New Landlord. How to handle a situation when tenant cannot pay the full rent amount

[James Park]

I brought in new tenants to my townhome in the Chicago burbs three month ago, before moving to Atlanta.

Long story short, in July, I had an unusual storm in Chicago that put 6 feet of water in my basement. I have spent $15,000 in fully restoring the basement for my tenants. The tenants used this as an excuse not to pay the full rent amount of $2200/month that they signed a contract for 2 years.

Recently the mother told me that her son lost his job who is the co-signor on the lease. She told me that all she can afford is $1800.00. Though we had a situation where we were very close to the path of eviction, the tenant did pay me this rent amount on Oct.1 2011. She had agreed to allow me to show my home to bring in new tenants at this discounted amount.

What are options when my tenants cannot pay the full rent amount that they signed the contract for? Did I make the right decision to collect the lower rent amount $1800/month hoping to find the right tenants? I figured I would be worse off collecting $0 rent while looking for a qualified tenant. I really learned my lesson to be more careful in selecting tenants. I will also never purchase rental properties more than an 1 hour away from my primary residence. This property and tenant experience really has been a thorn under my skin.

I would appreciate your advice.

Thanks.