thanks ALL for the great advices.

I seriously think that I should change my mindset, and purely assume everyone out there is a devil...

How sad, but is that right though... Would there any exception that a bit of compassion can co-exist in a business world...

Super.

 

[Gee Cee]

I certainly agree with compassion.
I am not going to kick someone out at a instant.
BUT>
If they continually just RORT the system.
Cannot pay rent for a few weeks. But have a new car,
Or other expenses more important.
(Like what is more important than a roof over your families head)

Tenants of late seem to think that EVERYTHING ELSE is more important.
Like the RICH Landlord will cover OUR costs.
BUT with the downturn/ Lack of rentals available/ Increases of demand and thus rents.
These people/ TENANTS are REALISING that the tide has changed.
So :

If they do not want to pay the market rent,
The demand of people that will pay is high
(Owing to no construction or investors buying.)

OK It REALLY sounds sad.

But that is what supply/demand and life plays out

If they want subsidised rentals move out to a Housing Commission area

Then repeat the cycle with ya children & grandchildren

This post is a bit rough but it accomodates SO MANY people that BLAME everything ELSE.

Not themselves

 

[Bargain Hunter]

Superstitionist,

Having given tenants and employees the benefit of the doubt and then being taken advantage of, I now lean towards the 'give them notice when it's noticed' principle.

Some people only respond when they see the matter in writing. "Oh no, their going to kick me out. Better pay the rent."

I feel bad threatening to kick people out when I hear of their struggles, but I feel worse when I allow them to take advantage of me.

No one should be taken advantage of in this relationship. You are providing them with a place to live and maintaining the property, and in return they pay you an agreed sum. It really is that simple.

Regards

Andrew