A tenant not paying the rent is possibly the worst problem the average landlord will face. Fortunately, it’s a common problem, and there are solutions. I own a property management company, have over 65 rental properties, and have been a landlord for more than 15 years. Over that time, I’ve learned how to deal with a tenant who isn’t paying their rent.
When a tenant does not pay their rent, you must begin eviction proceedings as soon as legally possible. After that, you can work with your tenant and allow them to get caught up, and the eviction can always be stopped when you have an acceptable arrangement.
In this article, I will explain why this is a huge problem, how to help your tenants stay current, and what you should do when your tenants don’t pay the rent. I’ll explain why it’s essential to start the eviction process without delay and how that helps you collect past-due rent. I know how to deal with a tenant not paying rent; after reading this article, you will too.
The Impact of Missed Rent
One of the most frustrating situations for a rental property owner is having a tenant that is not paying rent. It’s worse than having a vacant property because there is no chance of finding a tenant, and wear-and-tear (or worse) is happening to the house. The longer this goes on, the lower the chances are that your tenant will catch up on the rent and stay.
When rent is not paid, it becomes difficult to cover your expenses. You can’t handle routine property maintenance and may even have trouble paying for insurance and property taxes. If your property has a mortgage, you may be in jeopardy of losing the house.
Help your Tenants Stay Current
The best way to deal with tenants that don’t pay the rent is for all your tenants to pay the rent. Unfortunately, this is not always possible, but there are some things that you can do to help. Here are a few things within your control that will help your tenants stay current.
- Don’t be a Slumlord. Handle maintenance issues promptly. Don’t give your tenant any perceived justification for not paying the rent.
- Don’t be a pushover. You shouldn’t make it easy for tenants to pay late. Make sure you have a significant late fee in place, and never waive that late fee.
- Impose Drastic Consequences. When there is not enough money to go around, your tenants must choose which bills to pay. People tend to pay the ones with the greatest consequences and stall the ones they can get away with. You should impose severe consequences if the rent is not paid.
- Don’t have a Grace Period. Expect the rent on the due date. You shouldn’t have a grace period unless your local laws require it. If you want to give the tenant a few extra days, then change the due date.
- Take Action Fast. Don’t let the past due rent balance grow higher. As that balance gets higher than a security deposit and a month’s rent, it becomes cheaper for a tenant to leave.
What to Do When a Tenant Fails to Pay Rent
When a tenant misses their rent payment, you should file for eviction as soon as you are legally allowed. State and local laws govern evictions; therefore, the process varies by municipality. Learn the laws and procedures in your area, and start the eviction process as soon as you can.
Don’t chase the rent; don’t track down the tenants and beg them to pay it. Just send late payment notices and any legal notices required before you can file for eviction. Then start the removal as soon as you can. The best late notice is the formal eviction notice tacked to the door, and you need this to happen as fast as possible. Evictions can take several weeks (or months), so don’t let several more weeks go by before you start the process.
Filing for the eviction doesn’t mean the tenant has to leave. You can always stop the removal once the tenants pay. In many areas, you must stop eviction if you accept any payment; therefore, you should avoid accepting small partial payments. If you take a sizeable partial amount and the eviction process stops, be ready to file again the moment the tenant fails to adhere to any payment arrangement.
How to Handle Late Rent Balances
In some instances, despite your best efforts, the tenants end up with a past-due balance due to a problem that has been resolved. There are benefits to letting the tenant stay if you think the payment problem has been resolved. If the tenant stays, you avoid the vacancy and the cost of getting the unit ready for another tenant.
An excellent way to handle a sizeable past-due balance is to issue a new lease, which replaces the current one. This new lease will forgive the past-due balance and raise the rent to recapture the arrears. Adding a slight rent increase is often easier for the tenant to pay than a lump sum for the past due balance. In addition, it’s easier for the landlord to manage than an outstanding late balance that must be addressed each month.
This article has laid out the best way to deal with a tenant that is not paying the rent. I have provided tips you can implement to reduce the likelihood of a tenant getting behind. I’ve also told you how to handle a tenant that doesn’t pay the rent, which is to begin the eviction process quickly but work with the tenant during this process. Finally, I presented a method for handling a sizeable past-due balance in the event the tenant stays. For more information on investing in real estate, check out my guide that walks you through buying your first rental property.
Image by gpointstudio on Freepik