Newbie landlord mistakes... is it too late to backtrack?

Question

My first tenant ever moved in November, 2020. I set up the lease electronically and rent on autopay.

Error#1: on the first draft for rent and deposit it didn’t go through, came back as NSF three times. Finally the tenant called and asked if he could pay me directly in cash this time and moving forward, I agreed, and he paid deposit and rent in cash. I did not charge a late fee.

Error #2: in December he called and said he couldn’t pay rent in full on 1st because car payments auto deducted and he didn’t have enough on hand to pay rent, so could he pay next week. I asked if he could make a partial payment at least - he paid $200 - and I didn’t charge late fee. The following week he paid but was $5 (?) short of the total amount owed; he asked if he could add it to the January rent and I agreed.

Error #3: when he moved in I used a screening tool (he paid the fee for the background checks) but I failed to get the move-in checklist.

Note: late fee policy is spelled out in lease (my property is located in Indiana)

Question #1: since I have failed to enforce the late fee in the first two months has that set a precedent? Can I remind him that the lease stipulates late fee if rent is paid after the 5th and as of January it will be enforced?

Question #2: since he has been in the unit 2 months now is it too late to go back and get the move in checklist done still?

Arthur McCormack · Answer

Thank you ali for your thoughts and suggestions. I am definently setting up the reminders and let's see what happens when January rolls around. I'm going to give him a call to remind him of late fees and that from January it will be enforced.  In the meantime I'll get my ducks lined up, so to speak, should the eviction become necessary.  Thank you again.

Isaac Pepper · Answer

@Arthur McCormack you can absolutely charge late fees moving forward, but the move in checklist is a no go. It is called "move-in" checklist for a reason.

With a tenant that has failed to meet the agreed standard every step of the way, I think you already know where this is headed.....

Good luck!

Theresa Harris · Answer

I'm glad you were able to get it turned around!

Arthur McCormack · Answer

I just wanted to take a moment and thank all who gave me advice about how to deal with the tenant rent payment issue - 1/1/21 was to be the date to see if that polite yet stern conversation had the desired effect. Well, seems like it did. The tenant called me today and said rent was in hands. I went by there and indeed, rent in full paid on time. I don't mind going by there for now, since I only have one property, and it gives me a chance to take a look at the location and see if anything looks out of place. Of course, once the number of rentals and tenants increase it will only make sense to have a PM handle all of that. On another positive side note - the tenant next door (it's a duplex) must of heard about our conversation because she not only paid electronically, but paid a few days  in advance.

Thank you again my fellow BP'ers.

Lynnette E. · Answer

You can still get the move in check list.  Just tell him that he has not returned it yet and he need to return it with the Jan rent.

Adrien C. · Answer

You better take control and make sure tenant knows expectations. They are walking all over you and testing you and it's not getting better unless you put your foot down and start enforcing the expectations in the lease. Next month they pay even less and less. Don't take this the wrong way- but you seem like a super nice guy and maybe self managing isn't a fit for you. Kind of have to be a dick at times so might be worth looking at PM.

Justin Polston · Answer

@Arthur McCormack yes charge late fees, no problem there. SOL on any initial walkthrough checklist but you definitely deserve right to visit with a heads up given.

Listen, you cannot keep that pattern going. Give em an inch they'll take a mile...

In indiana you can file eviction proceedings on the 11th. Each county is different but if you want to avoid this pattern any further, go ahead and file and set a precedent of all business, if they bring in rent prior to hearing plus late fees you'll table the eviction until next month and so on.

Explain with an eviction on the background they'll never rent again (I mean maybe a mom n pop landlord) and if they willingly vacate and keep home in good order upon move out and set up a payment plan, you'll drop the suit. If you want them out bad enough to them to use the rent they might have for you towards their next place. Trust me, getting possession back is almost more important than the balance owed. Work on collecting after possession.

Beau Watson · Answer

@Arthur McCormack

I am with the others, you seem to have a personal connection with the tenant if he is paying you cash in hand. You just need to remind him in person to his face what is in the lease he signed. Also maybe help them come up with a different solution to paying you. Later due date? Earlier due date before the car? Reminders sent out at 10 days and 5 days that rent will be due soon. Ultimately sounds like they will need to go sooner rather than later but you can try a few of these items in the meantime.

I would look into rentec direct. Their property management software has been awesome for me! Keeps track of everything professionally and at an arms length. Been using it for almost a year now with 5 units.

Theresa Harris · Answer

I agree with Issac.  You should go in and do an inspection after a few months with a new tenant, especially if they don't even have $5 to pay the rent in full. This won't be a move in inspection, more to check on things.  For January, if he doesn't pay in full charge the late fee and and tell him that perhaps he may want to look for another place to live as he's had problems paying the rent for Dec and Jan.  I'm guessing you checked his income was enough to pay for the rent (usually 3x the rent).

Drew Sygit · Answer

You forgot to list your biggest mistake: allowing them to move in without paying first month of rent plus security deposit upfront, before they get the keys. Make them do it electronically as part of your screening process and don't give them keys until the payment clears.

Sounds like this tenant is terrible at managing their bank account balance and money in general. So, expect them to blow their money on holiday spending and have a cry-story when January rent comes due. Brush up on eviction process from not until then, so you are ready to serve them ASAP. If you are lucky, they'll pay their balance sometime in mid February when they get their income tax rapid refund money.

Newbie landlord mistakes... is it too late to backtrack?

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