What if a Tenant Stops Paying Rent - Quick SolutionsDecember 10, 2018
The dreaded part of being a landlord is having to deal with a tenant that won’t pay. The investment you calculated isn’t paying for itself, and time is against you. The reality sets in that rent isn’t coming in, and you still have a tenant living in your rental. There are formal legal proceedings and processes to follow as well, but what if there is a faster way? Let’s consider an alternative method as well as the formal processes at your disposal.
Quick Move-out Solution
The quick solution isn’t always the easiest. It takes some humility to understand the math of the rental business. If your tenant hasn’t paid for at least three weeks, it’s clear they won’t pay. Understanding that most tenants want to pay their rent is important. Their inability to pay is often due to some unforeseen circumstances. If the tenant fights your eviction, it can drag out to as much as 45 days in most states. After the 45 days, the tenant is probably also quite disgruntled with you, as the landlord, and won’t leave the rental in great condition. With an average of $1,200 a month in rent and repair costs at an average of $1,800, that’s a total of $3,600 before you can even get the rental back on the market.
Time is always important, so getting your rental on the market before fall or before cold weather sets in can be the difference of $100-200 in rent. If the tenant does trash the house, yes, you have a deposit of maybe $1,000, but that can easily be eaten up with the time to finish repairs.
As an alternative, what if you were to offer the tenant their deposit back in cash if they can be out within seven days? I know it sounds insane—why offer money to the people who owe you rent? The reason is tenants are up against a wall and looking to find an alternative place to live, but are obviously hard up for cash or they would pay you. If they had $1,000, they could find another place, but the additional step is to require that the place be left in reasonable condition. This has worked for me 90% of the time and saved me a tremendous amount of money.
In weighing the costs, you see that having the tenant out within seven days for $1,000 is great, because you save on repairs, lost rent, and timing. Most of the time I have the rental back on the market within the first weekend of the tenant moving out.
To do this requires some savvy, though. Make sure you inform the tenant they won’t get the $1,000 until they are moved out and you have inspected. Also, have a simple letter for them to sign stating they are handing over the property to you. This can be quite simple, with no lawyer necessary. Another important thing is don’t screw your tenant! I have proffered this advice to many and found that some cheat the deal after the tenant moves out by not handing over the cash. It’s true the tenant owes you and didn’t keep up their end of the bargain, but that doesn’t mean you should do the same.
In most cities the standard process is to inform the tenant they are late via a notice. A service like TenantCloud that does your accounting for you will give you automatic reminders of late notices. Once a notice is sent (usually after the grace period), then a formal 72-hour notice can be posted. The 72-hour notice is usually required to be mailed and posted on the door. If the tenant hasn’t paid within the 72-hour period, you can usually file for eviction.
To file for eviction, you will need to have all the occupants’ personal information, a copy of the lease agreement, an accounting of the tenant’s payments showing the missing rent, and a copy of the 72-hour notice and first letter demanding rent. Once filed, you will be given a court date and have to pay to have the local magistrate provide notice to the tenant to appear in court. The typical cost for this is around $150, as it pays for filing and formal posting to the tenant.
In court you will wait all day for the judge to finally hear your case, and when it's your turn, the judge will prompt you and the tenant to step outside and see if you can find a compromise. If one cannot be found, then the judge will listen to the tenant for a bit and then order a time frame for the tenant to move out—often in the neighborhood of one week or so.
If the tenant still has not moved out by the time the judge ordered, then you can file for a 24-hour notice. This will require you to formally request the notice. You will need the court order from the eviction court hearing and usually a check for $150. The sheriff will then post a notice for 24 hours, and the following day will be present as you pay to have the tenant’s belongings moved out of the house.
During the move-out, you, as the landlord, will be required to care for anything of value. In most states, value is defined as anything over $50, but this is very subjective. You will need to store everything they don’t take with them for up to 45 days in most states. After the 45 days, you can dispose of their belongings.
As you can see, finding an alternative to the standard eviction process is the fastest and most advised method for moving a tenant out. It doesn’t work all of the time, and usually isn’t advised for larger property management companies, but for the self-managing DIY landlord, it is great.