I’ve been investing in real estate for over 20 years and I can safely say that I’ve seen and heard it all. There was the renter who neglected to tell me her toilet was leaking for months until the $800 water bill arrived. Or the 1:00am phone call from the panic stricken tenant complaining about the mouse terrorizing her home. But one of the most important money-saving experiences I’ve had is learning how to manage those late paying tenants and the subsequent eviction process.
First, you have to maintain detailed files on each of your properties so you can effectively track the rents and utilities coming in and going out.
Second, create a plan for handling when the rents are due and a process for following up when the rents are late. And then enforce it. For example, the rents on all 20+ of my properties are due on the first of the month. If not received by the 5th, they get a phone call; if still no response by the 7th, they receive a letter. By the 10th I start the eviction process.
This is the third and most important lesson: don’t make the common mistake of delaying the eviction process. Starting early on is key. You can always cancel the eviction but you can’t recover the time lost from waiting for that check to arrive in the mail. It’s important to act quickly because it can take approximately six weeks to even schedule the court date.
Typically, one of two things occur when it’s your day in court. Either the renter will not appear and you automatically win the case. Or, you both show up and an arbitration hearing takes place with you, the tenant and the law clerk. This is where you’ll cut a deal with the delinquent tenant, which is enforced and administered by the court.
This is never a pleasant process but it can be avoided by taking the time to put the right systems in place. A few other helpful tips I wish I knew when I was a young investor:
- Make sure you provide a written policy to the tenant when they move in so there is no confusion.
- You don’t need to hire an attorney to take a tenant to eviction court. They’ll charge you anywhere from $500 to $1,000. You can find all of the forms online and it costs about $50 to file the paperwork yourself.
- Another valuable resource that many landlords use is the tenant screening services.
- Finally, as your investment portfolio grows, you may need to hire a dependable assistant to help manage this entire process.
Next week we'll post the payment policy form we supply to new tenants. Please leave a comment about your experience with eviction issues.
Experience is a good teacher, but she sends in terrific bills.
-Minna Antrim
