Long Distance Rental: Late-Paying Tenant Question

[John P.]

I own a house in another state with tentants and property management in place.  I bought it about a year ago.  So far, it's been more of a learning experience/gut check than an  "effortless cash flow source."

Last month, the PM had trouble contacting the tenants.  It turns out a close family member died, and they were out of town for the funeral/arrangements.  They said they'd be a few days late on their July payment.  Apparently funeral expenses took a toll on them.  I was OK with the late payment, since they've paid timely so far (since Dec. 2013).  Normally, we'd start charging late fees on Aug. 3.  I was expecting the payment by Aug. 8.

Well, it's now 8/18 and I still haven't received the payment.  The PM again had trouble communicating with the tenants, but finally talked to them today.  The lady said her husband's pay was shorted last month, but she's going to try borrowing the money from her sister.  If she can't do that, she says she'll still pay by this Friday (8/22).

Any advice would be appreciated.  My short-term options are (1) Start charging the late fee today) (2) Start the late fee if they don't pay by Friday.  Longer-term, I'm wondering about next month's rent (due in about two weeks) and possibly eviction.  The PM says there's pretty strong demand for renters in the area.  However, I've probably missed the best season to put someone new in the house.  The current renters lease is up this November.

[Roger Blankenship]

My answer would be modified perhaps by the specific county where your house is (not that I'm asking). In some counties in Georgia where I hold rentals, the local magistrate judge is predictable and abides by the law. In other areas, judges are sometimes much more lenient with tenants and knowing this makes me more interested in working something out with the tenants.

In general, people rent because they haven't done what it takes in their personal lives to buy a house. I say this as an observation, not to be judgmental. In 10 years of rental home ownership I've yet to meet one tenant with any significant cash reserves. Therefore a death in the family, lost wages, or almost any unexpected expense can put them behind. Assessing late charges and expecting payment in full seems to them like "piling on" even though it isn't your (the landlord's) fault. One approach that has worked for me (with tenants that have a good history) has been to offer to allow them to catch up deficiencies over a 3-4 month period with slightly higher payments. It is important you get any agreement in writing and imperative that you understand local tenant laws before you do something like this. But if it works out, you have 

1. Helped some people out who probably really needed it.

2. Saved yourself the expense and trouble of eviction.

3. Saved yourself the expense of preparing the home for new tenants.

4. Sown a measure of "good will" with the tenants. 

Best of luck!