Only 4 of the 5 tenants have paid before move in. How to proceed?

Question

I have 5 tenants that are on a joint lease schedule to move in on August 1st. One has not paid yet. How do I handle this situation? So far I've told them that no one can move in until rent has been paid.

More background information - All of the tenants are college students. I do my best to mitigate my risk by making the lease a joint lease and requiring co-signers for each of them. I require all my tenants to make payments through Avail.com. None of them have had any issue with this except one. I called the mother of the one who hasn't paid yet and her response was I sent a check through bank of america and it will arrive on or around the 1st. I explained to her that one, payment has to be received before move in and two, that all payments must be made through Avail and 3 I do not accept checks. I then asked her where she had bank of america mail the check to and she responded that she wasn't sure. I honestly think she lying about the whole BOA check thing. I reminded her that she agreed to this back in March when she signed the lease and she responded with a sarcastic OK and hung up on me. I've made all of the tenants aware that I haven't received payment from a 5th individual but none have responded. How should I proceed? What do I do about the four tenants that have paid. Since fall semester is starting back for students in this area in less than a month it is unlikely I find other tenants.

Will Gaston · Answer

@Alex Black I had a similar mindset for the first several years that I rented to students. You're 100% right that they "should" follow those terms.

However, that isn't how student rentals work in the real world.

The upside to student rentals is the great cash flow, occupancy, and high demand. But the downside is the (often) tremendous difficulty of management. You're dealing with five tenants plus up to ten parents that may contact you for one property.

I'd recommend drastically lowering your expectations as to how responsible the tenants "should" be. That has helped me a lot. I'd also recommend putting some more thought and more systems in place as to how you want things done with your tenants.

The more effectively you communicate with your tenants the smoother everything will be.

Alex Black · Answer

None of the tenants have received keys yet. I would definitely never give them access to the property before receiving full payment. I think the separate payments is something Avail.com allows them to setup. I enter in as on payment for the the property. I plan on switching to another platform after these next round of leases are up. The user interface for Avail is terrible. In the future I will definitely only accept one full payment. I'll probably also require one months rent along with security deposit in order to secure the lease. For some reason it is incredibly difficult to get them pay that first months rent. It just boggles their minds that the evil landlord won't let them move into the property before they pay.

I initially contacted both him and the mother since they are both on the lease. I hate dealing with the parents. In the past I have refused to communicate with parents and told them that all further communication with only be with their son or daughter.

Andrew B. · Answer

You shouldn't accept separate payments, especially if it is an online service where people can all sign in and pay individually. Maybe one envelope with 5 checks is acceptable, but if they are paying online you sure as hell shouldn't let them pay separate. Unless your lease specifically mentions it, you should tell them that from now on only one person can make payment, and you should setup your online system to only accept full payment.

Right now, do not let them move in unless full rent is paid. I would contact all 5 tenants and inform them such. If you have given them keys already (bad move) change the locks for now. Also, I don't think contacting the mother is a good idea. All communication should go through the tenants. If not, you set a precedent that the parents should contact you with issues. Then you have 15 people contacting you with stupid problems instead of 5.

Mike S. · Answer

I don't get a lot of college kids, but when I do, I don't accept any money unless it's all the money. They can figure it out between themselves.  I also don't accept separate payments during the lease. I don't care which one makes the payment, but I let them know upfront only one payment, in total, is to be made.  Again, they can settle it themselves.  I won't chase down separate payments.

Alex Black · Answer

Thanks for the advice. I'll definitely give that a try. I reached out to the leasing agent that I had show them the place and collect their security deposit. She said this same person did the same thing to her. The leasing agent offered to reach out to her for me and of course the woman responded immediately. Hopefully the issue will resolve from there. I just don't understand people who read the lease and accept the terms and then act like I'm being ridiculous when they're expected to follow those terms.

Will Gaston · Answer

@Alex Black I own about ~50 USC student rentals in Columbia and unfortunately have dealt with these types of issues when I first starting investing.

The good news is that you seemingly have a signed lease and 4/5 of the first month's rent paid. Hopefully you have a security deposit as well. It has been my experience that students will flake out on signed leases but not signed leases AND skin in the game (i.e. money). I'd recommend the following:

-Send a text to all 5 of the tenants on one text chain and try and set up a conference call. The biggest problems with these situations is communication. Students are averse to doing so but it's the only way it will be solved. You need to communicate your requirements to all of them at the same time.

-Tell them politely but firmly on the call that they are all on one lease and the entire first month's rent has to be paid prior to move in. You don't care who it comes from but it has to be the entire amount.

You absolutely need to work this out with this group or else you may have a vacancy for a semester or more. Finding a group this late in the summer can be incredibly difficult. Ask me how I know.

Only 4 of the 5 tenants have paid before move in. How to proceed?

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