Author Topic: First Bad renters NOT PAYING RENT!!!  (Read 1685 times)

Markywalberg

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First Bad renters NOT PAYING RENT!!!
« on: March 13, 2017, 05:31:11 PM »
HELLO MUSTACHIANS, I got quick question for the more experienced landlords on here. So my renters are coming up on not paying rent for 3 months and im gonna evict them soon if they dont pay. My question is that if they dont pay and i evict them how can i manage to still get the rent they owe me?  Some have suggested small claims court. Also though about selling the debt they owe me to a debt collector for a fraction of what they  still owe but im not sure how that process works either.

Ocinfo

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Re: First Bad renters NOT PAYING RENT!!!
« Reply #1 on: March 13, 2017, 06:02:02 PM »
Good luck. It heavily depends on the location of your rental because there are vastly different laws across the country.  If they really don't have the money then get the eviction process started as soon as legally allowed. Another option is to offer them money to leave. At this point, just hope they don't trash the place. A lot of this depends on how friendly your area is to renters (some places heavily favor the renter) and whether you think it's a temporary hardship (job loss but overall good people) or just a deadbeat. How long have they been tenants and is this issue new?


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$200k

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Re: First Bad renters NOT PAYING RENT!!!
« Reply #2 on: March 13, 2017, 06:04:55 PM »
If I were you, I'd not wait any longer to start serving notices and evicting them.  Three months without rent is too long, but you probably already knew that. 

If they do not pay, then yes, you need to go get a judgment against them in small claims court.  In my opinion, getting that kind of judgment is easy, it's just a pain in the butt to service notices, summons, etc.  Once you get the judgment, you still need to use the court to collect against them, and that is only if they have money to collect against.  If they don't pay rent, I don't think your prospects of collecting are any good.

You could potentially sell the judgment for to a debtor collector, but I doubt you'll have a buyer.

So yeah, focus your efforts on eviction now. Cut your losses and move on to the next tenant.   

Oil Patch Adams

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Re: First Bad renters NOT PAYING RENT!!!
« Reply #3 on: March 13, 2017, 06:33:47 PM »
If there is a judgement on them, they will never pass another background check for renting, never buy anything that requires a credit check, etc until they pay you.  This behavior is not acceptable.

iamlindoro

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Re: First Bad renters NOT PAYING RENT!!!
« Reply #4 on: March 13, 2017, 07:44:17 PM »
Just so it doesn't go unsaid, the right time to issue a pay or quit notice is within days of rent being late (the 15th of the month on the outside). These tenants should have been out MONTHS ago. I'm sure you have figured this out by now, but it bore mentioning.

Now, in all likelihood, it is unlikely that it will be worth it to you to pursue the tenants for the unpaid rent, even after months-- simply put, you can't get blood from a stone. This is why you should move to evict on a reliable schedule (and you should explain it to your tenants when you sign a contract). You are likely to lose more time and money pursuing a legal remedy than you would collect-- and even with a judgment, you may still never collect.

Were it me in your situation? I would either pay for keys, offer not to pursue them legally if they are out within 72 hours, or immediately evict.  Hopefully you got a sizable deposit, as a friend of mine in a similar situation found that tenants had left their dog locked in the attic for months, and it had eaten the walls-- and passed them onto the floor as explosive diarrhea. Crap in the toilet, garbage and food everywhere, pest infestation... these are all things that only get worse the more time you give a non-paying tenant. They have literally no reason to behave-- and they won't. Get in your car and post a 72 hour notice on the door today.
« Last Edit: March 13, 2017, 11:08:57 PM by iamlindoro »
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marty998

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Re: First Bad renters NOT PAYING RENT!!!
« Reply #5 on: March 14, 2017, 12:51:13 AM »
Next tenants... set them up on automatic bank direct debits/credits.

Soon as they miss a payment send a text message. Earliest opportunity under your laws start the eviction process.

Check your insurance policy whether it covers loss of rent. Also check if you can recover money from the bond, or refuse to refund bond until the rent is up to date.

Scortius

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Re: First Bad renters NOT PAYING RENT!!!
« Reply #6 on: March 14, 2017, 10:23:16 AM »
I agree with iamlindoro.  Tenant rights are strongly protected, which means that as a landlord you must take action as soon as possible.  For example, you should get in the habit of posting a 3-day notice exactly on day 3.  Going through the process does not mean you have to evict them, but if you do not do this, you cannot evict them.  Generally, this whole process is why landlords ask for a security deposit and first and last month's rent.  An eviction takes approximately 30 days in most states, which will be covered by the last month's rent.  This is also why it's so important to start the eviction process immediately, otherwise you'll end up in your situation, out thousands of dollars.

You are not likely to ever receive compensation from evicted renters due to their poor financial situation, regardless of whether or not you can win a judgment against them in court.  Once again, this is why you must start the formal eviction process immediately.  If the renters do pay later it is always easy to stop the process.  As it is, you are probably screwed and will need to consider this an expensive lesson.
« Last Edit: March 14, 2017, 10:29:36 AM by Scortius »

v8rx7guy

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Re: First Bad renters NOT PAYING RENT!!!
« Reply #7 on: March 14, 2017, 11:02:51 AM »
Get the process going... now... two months ago would have been better!  For our first eviction it took almost a whole month after the process started.  We got a lawyer to work us through the process, it was not fun and was expensive.

Bobberth

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Re: First Bad renters NOT PAYING RENT!!!
« Reply #8 on: March 14, 2017, 11:12:50 AM »
If they have a good, steady job they are invested in, you can garnish their wages. The lawyers I have worked with and inquired into, generally will take on the collection aspect of an eviction as well for 20%-33% of the judgement collected. If they have low-paying, meaningless jobs, they will just find a new job if you find them & serve a garnishment on them. Then you have to find and serve them again. If they have protected income, you can't garnish that. Most won't have assets (bank accounts) to go after or will close it and get another bank account.

If you can't collect from them, I like to 1099-C them for what they owe. Make sure you have an EIN so you don't have to put your SSN on the form and mail it to their last known address. It won't get to them so when they file their taxes for that tax year, their refund will be reduced if not rejected for lack of claiming all income. Interest and penalties may also apply. I don't get any money from them but I wasn't going to anyway. Although I do receive the satisfaction of getting the last word. ***NOTE*** some accountants say this is inappropriate while others have told me it is exactly right since I am forgiving their debt and that is considered income. Get your own professional advice and stick to your own risk tolerance.


Oil Patch Adams

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Re: First Bad renters NOT PAYING RENT!!!
« Reply #9 on: March 14, 2017, 11:36:16 AM »
That is brilliant

Blindsquirrel

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Re: First Bad renters NOT PAYING RENT!!!
« Reply #10 on: March 14, 2017, 05:22:48 PM »
  Yes, start the eviction process now if you have not done so already. Set up an account at www.clearnow.com today and tell future renters you only take direct deposit. Kick them to the curb ASAP!
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Markywalberg

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Re: First Bad renters NOT PAYING RENT!!!
« Reply #11 on: March 18, 2017, 05:03:47 PM »
Just and update, with local laws we cant evict during certain months (winter months) the third month was the first month we are allowed to evict again. So we gave them a 15day notice to either pay 2 months or they have to be out by then. We got 2 months rent on the last day so now they are only down another 2 months on rent so when they come up late this next time ill do the same thing and if they pay they will be 1 month behind and ill just repeat until they are no longer behind or they are evicted. If I do evict  will keep the entire security deposit and then go to small claims court and try for garnished wages.

Another Reader

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Re: First Bad renters NOT PAYING RENT!!!
« Reply #12 on: March 18, 2017, 05:36:09 PM »
What you have are professional tenants that have done this before and will do it again.  They know the eviction laws better than you do. If they are on a lease, give them notice to move at the time specified in the lease or by law in your jurisdiction.  If they are month to month, give them the minimum notice ASAP and get them out.  Yes, you will lose some rent money, but you will save money in the long run.  These folks are probably destroying your property and the damage is worse every day they are there.

My guess is you did not do a very thorough background check when you rented to these people.  You need criminal history, as well as credit history for every adult living in the unit.  We don't just check convictions, we check locally for all court cases.  The new rules from HUD (hopefully to be rescinded by Ben Carson) require you not to consider criminal history alone in denying applicants.  You have to meet a test of showing the applicants are likely to cause material problems in the future based on the type and recency of the criminal record.

I completely agree with "No Nonsense Landlord," who occasionally posts here.  Credit scores correlate well with tenant behavior and performance.  He requires a minimum credit score of 625 for new tenants and his units are not in Class A neighborhoods.  Read his blog, it's very helpful for new landlords. 

iamlindoro

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Re: First Bad renters NOT PAYING RENT!!!
« Reply #13 on: March 18, 2017, 05:54:29 PM »
Just and update, with local laws we cant evict during certain months (winter months) the third month was the first month we are allowed to evict again.

What municipality is that?  If that's true, I'm guessing it's more nuanced than that-- I doubt it's a blanket prohibition on eviction during winter.
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iamlindoro

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Re: First Bad renters NOT PAYING RENT!!!
« Reply #14 on: March 18, 2017, 05:59:55 PM »
My guess is you did not do a very thorough background check when you rented to these people.  You need criminal history, as well as credit history for every adult living in the unit.  We don't just check convictions, we check locally for all court cases.  The new rules from HUD (hopefully to be rescinded by Ben Carson) require you not to consider criminal history alone in denying applicants.  You have to meet a test of showing the applicants are likely to cause material problems in the future based on the type and recency of the criminal record.

Agree, and I would add that I recommend actually picking up the phone and performing an employment check (don't trust what they put on their application), as well as speaking to the current landlord. If there's no landlord, or something doesn't add up when verifying employment, pass.
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Another Reader

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Re: First Bad renters NOT PAYING RENT!!!
« Reply #15 on: March 18, 2017, 06:19:29 PM »
Just and update, with local laws we cant evict during certain months (winter months) the third month was the first month we are allowed to evict again.

What municipality is that?  If that's true, I'm guessing it's more nuanced than that-- I doubt it's a blanket prohibition on eviction during winter.

Some jurisdictions in the upper midwest prohibit evictions during the winter because of the dangerous cold weather conditions.

Markywalberg

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Re: First Bad renters NOT PAYING RENT!!!
« Reply #16 on: March 18, 2017, 11:02:34 PM »
So tenant had good credit (642) and no criminal history and paid rent on time for first 6months before falling behind and had verified income more then 3x the rent we asked for. I guess the reason they gave us was a car transmission broke down and they had a recent death in the family which they had to help pay for. Either way it makes no difference to me (not to sound cruel) but I dont think these are tenants that had any red flags that showed up in the screening process.

Bateaux

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Re: First Bad renters NOT PAYING RENT!!!
« Reply #17 on: March 19, 2017, 01:10:19 AM »
Good luck.  My rental is vacant because having people live there isn't worth the pain.  Had domestic abuse as well as no payment of utilities or rent.  Real estate is a nightmare.   I fund REITs for real estate investing now.   Use my rental as storage. 
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Slow2FIRE

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Re: First Bad renters NOT PAYING RENT!!!
« Reply #18 on: March 19, 2017, 01:25:29 AM »
Just and update, with local laws we cant evict during certain months (winter months) the third month was the first month we are allowed to evict again.

What municipality is that?  If that's true, I'm guessing it's more nuanced than that-- I doubt it's a blanket prohibition on eviction during winter.

Some jurisdictions in the upper midwest prohibit evictions during the winter because of the dangerous cold weather conditions.

My parents said the same thing about Montana.  They ran into that problem a few times back in the 70s and 80s and eventually sold their rental property in the state in the 80s.

marty998

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Re: First Bad renters NOT PAYING RENT!!!
« Reply #19 on: March 19, 2017, 04:11:01 AM »
Just and update, with local laws we cant evict during certain months (winter months) the third month was the first month we are allowed to evict again. So we gave them a 15day notice to either pay 2 months or they have to be out by then. We got 2 months rent on the last day so now they are only down another 2 months on rent so when they come up late this next time ill do the same thing and if they pay they will be 1 month behind and ill just repeat until they are no longer behind or they are evicted. If I do evict  will keep the entire security deposit and then go to small claims court and try for garnished wages.

I agree with Another Reader. You are getting played. Get them up to date, and evict.

Document every interaction as well.

Car Jack

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Re: First Bad renters NOT PAYING RENT!!!
« Reply #20 on: March 24, 2017, 07:37:17 AM »
Be careful about holding the security deposit.  Know the lease and law.  You can't just hold the security deposit without documenting damage for which you hold it.  It is not just money to pay the rent that's unpaid.

iamlindoro

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Re: First Bad renters NOT PAYING RENT!!!
« Reply #21 on: March 24, 2017, 09:08:33 AM »
Be careful about holding the security deposit.  Know the lease and law.  You can't just hold the security deposit without documenting damage for which you hold it.  It is not just money to pay the rent that's unpaid.

The security deposit may be used to cover unpaid rent in many jurisdictions, so it's definitely right to be aware of the laws (and the lease you're using) as to whether you can do it in yours.
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Secretly Saving

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Re: First Bad renters NOT PAYING RENT!!!
« Reply #22 on: March 24, 2017, 09:16:04 AM »
The time that has passed is water under the bridge now.  Start the process now to get them out!  Follow up with all of your documentation, notices etc and get the clock ticking.