How to train your tenant to become a great tenant?
Future real-estate investor · East Selkirk, Manitoba · Member since 2015 · 74 posts · 25 votes
How to train your tenant to become a great tenant?
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Retired Landlord/Author · Commerce Township, MI · Member since 2012 · 1k+ posts · 1k+ votes
10yThe Tenant Phase by Nancy Neville
THE FIRST MONTH (THE HAPPY PHASE)
During the first month of a rental period, the tenant is happy. They wanted the home, they got the home and everything is fine. THEY ARE VERY HAPPY! You spent a lot of time at the signing of the lease telling them what you expect from them and what they can expect from you. They seemed to be happy and they nodded in understanding.
THE SECOND MONTH
Somehow during the second month, when the newness wears off and the happiness falls into a routine, the new tenants become confused. They seem to forget what the rules are and when rent is due (even though they have a written lease agreement to refer to). If they are one of the few tenants who do not get confused during this time, this means they have jumped from the Second Month phase into the TESTING PHASE which may cause a few problems, but I will talk about that in a few minutes.
To help the Tenants not be confused during the 2ND MONTH PHASE, I always bill my Tenants their rent 10 days before it is due. It's during the 2ND MONTH PHASE that I will answer any questions they have and not make them put it in writing.
TESTING PHASE (May begin as early as 2nd month)
The TESTING PHASE is a very crucial phase. Whether the tenants and you get along is determined during the TESTING PHASE. More Tenants than not like to Test the Landlord. If they had gotten away with it with their previous landlord, chances are, they feel they can get away with it with you.... so they will try. They will pay their rent when they want to, putting you last and live the way they want to regardless of your rules.
It is very important to nip this in the bud during the TESTING PHASE, because if you allow the tenant to get away with things such as paying their rent when they want to and doing what they want, then chances are you will never proceed past the TESTING PHASE.
THE THIRD MONTH:
If you make it to the third month, that is good. But it is also very crucial during this time as well to make sure the tenant stays on course. The Third Month strengthens your position as to who runs what. During this time you want to make sure that the tenant keeps paying their rent on time and keeps obeying the rules. One little falter on your part can throw the tenant back into the TESTING PHASE. It is very important that you guide them during this time as to what you expect and want. It is important that you gain their trust and respect during this time.
THE FOURTH MONTH - THE COMFORT PHASE:
The fourth month through the first year is THE COMFORT PHASE: the tenant becomes accustomed to your rules and is starting to feel comfortable. If you have handled everything correctly, being strong when needed to be, and doing evictions when needed, the Tenant will feel secure because the Tenant will know what is expected of them and will feel comfortable and will want to stay. (Tenants usually feel comfortable with stability and sameness).
AFTER THE FIRST YEAR:
After the first year, the COMFORT PHASE becomes more stable and each year thereafter. It's just a matter of keeping your Tenant happy, yet, making sure they don't slip into the Testing Phase from time to time. Even old time Tenants will want to go to the Testing Phase if they see their Landlord falter, get too over generous or too understanding.
When that happens the Tenant's stability changes because the rules are changing throwing the tenant into the Testing Phase again, so we don't ever want to falter but always stay strong and in control.
THE MOVING PHASE:
During the moving phase the Tenant, no matter how many years they have been with you, seems to forget everything again. They become babies and they revert back to the TESTING PHASE. Once again they never refer to the Lease and must depend on you for answers.
During the MOVING PHASE, the Tenant can change personalities quickly. It's like they drank a potion that changed them from Jekyll into Hyde. They become this fiend, this villain that could destroy you and is probably the hardest phase of all the phases.
It is during the MOVING PHASE, that you must be cool, have all your wits about you and be prepared, yet still be cordial so as not to enraged the monster that seems to be lurking in your Tenant during the MOVING PHASE (as there is NO ANTIDOTE to calm the savage beast once it takes form). If by chance this happens, it is best to not confront the beast but to keep your distance until the courts can set it free!
With time everything will fall into place as long as you treat Land lording as a business!
20 Replies
- Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes10y
Interesting thought, Clayton.
Have you considered what impact "variable rent" will have on your ability to value the property?
Figure a 6-flat. That's $600 a month you're not collecting or $7,200 a year. What does that do to the value of your property?
...or, to look at it another way, what would a "surplus" of $7,200 a year in gross income do to the value of your property?
It's an interesting thought, but how do you make the numbers work?
- Investor · Burns, TN · Member since 2015 · 29 posts · 8 votes10y
hate on one of my properties the lease is signed for $1,250.00 per month. If rent is paid on time they pay $1,200.00. It is a built in late fee and works beautifully. They feel like they are getting a $50 bonus in their pocket each month. I didn't verbally tell them this when they signed the lease. They had to read it to find out. This let me know that they read the lease . This was my Mother's house and helped fund her assisted living monthly fee. I inherited the house and the same tenants are still there. My husband and i have purchased 4 more rental homes since. He will not agree to do this for them. But i would like to.
- Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes10y
WOW - - great concept; Training the tenant. Your concept of discounting is similar to a business invoice with terms like Net 0, less $100 5 days prior due date.
I use popmoney.com to assist tenants in making timely payments and make past due expensive -- $150 late fee.
I send a courtesy note the first time their rent is late:
- You are late in your rent payment and this memo is to remind you of the $150 late fee. To help you remember, next month you will be assessed this late fee if the rent payment is not received in a timely manner.
- You are late in your rent payment and this memo is to remind you of the $150 late fee. To help you remember, next month you will be assessed this late fee if the rent payment is not received in a timely manner.
- Retired Landlord/Author · Commerce Township, MI · Member since 2012 · 1k+ posts · 1k+ votes10y
The Tenant Phase by Nancy Neville
THE FIRST MONTH (THE HAPPY PHASE)
During the first month of a rental period, the tenant is happy. They wanted the home, they got the home and everything is fine. THEY ARE VERY HAPPY! You spent a lot of time at the signing of the lease telling them what you expect from them and what they can expect from you. They seemed to be happy and they nodded in understanding.
THE SECOND MONTH
Somehow during the second month, when the newness wears off and the happiness falls into a routine, the new tenants become confused. They seem to forget what the rules are and when rent is due (even though they have a written lease agreement to refer to). If they are one of the few tenants who do not get confused during this time, this means they have jumped from the Second Month phase into the TESTING PHASE which may cause a few problems, but I will talk about that in a few minutes.
To help the Tenants not be confused during the 2ND MONTH PHASE, I always bill my Tenants their rent 10 days before it is due. It's during the 2ND MONTH PHASE that I will answer any questions they have and not make them put it in writing.
TESTING PHASE (May begin as early as 2nd month)
The TESTING PHASE is a very crucial phase. Whether the tenants and you get along is determined during the TESTING PHASE. More Tenants than not like to Test the Landlord. If they had gotten away with it with their previous landlord, chances are, they feel they can get away with it with you.... so they will try. They will pay their rent when they want to, putting you last and live the way they want to regardless of your rules.
It is very important to nip this in the bud during the TESTING PHASE, because if you allow the tenant to get away with things such as paying their rent when they want to and doing what they want, then chances are you will never proceed past the TESTING PHASE.
THE THIRD MONTH:
If you make it to the third month, that is good. But it is also very crucial during this time as well to make sure the tenant stays on course. The Third Month strengthens your position as to who runs what. During this time you want to make sure that the tenant keeps paying their rent on time and keeps obeying the rules. One little falter on your part can throw the tenant back into the TESTING PHASE. It is very important that you guide them during this time as to what you expect and want. It is important that you gain their trust and respect during this time.
THE FOURTH MONTH - THE COMFORT PHASE:
The fourth month through the first year is THE COMFORT PHASE: the tenant becomes accustomed to your rules and is starting to feel comfortable. If you have handled everything correctly, being strong when needed to be, and doing evictions when needed, the Tenant will feel secure because the Tenant will know what is expected of them and will feel comfortable and will want to stay. (Tenants usually feel comfortable with stability and sameness).
AFTER THE FIRST YEAR:
After the first year, the COMFORT PHASE becomes more stable and each year thereafter. It's just a matter of keeping your Tenant happy, yet, making sure they don't slip into the Testing Phase from time to time. Even old time Tenants will want to go to the Testing Phase if they see their Landlord falter, get too over generous or too understanding.
When that happens the Tenant's stability changes because the rules are changing throwing the tenant into the Testing Phase again, so we don't ever want to falter but always stay strong and in control.
THE MOVING PHASE:
During the moving phase the Tenant, no matter how many years they have been with you, seems to forget everything again. They become babies and they revert back to the TESTING PHASE. Once again they never refer to the Lease and must depend on you for answers.
During the MOVING PHASE, the Tenant can change personalities quickly. It's like they drank a potion that changed them from Jekyll into Hyde. They become this fiend, this villain that could destroy you and is probably the hardest phase of all the phases.
It is during the MOVING PHASE, that you must be cool, have all your wits about you and be prepared, yet still be cordial so as not to enraged the monster that seems to be lurking in your Tenant during the MOVING PHASE (as there is NO ANTIDOTE to calm the savage beast once it takes form). If by chance this happens, it is best to not confront the beast but to keep your distance until the courts can set it free!
With time everything will fall into place as long as you treat Land lording as a business!
- Rental Property Investor · Providence, RI · Member since 2015 · 1k+ posts · 594 votes10y
Generally, I will list a property a little higher than my desired rent no then tell them that I offer a 25-50 dollar monthly discount for online rent payments. That invoice is sent out 10-15 days before the first and any payments made after the 5 day grace period are subject to a late fee. 99% of tenants pay on time. I have one who is usually paying on the first Friday after the first. He got a pass on the first late fee, but he has paid a late fee every month since. Waiting until the 6-7th of month for a few extra bucks doesn't bother me too much. Build in incentives and train them. It does work.
- 10yMike CumbieBusiness MemberREALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
First time I rented out an in-law apartment in my first house, rent started coming in on the second then the third, then the fourth, then I was knocking at the door on the eighth. Finally I was sitting up looking out my window at 10:00 at night on the fourteenth hoping the car would pull in so I could go out and ask for a check.
New method, upon first meeting I am the property manager who works for the owner. Explain in detail the lease when money is due. When a late fee falls in and when it will get filed for eviction. Explain that I have to follow those steps or I lose my little part time gig which is helping with the property. Let them know that the owner is very rigid and follows the legal terms they both are agreeing to along the letter.
If someone asks for an extension at some point, I let them know "I will go ask". I go inside, get a cup of coffee, let them know I left a message and will get back to them. Wait a few hours (gives them a chance to think of other ideas) and then come in and let them know they have to follow the lease per the boss, he did suggest contacting family, friends, local charity organizations.. There is a food bank truck at Lake and Roosevelt on Thursday so if you can move some money around in other areas. He said he was sorry but he has to follow the contract.
- Rental Property Investor · Oldsmar, FL · Member since 2014 · 238 posts · 61 votes10y
I have offered incentives to pay early and did not work (it was low income property). I am going to try it again on my middle income. I think a $50. Is more than enough incentive. Perhaps make it between the 25th to 1st of month. After the 1st have late fees occur.
- Visalia-Fresno, CA · Member since 2009 · 1k+ posts · 863 votes10y
@Account Closed
Sounds like a game. Wait until you own a few dozen properties. Manipulation like this will cause more problems than you need.
My best advice is to become genuinely interested in people, be fair and prompt.
Frank - Retired Landlord/Author · Commerce Township, MI · Member since 2012 · 1k+ posts · 1k+ votes10y
There is no need to play games and pretend. YOU are the OWNER, be proud of it !!! Don't be afraid to face problems head on. You can't run away from it and hide. Set the rules and let the Legal Contract-Lease Agreement do the work for you. (by playing games you create a lawsuit against you. Misleading the public and so much more.) Once a tenant finds out you lied to them about who you are, your reputation is down the drain! Word of mouth is good or bad advertisement!
This is what is in my Lease Agreement
TABLE OF CONTENTS
1 Materiality of Application to Rent (Everything on application true ) Page 3
2 Residential Tenancy Agreement - Notice Page4
3 Financial Statement Page 5
4 Deposit and Utilities Criteria Sheet Page 6
5 Utilities and Tenant(s)’s Responsibilities Page 7
6 The Leased Premises Address and how it is to be used & furnishings Page 8
7 Terms of LeaseMonth to Month Page 9
8 Occupants & Overnight Guests Page 10
9 Rent:Where to send payments Page 11
10 Rent:How money is applied Page 12
11 Rent:Late Fees Page 13
12 The Eviction Process Page 14
13 NSF Fees Page 15
14 Pets Page 16
15 Notice to Surrender30 Day Notice to Terminate Tenancy Page 17
16 Holding Over Page 18
17 Security Deposit:How it is used.Where it is held.Forwarding Address: Page 19
18 Security Deposit:Damages Page 20
19 Quiet Enjoyment – Inspections – Photo’s Page 21
20 Alterations Page 22
21 Insurance Page 23
22 Abandonment Page 24
23 Attorney’s Fees, Government Law, Severability, Amendment, Assignee Page 25
24 Additional Provisions Page 26
25 Smoke Detectors, Batteries and Furnace filters Page 29
26 Sewer Drains Page 30
27 Lawn Maintenance – Vehicle Violation Page 31
28 City Ordinance Page 32
29 Delay in Repairs and Miscellaneous Charges Page 33
30 Illegal Use – Hazardous Materials Page 34
31 Address for Notice Page 35
32 General Provisions Page 36
33 Personal Injury Page 37
34 For Rentand Sale Signs Page 38
35 Inventory Checklist Page 39
36 Signing of the Lease Page 40
37 Lead Paint Signature Sheet Page 41
38 Lead Paint Brochure Separate
39 Pictures of Properties Last Page
Notice # 12 The Eviction Process. I make it clear where I stand. It takes about 20 minutes to go over the lease, and how I word what I say and the tone I use makes a big difference in how they take the rules I set in place, especially the eviction process.
My tone is business and not commanding. I explain why I have to do these things and why I have to follow up non payment of rents the way that I do.
It may sound like I am a force to be reckoned with, and I am, but I also tell them what my duties are to them, and what they can expect from me and that is to take care of their emergencies immediately, and their general repairs in the order they are received in my office. I also joke with them and always refer to their rental unit as THEIR HOME and not mine.
You want to be fair, but also make it clear where you stand.
THE EVICTION PROCESS:
First of the month rent is due No matter what crisis the Tenant(s) may be going through. Rent will be due on or before the first of every month. (Allowing for week-ends and Holidays)No excuses will be accepted as to why rent is late.
Second of the month 7 Day Notice to Quit is sent to the Tenant(s) If rent is not received in my office on or before the 1st of the month (allowing for week-ends and Holidays) than rent is late and a 7 Day Notice to Quit will be sent to the Tenant(s) ..No exceptions.
5th of the month.
THIS IS NOT A GRACE PERIOD If rent is not received in my office on or before the 5th of the month, allowing for week-ends and Holidays, then a $25.00 late fee is charged in addition to all monies owed up to this date and a $3.00 per day late fee will be charged from the 5th of the month until all money is received in my office.
If rent is received in my office after the 5th three times in a row, then the late fee will be charged on the very first day rent is late which will be the 2nd of the month and a $3.00 per day late fee will be charged until all rent is received in my office.10th of the month If rent is not received in my office on or before the 10th of the month that on the 11th of the month I will be filing for eviction for non payment of rent and all legal fees and administrations fees will be charged to the Tenant(s) in addition to all other monies owed.
11th of the Month I file for eviction and all legal fees, administration fees and late fees and all monies owed will be charged against the Tenant(s).
- Investor · Baltimore, MD · Member since 2013 · 205 posts · 44 votes10y
@Nancy
@Account Closed please critic me. I have an orientation packet that explains what is expected if them that I read through with them and give them a copy with a mandatory 48hr. review period.
I mail rent invoices on the 23rd with a $25 discount for post dated rent by the 26th. If rent is postdated by the 5th it is not late. Rent not recieved by the 7th Failure to Pay Rent is filed to start the eviction process.
Post dates are used for further evidence for court and to avoid grey areas.
- Retired Landlord/Author · Commerce Township, MI · Member since 2012 · 1k+ posts · 1k+ votes10y
Hello Robert:
Time is of the essence when renting a property out. No time to take home an application or lease agreement and think about it. Chances are they will never get back to you, and you will be calling them to ask for an update. The clock is ticking. Other applicants are waiting. Therefore no 48 hour review or a even a one minute review. They have chance to say yea or nay at the signing of the lease. That is why I go over everything at that time. If they say no, and nobody ever has, I still have other people in line waiting. And If I don't have anyone in line waiting, the ad is still running until I have a signed Lease Agreement.
Post dated checks can bounce, and they could do this with the idea in mind that they will get a discount. And then give you many excuses as to why they thought their check was good. Just because a check is post dated to the 5th, doesn't mean the check is good. The eviction starts the day it's not received in my office on or before the 1st.
Remember the Notice to Quit is just a Notice. You cannot file for an eviction until that notice is sent and is why it is crucial to send it out the day the rent is late.
They still have 7 days or 3 days, or how many days your state laws says they have to pay their rent according to the Notice. So it's not like you saying they have to pay it today or today I go to court. It doesn't happen that way. But you certainly can't go to court until that Notice has been sent or evict them and time is of the essence.
This is just my two cents.
Checks can bounce. Checks can have a stop payment put on it. If you are going to give them this deal, then make it work for you. Have them pay you by Cashier's Check or cash. But not by Money Orders or Checks.
Nancy Neville
- Investor · Baltimore, MD · Member since 2013 · 205 posts · 44 votes10y
@Account Closed
Thanks for your advice on the no waiting for review of orientation.
-Misinterpertation. Postage date on envelope. I do not except checks. I file by state law for failure to pay rent.
Maryland: 1st file failure to pay rent. 2. File Warrant of Restiturion to evict. No notices needed.
- Retired Landlord/Author · Commerce Township, MI · Member since 2012 · 1k+ posts · 1k+ votes10y
Ah very good!
Nancy Neville
- 10yMindy JensenPro MemberBiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
@Jeff B., be careful with your late fees. California allows reasonable late fees, and only if they are addressed in the lease. $150 may not sound reasonable to a judge.
- Realtor · Atlanta, GA · Member since 2015 · 693 posts · 357 votes10y
$150 is a huge late fee, generally it's like $50 per day
- Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes10y
Thanks @Mindy Jensen, the fee is in the lease and is initialed by the tenant when signed.
A 10% fee is very common. The whole point is a punitive action to "train the tenant". I may get one per tenant, but never a second :wink:
- 10yDan H.Pro MemberInvestor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
The book Landlording on Auto Pilot or something close to that has both the trick of rebating for early payment and the trick about being the "Property Manager".
We do not use the early payment rebate because we do not have an issue. If they are late without discussing it with us we come down hard. I have only had one tenant late twice without discussing an issue with us and they were served their notice on the first day allowed. We have never had someone late 3 times in 12.5 years of having rental properties. We have only once been unable to collect all rent and that is unlikely to happen again (lesson learned).
We do use the trick of being the "Property Manager". I could easily take the responsibility associated with not letting the tenant get away with stuff or doing tenant requests but I desire to have a friendly relationship. If I say no to a tenant request and the tenant is not happy it is easier to blame it on the owner rather than have any resentment towards me. It is not that I cannot handle the resentment, it is just easier to not have to handle it. In the last month a tenant requested exterior venting for a dryer. Note we supplied a dryer vent box. He did not desire the humidity in the garage (laundry hookups are in the garage in this SFH). "Sorry owner does not want it venting to the front of the unit and it is too costly to vent to the back of the unit." Of course the owner is H3 Properties which is the wife, child, and me.
- Investor · Baltimore, MD · Member since 2013 · 205 posts · 44 votes10y
These are very effective ways of training tenants. It also depends on your customer base and neighborhood. Class C or worse neighborhoods its harder to weed out bad applicants and train tenants.
- 10yNicole A.Pro MemberRental Property Investor · Baltimore County Maryland and Tampa Florida · Member since 2013 · 2k+ posts · 2k+ votes
I do not offer early-pay incentives nor do I do a daily-increasing late fee. This just causes more accounting chores for yourself. The rent amount is the rent amount due on the 1st. The late fee comes in effect on the 4th at maximum legal amount. In addition, rent court is filed on the 4th...so the late fee is just the beginning of the fees they'll have to pay.
Oh, and payment must be *received* by these dates. None of that post-marked-by game.
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