Evict tenant now or just wait?

Question

What would you do in this situation: tenant is getting her rent subsidized through an agency (like section 8), her portion is 400/month. The agency pays 800/month. She missed her portion for 2 months so she owes me 800. On top of that the market rate rent for this house is 1550, so it’s already 350 below market. The cost to evict her is about 600 and my PM thinks that since she’s current now the judge would rule in the favor of the tenant for a payment plan or something like that. We’ve been asking for back rent for a while and the tenant didn’t respond, then said she’d send it and never did. So my plan was to just not renew her but then I found out after her lease ended my PM put her on a month to month without asking me

Nathan Gesner · Answer

1. Fire your Property Manager for letting this tenant go two months without the tenant paying rent and then giving you crap advice.2. Start by reporting her to the housing authority that's paying her rent. They typically have a separate agreement that says they will lose their benefit if they fail to abide by the agreement. If they stop her subsidy, that will make it easy to evict.3. Even if they don't stop the subsidy or help you terminate, you should file for eviction immediately. You're only $800 behind but I'm guessing she has a deposit much higher than that. Get her out now. You'll lose some money but you'll make it up quick with a tenant paying market rates.4. Clean up the property and rent it for market rate.While you are going through this process, educate yourself on what a good PM looks like and start looking for one. Your PM agreement should give you the ability to terminate without penalty when the PM fails to do their job. I would argue they've failed, which is why you're on a forum asking strangers how to handle the tenant instead of following your PM's lead.Remember: cheaper doesn't mean you'll make more money.Start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. You can also search Google and read reviews. Regardless of how you find them, try to interview at least three managers.1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their staff qualifications.2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 6% management fee but the extra fees can add up to be more than the other company that charges 10% with no additional fees. Fees should be clearly stated in writing, easy to understand, and justifiable. Common fees will include a set-up fee, leasing fee for each turnover or a lease renewal fee, marking up maintenance, retaining late fees, and more. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate, particularly if you have a lot of rentals.4. Review their lease agreement and addenda. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that policies are enforced equally and fairly by their entire staff.6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact that a tenant is complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.7. Look at their marketing strategy. Are they doing everything they can to expose properties to the widest possible market? Are their listings detailed with good quality photos? Can they prove how long it takes to rent a vacant property?This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!

Amir Navabpour · Answer

@Nathan G. Thanks Nathan and everyone for the great advise. Let me clarify a few things and would love your guidance. This tenant owes 400/month and there’s an agency (not section 8 but another government subsidized one that pays 800/month on her behalf). When I say she’s current know I mean the tenant missed her portion for two months, (feb and March), but now she’s paying her full portion. My PM has been asking her to pay the back rent and no response on that but rent is coming in monthly. This property is in Rochester NY and my PM is more than willing to go through the eviction process but the cost will be almost what back rent is. My PM said based on her experience the judge will rule for us to work with the tenant on an installment plan or something to that effect, so I’m questioning the ROI of going through the eviction process. I have no problem terminating the PM, but I only have one property out there and my prior PM was straight up stealing mls h so I’m hesitant to go through the legwork. In other words, if tent is being fully paid and there’s no ROI on an eviction would you still go through with it if you’re looking at a dubious outcome?

Amir Navabpour · Answer

@Drew Sygit thanks for the feedback everyone. Going to take action now. I have to say as a remote investor by far the biggest pain point I’ve dealt with is incompetent and dishonest PMs. I’ve been through many.

Drew Sygit · Answer

@Amir Navabpour all Property Mangement Companies dealing with Class B & C tenants are experiencing issues with tenants that still think an eviction moratorium is in place or have just developed an entitlement mentality that they don't need to pay rent.I've heard NY is still a pain to evict and takes "forever" due to tenant-friendly judges. You PMC should be a bit more aggressive about pushing the tenant to pay past due amount. Any payment plan should also include specific payment dates & amounts, with proof of tenant's ability to pay - otherwise it's a waste of time and will only delay inevitable.

Eliott Elias · Answer

Evict the tenant. They probably feel comfortable and are taking advantage of your kindness. Light a fire up under her and get her evicted

Nathan Gesner · Answer

Your PM may be right, but why are they not doing anything? If they know the court will require a payment plan, why didn't they create a payment plan in April? Why are they doing nothing?The PM should have started this in March when the tenant was 30 days late on their $400 payment. That's when they should have created a payment plan and attempted to get the tenant caught up. If the tenant does not respond, start the eviction process! If you end up in court and can show that you've already attempted to set up a payment plan but the tenant failed to respond, then the judge will be more likely to evict.Yes, an eviction may cost as much as the owed rent, but it will only get worse if you keep sitting on your thumbs. Demand the PM act now, or take matters into your own hands and hire an attorney to get this resolved. I'm pretty confident your tenant will respond when she sees a letter from an attorney or a summons from the court.

Dan H. · Answer

Your lease should have been written such that oldest debt is paid first. Regardless, in no definition is she current on her rent if she has not paid two months of her portion of rent. First i would contact the agency and notify them the tenant is behind on their rent. Assured Full rent payment is supposed to be the advantage of government subsidized rents. It is my belief the agency will force her to come current on her rent to stay in the program. they do not desire the program to get a reputation for having tenants not paying their rent as it is already challenging to find Landlords that want these agent tenants. I know the eviction process in California but not NY. if this was a SFR in California and it was legal (not rent controlled), I would raise the rent $200/month above market giving the proper duration notice (60 days for tenants over 1 year, 30 days for tenants less than a year). Ideally the tenant provides notice. No eviction required. She moves out ideally with a deposit sufficient to cover owed rent and any damage. If for some reason you are not legally allowed to raise the rent above market rate (such as unit is rent controlled), I would provide notice of tenant termination providing the required duration notice. Ideally the tenant vacates when they are required. If the tenants do not vacate when required, you may have to proceed with eviction (I do not believe in cash for keys to address poor tenants). The eviction will be more costly, but at this point you would have few options (not including the cash for keys option). Basically I look at eviction as the final option (actually I would do eviction before cash for keys to a bad tenant). Good luck

John Teachout · Answer

Don't put it off, it will only increase your losses.

Colleen F. · Answer

@Amir Navabpour if she is not current on rent your PM should have evicted her. However my understanding is for section 8 you notify her caseworker too. What do you mean she is current now? Did she pay her share in april but not feb and march? That would mean she is not current. I can' t say what an eviction judge would do in california , get some good local advice.