ACT QUICKLY WHEN TENANTS DON’T PAY
It’s always surprising to me that so many landlords I talk to don’t have the foggiest notion about what they should do if their tenant goes bonkers. It’s almost as if they think that once the house is rented out that’s it. Everyone is gonna live happily ever after. Folks, let me tell you right now, that’s hogwash! Plainly stated; it just doesn’t happen like that.
“Scuzzos will still slip through your check-points … ”
Any landlord who’s been around the block can tell you that qualifying a tenant on paper is not 100 percent fool-proof, even when a prospective renter presents you with a beautiful well-written application form, the kind where every blank line is filled in perfectly and you get all the right answers to the important questions. Quite often applicants have good references and flowery letters from their last landlord. Even so, the system is not perfect. Scuzzos will still slip through your check-points occasionally. When that happens you’ll need to erase your mistake quickly and painlessly as possible.
Recently a young landlord said to me, “Jay, I’m not much interested in learning how-to kick tenants out. That won’t make me any money. Renting my units faster is what brings in the big bucks. That’s what I want to learn to do better.” It’s quite obvious that my young landlord acquaintance does not yet understand there are basically two ways to make money in this business. Collecting more rent is what most people think of first. However, equally important is controlling or reducing expenses.
Let me ask you this question. Who is better off, the landlord who grosses $1000 every month and pays out $500 in expenses; or the owner who takes in $1 00,000 monthly, but pays out exactly the same amount for expenses? Obviously, it doesn’t do you much good to improve your gross earnings if you lose it out the back door to higher expenses. That’s something like trying to fix a leak in a ruptured water line by increasing the pressure. By the way, I didn’t just make that up. A friend of mine actually tried to do that instead of calling in a plumber. It didn’t work very well. He blew the water line apart in five different spots.
“Doing an eviction is not very glamorous. ”
Sometimes evictions don’t seem like hot shot investor work. However, I think it’s helpful to understand just how much money is involved. Eviction costs are not exactly the same as ordinary expenses to a landlord. They are more like paying double to fix the same problem. That’s the good news. The bad news is often they cost a great deal more than double. Why should they cost double or more you ask? The reason is because when you have an eviction going on; in 99 percent of the cases you’re not receiving rent payments. At the same time, your house is still occupied which stops you from generating new income from tenants who are willing to pay. The total effect of this combination, even without adding in the legal costs can be a very expensive proposition for landlords.
” … evictions don’t seem like hot shot investor work. ”
Some may argue that eventually, when you get your default judgment, or assuming you will prevail in the courtroom, you’ll get all your money back. In most cases, the odds are more in your favor that a flock of geese will fly down your chimney and swim in your bathtub.
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