Non payment and when to evict

[Matthew Wright]

What is your tolerance when it comes to tenants being late, before evicting? Im currently owed most of May and all of June and I think if I give them more time its just going to cost me in the end. Especially when shes blaming employer, severance and every other excuse you can think of. If I dont evict now, Im guessing Ill be out multiple months which is several thousand dollars. How do you handle these non paying tenants, who with their initial rental application show sufficient proof of income and who also seem to have their **** together?

[Ricardo R.]

@Matthew Wright May and June is longer than most would like. You should have a very low tolerance for late or missed payments. The fact is that this is your investment, you have money and time wrapped up into it and it is unfair to you to expect that you support another grown adult which you're providing housing for under the initial understanding that they would compensate you every month for your services and your risk.

You should have a very low tolerance but, that doesn't mean you have to be heartless in your approach either. One the best methods that works for us is to be stern but fair when dealing with late or missed payments. If a tenant is late on rent:

1. The first thing you need to do either after business hours on the 1st or early on the 2nd is to politely notify them in writing that they are late on rent and that they have or will be assessed a late fee if rent is not paid before the grace period (if there is one). 
2. If rent is not received, after your grace period, you should file a 'demand for possession due to non-payment of rent' at the earliest allowable time-period allowed by your state - this initiates the eviction process and conveys that you ARE serious an that rent IS a priority. 
3. You should ALWAYS assess late fees - the only exception to this is a tenant which is late for the first time on rent - for first-timers, we typically assess the late fees and then waive them once the payment is made as an attempt to keep a good relationship but, the thing here is: 1) they don't know that late fees will be waived and 2) you should try to maintain a reasonable good relationship because after all they are in control of your investment. 
4. You should never delay your eviction process period. Employment, medical, lost payments, its on the way, etc. you will get every reason under the sun for missed and late payments but, you should never delay your eviction process for it - you need to be consistent in filing for possession and if payment is received before a court date is scheduled then you can always cancel it, but you should never delay it. 
5. Remain in contact with your tenant in writing. If you don't already you should consider assessing an initial late fee and then a daily late fee (if your state allows it) until rent is received - (you can also always cap your daily fee if required by your state) - this will convey to the tenant that again - late payments are not tolerated.

You'll have people on either side, some will say let them go for as long as  you can afford it without paying rent because everyone runs into financial trouble and others will say evict the moment they are 1 day late and don't look back. Doing it this way 1) is extremely fair; 2) sets you up to run your rental like a business (because it is one) and; 3) allows good tenants to remain good tenants while conveying to bad tenants that late or missed payments will not be tolerated.  

When you screen tenants you should be ensuring that their combined household income is at least 2-3x's your rent amount. You should always pick up the phone and verify employers, pay stubs and previous landlords. When accepting payments, you should look to receive them online however, if your tenant insists that they mail it, you should write it in our lease that if payment are mailed the tenants need to ensure they choose a traceable mailing option - which will alleviate you of the burden of having to listen to tenants tell you they mailed payment when they didn't. 

If you let this tenant go on delaying payment, you are most likely not going to get your rent payments. It is both unfair to you and the tenant. Unfair to the tenant because it is unlikely that they will be able to make up the late/missed payments especially if they are having trouble with them now. Unfair to you because you have money and time invested in this investment and should not be a scape goat for everyone's troubles in life - you offered your property under the impression that they would pay for your service every month, if they are no longer willing to pay for that service, regardless of the reason, it's unfair to you and you should move to replace them as soon as possible. I hope this helps.