Make your eviction policy clear to your tenants
- Author Alan Cowgill
- Published February 27, 2011
- Word count 1,612
Starting out in real estate is never easy. I have herd stories about people who were running their business out of a pickup truck. They'd call their tenants and ask for the rent. The tenant would say they had the rent. Lo and behold, the tenant did not have the rent. So the guy would call the tenant and say the rent is late on such and such date. The tenant would say they have the rent. They'd ask to meet at Burger King and the tenant would drop off a partial payment. This means the landlord is hurting. He can't pay his bills when the tenant isn't paying. Now all of us want to be kind. But you have to stick up for yourself or you will go under.
We make it readily apparent to the rental tenants that we have certain expectations. Rent is due on one day, it's late on this day and we evict you on this day. We don't want to go around calling people and knocking on their doors. We certainly don't want to go to pick up a check at Burger King. We don't mess around either. We want people to know that we will follow up on our promises to charge the late fee and to evict. This rent system has made our lives very easy. If they can't pay the rent, we can't be nice people. The expression ‘nice guys finish last’ is true in real estate. We don't like the idea of allowing the tenant to lead us on a wild goose chase. If they have the opportunity to or are lead to believe that it is something they can do, they will take advantage.
Be tough in this business.
I get very annoyed by people who don’t pay. This is the reason I have that weekly and monthly meeting. We want to check on the pulse of the company. I want to see who is paying and who isn’t paying. When I ask who isn’t paying and find out the names, I then ask why. I then allow my staff to make the decision. Sometimes they’ll say, "Let’s get rid of him." Naturally my acquisitions guy, Kevin, is a little sheepish about dumping people because he stuck them there and he has to deal with the fact that they didn’t come through. Kevin does a good job screening and then it turns out to be a bad move. He gets hurt by it.
So, when we make the call and it is time for someone to go we look at our rights. We have the right to apply past due charges in the rent first. So when they hit the magic number of their monthly rent what will happen is we will apply everything to rent and then we will continue with the eviction process. What commonly happens next is they magically find another month’s rent and we have to make a decision are we going to take it or not. Sometimes they will come in and they’ll give us a whole big stack of money. I have to admit, it’s hard for me to say no to that. But the eviction process must go on. It is a tough thing for people to go through. But if they can’t pay, they can’t stay.
There are certain people who we have to chase to pay the rent every time out. What I learned over time was that the longer I let them stay in the house, the worse the house would get. Often we have someone who starts out bad right off the bat and doesn’t pay rent for the first month. We chase them and we don’t get paid until after we file the eviction. This happens every month.
Once they don’t pay, it kicks into another system to where I’m cutting checks to evict them. I’m going to my attorney, the administrative assistant’s filling out paperwork, driving it to the attorney, we’re going down to court, filing so we can go to court with them, we’re running copies, we’re putting copies in files. It kicks in a whole lot of extra work and expense into play.
If you’re fed up enough, then it’s your decision to say ‘pull the trigger.’ The only time we don’t do that is if I’m headed into the winter months in Ohio. Because that’s when I’m looking paying two or three hundred dollar a month heating bill. So I’m going to let them slide if I can keep getting the money for that bill. But that doesn’t mean if they don’t pay I let them slide all the way.
If they don’t pay, we take them out. If they pay after we post a notice on the door, too bad so sad. We don’t even take their rent. At that point, we’ve decided that we’re going to pursue the eviction. That’s what we do because we’re tired of chasing them. I don’t want the house to get torn up any more than what it’s going to be so I get them out. That’s what we do. Our policy has been laid out before them. Rent is due on the first, late on the second and you get your three day notice on the third. We don’t post three day notices until after lunch because we do get some checks in the mail. If we didn’t get their check in the mail, I say two words to my staff, "Go post!" They get on it. We used to go out and post on the weekend and on holidays. But we decided against it. You can’t get everybody to go out and get a money order. We accept Speedway and Wal-Mart orders, but not everybody can do it.
Plus, it’s no fun to do this work on weekends and holidays. We don’t accept partial payments or credit card payments. We probably could and should do credit card payments. But we haven’t done it yet. As far as bounced checks are concerned, we find out about those when the bank sends us a letter. We send the tenant a nice letter that explains that as of this date their rent is not paid. Therefore they must come in and pay their bounced check.
On the third day of the month, we put an eviction notice up. We have a whiteboard in the office that has a list of who hasn't paid. We review that list. Then we check QuickBooks to make sure there wasn't an error. Sometimes names just don't get erased off the board. If someone has a no payment, we draw up the three day notice. In our state, it's three days. Check out the rules on your state. It might be something like five or ten days.
You can obtain a form from the county courthouse if you don't have the forms already. The notice says that they have to pay in three days. Technically it says, "Pay or quit." That means get out. We'll handwrite the tenant information on the form. We make copies; take the originals to the properties to post. So we have to arrange them in geographical order. We have it set up so our people don't have to zigzag all across the town; they need to be in a good geographic loop.
Our people just do a circle around town and let people know that they have an eviction notice for non-payment of rent. We tape it on the door. A lot of landlords use bright colors like orange and post them all over the property on every window. We don't go that far. We just give them one notice on the front door. We don't ring their doorbell and we also don't sneak around either. You can also choose to mail them or hand them over in person.
I have learned to move quickly with eviction notices. I don't want the money to be in their hands. I want to have it in my hands. The quicker I notify them, the quicker they pay me. It's simple. I make my language in an eviction notice clear. There will be no confusion here. I have found that if I send out ten eviction notices in one day, nine of them are going to be paid before the three days are up. Sometimes the tenant will beat us back to the office with their payment. Often the case is they just need a kick in the rear. When they get the kick in the rear, they swing into action.
A short note here, in our state, Ohio, if you have filed the land contract with the county recorder's office, you have to follow your eviction proceeding before you can get out of that land contract. You can take the house back, but if you want to get the land contract out of their name you have to file the eviction process. That is if it's been recorded. That is also even if you don't know where they are.
We record the land contract, so the recording is taken care of. We then follow through with the eviction process. Then we wipe the recording out and get back our possession of the property. This takes a few steps. But when we get the property back and fix it up, we can start again with a new tenant.
E. Alan Cowgill is the owner of Colby Properties, LLC. and President of Integrity Home Buyers, Inc. Since 1995, Alan has bought and/or sold hundreds of single family and small multi-family investment properties. His home study system, 'Private Lending Made Easy', shows others how to find private lenders for their very own real estate business.
His website is http://www.supercoolsystems.comArticle source: http://articlebiz.com
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