Rental and rent payment assurance

[Rafael Alonso]

Hello everyone. 

Here to learn more from other landlords and property managers. I have questions regarding rental payments/income protection and making sure an investment doesn’t become a loss. 

So I manage about 8 properties. Some are my own, a few from family members including parents. So far we’ve never had any issues with tenants not paying rent with the screening and leases we use, although only one tenant did take advantage of not paying rent during NJs COVID rent moratorium but we know of many landlords that got affected by this with tenants that could pay rent that didn’t. We’ve always had our tenants pay on time and not miss a payment.

I’ve heard of landlord stories where there are profesional tenants that cause mayhem whether destroying the property or not paying rent only for the landlord to have to be in the negative after having to hire an attorney, filling an eviction, etc. all your hard earned rental income goes to the fire.

I’m currently dealing with a tenant that although we screened the tenant properly; scores in the 700s, no issue with credit reports, and did pay rent on time thay stopped paying her rent on faulty mold claims. It’s already costed us 3 months rent, and legal expense and we’re hoping for her to move out soon. I don’t want to get into the details (that’s another post) but we know she is causing us problems as a form of retaliation. 

I’m wanting to know as a landlord how to better protect yourself and your investment being that there really is no gain in a rental property unless the rent payment is received and you don’t have malicious tenants try to avoid paying rent, or affect you in a way to rob you from that income like in faulty allegations or habitability issues that then need an attorney or going to court.

I have heard of wise landlords using a guarantor service that pays the rent if the tenant stops paying for whatever reason.  Just like a homeowners insurance where they have their own attorney to defend against litigation, this rent guarantee insurance has their own and takes care of getting the money back on their end.

Another option I was seeing that as a landlord you could also pay for a service to report tenant payment history which seems to do the trick to even those tenants with great scores that try to find a way to avoid paying rent or cause issues that way.   

Has anyone used these types of services and what are some ways to protect oneself from issues like this since all problems have solutions but in our industry it seems in order to solve a problem it costs thousands of dollars of either unpaid rent or attorneys costs and more so if you own properties in states like NY or NJ where the laws and judges are more tenant friendly.  

I truly think as landlords we need to help each other bring forth an industry that’s respected like the credit card and finance industry where if someone does not pay for services rendered then they suffer the consequences. If credit reporting is one way to do it that might be one option to look into.

Thank you