Inheriting tenants with varied payment dates

[Leah Spurlock]

I am buying 11 houses from a retiring investor in which he collects rent at different dates for different tenants.  He knows when they get paid and has always collected on dates when they get paid.  Ideally, I'd like everyone due on 1st of month.  Any suggestions and how to transition these inherited tenants to 1st of month? 

[Nathan Gesner]

Leah, there's a very good chance some of these tenants are below market and not very good renters. You should start figuring out which ones are not worth keeping, then give them notice and get rid of them as quickly as legally allowed. 

If they are good renters at market rate and you want to keep them, you'll have to do the hard work of getting them on board with your process. Send them written notice of the change, give them 30 - 60 days to adapt, and make sure you have consequences and are ready to enforce them to get the tenants to comply.

[Justin Hoggatt]

@Leah Spurlock, I agree with @Nathan Gesner. You will want to check the leases on each of them and see if that's something already mentioned in the lease and the previous owner is just being relaxed, or if that is part of their lease that they can pay on different dates. When you take over the properties, give notice immediately that you will either be changing things and/or enforcing the lease.  If you like because you feel like there needs to be an excuse, make the bad guy the new mortgage company.  Explain that you have to receive payments by a certain day (the 1st) so that you can make sure bills are paid and the property runs smoothly. You can also likely start getting late fees if there are problems with them paying on time.

[NA Jones]

Yes agree with the others

Look at the lease and see what notice they require before the renewal date. If it is 60 days notice.

Then give them 60 days notice before the renewal date of the change. That rent will be due on the 1 st.

Just like you would do with any lease change.

[Adam Martin]

I agree with making sure the rents are where you need them to be and getting ready to get rid of any tenants who are too far behind or may become problems and when you get new ones you can get them on the first.  My question is how far off the first are they, I have heard of some tenants on social security or pensions that don't get paid until the 3rd or 4th and most landlords are happy to work with them as they have guaranteed income.  I caution you not to loose a good long term tenant who is around market just because you are concerned of wanting to get paid on the first.  If most of your tenants are on or around the first you should have plenty to have the mortgage paid, especially since most banks have a 15 day grace period.  I had one tenant on the 15th since he moved in mid month and it was great and would actually be my preference for everyone since it gives the money time to clear and even if they are a couple days late I still had it in plenty of time before the first.  In summary to my long winded way of saying it don't loose sight of the overall goal of long term paying tenants by focusing on small details like this.  In the future though for new tenants I would stick to either the 1st or 15th to simplify things.  

[Christen G.]

Congrats on the purchase! Yes, get ahold of the leases and see where they all stand. Do you have a rent roll for each property? I've inherited tenants in every home I've bought and I'm proud to say we weeded out the deadbeats within the first 2 mo. Just go in firm, clear, kind and with simple directions and they'll usually see themselves out (COVID-stuff aside) as they see you mean business.

I've found that a nice "introduction/transition letter" that is mailed + emailed the closing date goes a long way. I've pasted mine below. Obviously some of the details are state-specific, so be sure to know your local laws and if you want to use any of this change the language up as necessary. If you weren't planning on it, I'd also humbly suggest getting inside each unit on closing day to take photos and get a new, updated Move-In Form for each tenant. Best of luck and congrats again.

YOUR MONTHLY RENT PAYMENT IS:

Base Rent: $___

Pet Rent: $__

Utilities: $___

Storage: $100/mo:
Total Monthly Rent Due:

HOW TO PAY RENT & LATE FEES

1- Rent is due on the 1st of the month and late on the 5th at 5:00pm PST.

2- Moving forward you will pay rent using an app called Cozy.co - you will receive an email to create an account within 3 business days.

3- If you prefer to write a check or use another payment method for rent, there will be an additional $25 processing/collection fee added to your monthly rent.

Late Fees

A late fee of $100.00 will be issued to all late rent payments plus $5/day for each day that it is not paid in full.

Lockouts & Emergencies

Dial 911 in case of an emergency, fire, break-in, if you smell gas, etc...

Lockouts: A lockout fee of $150 will be charged to any Resident needing to be re-admitted by Landlord

Mission Statement

YOUR COMPANY NAME HERE strives to provide, maintain, and improve affordable homes with exceptional service.YOUR COMPANY NAME HERE is a professional property management company that takes great pride in offering clean, quality rentals at an affordable rate. We are committed to this goal long-term and seek to provide the best property management in YOUR LOCATION HERE. At YOUR COMPANY NAME HERE, we strive to:

• Return all correspondence within 48 business hours with a plan as needed.
• Complete all maintenance issues and repairs efficiently, quickly, and courteously
• Consistently improve the aesthetic look of any property we manage
• Maintain affordability in rental rates and treat our residents with respect
• Provide exceptional service and support to residents

What Is a Lease?

A lease is a legal contract between the landlord and tenant. When you lease a home from us, this is what you can expect. At the commencement of your tenancy…

The landlord (Us) will provide a home that is clean, sanitary, in good cosmetic shape, and in good working order. The landlord will continue to keep the home in good working order and abide by the terms in the lease throughout the length of your tenancy.

The tenant (You) is responsible for keeping the home in good condition by practicing good housekeeping habits, including to prevent leaks, mold growth, rodents, and pests, treating the property with care to avoid preventable damage or maintenance needs, reporting maintenance issues in a timely manner, paying rent when it is due, and abiding by the terms of the lease throughout the length of your tenancy.

Maintenance

Please call or email us promptly with any maintenance requests. Your home has been thoroughly cleaned and inspected for any maintenance issues prior to your taking occupancy. However, we do not live in the home and therefore will not be aware when you have a future maintenance concern unless you tell us. It is 100% your responsibility to report maintenance issues.

Here is a list of items we want to know about immediately:

1. Mold (within 48 hours)
2. Drippy faucets, drippy pipes, or “running” toilets (within 48 hours)
3. Moisture where there should be none (roof, under the sink, on a ceiling, etc.)

Maintenance Requests

Please submit your Maintenance Requests via email to: INSERT YOUR EMAIL HERE We are committed to responding to you with any questions and/or a plan (if necessary) within 48-hours.

Your Repair Responsibility

Mold (from living conditions): Mold will grow if given the opportunity. Keep your home clean and dry, with adequate ventilation and air movement. This means making sure all rooms receive heat and airflow on a consistent basis. Immediately clean up any sign of mold or mildew growth to prevent damage to the building. This includes behind furniture, in windows, in corners of walls, etc.

(Some) Leaks: You are responsible for leaks caused by misuse or neglect (such as knocking drain lines loose). Report all leaks immediately, as they can become a very big problem very quickly.

Faucets/knobs: Faucets and knobs can break easily if not handled properly.

Broken windows, blinds, doors, glass, locks, or any other damage caused directly/indirectly by you or your guests.

Light bulbs: These are your responsibility to replace.

Batteries: It is your responsibility to keep your smoke detector and carbon monoxide detector in working order by replacing the batteries on a regular schedule.

Clogged toilets, bathtubs, sinks, and other drains.

Unreported repair needs that lead to preventable damage, such as:

• Mold: Once again, mold and mildew will grow if given the opportunity. It is your responsibility to prevent mold and mildew and to clean it up at the first sign to avoid costly liability. If you do not kill mold and mildew immediately, it will continue to spread, leading to damage, damage that could have been prevented, therefore making you liable for the repair.
• Rot/damage from leaks: It is your responsibility to report all drippy faucets and pipe leaks within 48 hours. Non-reported leaks lead to damage that could have been prevented, therefore making you liable for the cost to repair the damage.

What is Emergency Maintenance?

An emergency maintenance problem is something that if not taken care of IMMEDIATELY will cause significant damage. Emergencies usually involve water or fire. If it involves fire, call 911.

When is Rent Due?

Rent is always due on the 1st of every month. Rent payments must be paid in full at all times to avoid a late fee. Past balances are considered rent due. For example, if you owe a balance in addition to rent, that amount is due on the 1st. To further break this down, if on June 15th you were billed $41.50 for a routine maintenance repair that you were responsible for, and on July 1st you only paid your regular rent payment, your rent payment would be considered $41.50 short.

Paying Rent on Time is a BIG DEAL. No excuses.

Rent is due on the 1st of each month, and it is solely your responsibility to be sure your rent gets to us in time. You will need to plan ahead to be sure you pay your rent on time. We understand that sometimes you may need a little more time; therefore, we give an additional 5 days’ grace period each month for instances when you cannot pay by the 1st.

If you do not pay your rent by the 5th of the month, this is what to expect:

• On the 6th, $100 will be added to your total due.
• On the 6th, you will be given Eviction Notice, at which time you have 3 days to pay your rent and late fees in full, or you will have to move.
• On the 7th, an additional $5 will begin accruing each day until your rent is paid in full.
• By the 10th, if we have still not received your rent payment and late fees, you will be evicted.

What’s Going to Happen if You Are Late with Rent

• It gets expensive! Plan ahead to avoid costly late fees.
• Eviction will be filed on you immediately.
• When you are evicted, it goes on your permanent record, and it will be extremely difficult to find another home to rent.
• When you are evicted, you are billed for our attorney's costs.
• When you are evicted, you create a substantial monetary judgment against you, which if remains unpaid is sent to a collection agency and affects your credit and credibility.

Policies

Your lease outlines our policies in detail, so please be sure to become familiar with them to avoid a phone call or worse, termination of your tenancy. Below are the policies that we would especially like you to remember.

No Smoking

One of the reasons you were chosen as a tenant is because you do not smoke. We do not allow smoking in any rental or within 20 feet of our buildings. Smoke permeates and damages ceilings, carpets, walls, and floor coverings. You will be held liable for any smoke-related damage within the rental.

No Pets

Pets are not allowed without written approval from the landlord and are subject to additional fees/Pet Rent. If you intend to hide a pet within your unit, please reconsider to avoid causing your own eviction.

Window Coverings

Bed sheets or other similar objects may not be used as curtains or window coverings. Broken blinds must be replaced immediately. If we notice your blinds are broken, we will hire a contractor to install new ones at your expense.

Decks/Balconies

Decks/balconies must remain clear of debris, garbage, bicycles, toys, furniture, tarps, and other clutter. Do not use your balcony as storage or to dry clothes. Decks/balconies are meant for your enjoyment. A barbecue, lawn furniture, and small plants are the only acceptable items. Failure to abide by this policy will result in termination of your tenancy.

Guests

Please limit your guests to 1-3 per day.

Noise Levels

Out of respect for your neighbors, please keep all noise to a minimum. Your neighbors are entitled to the quiet enjoyment of their home at all times.

Parties

Loud parties are not allowed.

Occupancy

Occupancy is limited to ONLY the people we listed on the lease agreement. If you decide to get a roommate after you move in or you have a guest staying for more than 14 consecutive days, you must notify us, and they must fill out an application and go through our approval process. All occupants must meet our screening standards. Keep in mind there is an occupancy limit for the home you rent.

Notice to Vacate

When you decide to move, remember to first take a look at the terms in your rental agreement or lease for how to proceed. If you are on a month-to-month rental agreement, you must give a minimum of 20 days’ written notice before the end of the month. If you have a lease, you must give a minimum of 30 days’ written notice before the expiration of your lease.

We hope this information has helped clarify any questions you may have had. Thank you for your tenancy and we look forward to working with you.

[Scott Mac]

Hi Leah,

If you move them backwards (ie. was due 15th Feb. now due the 1st Feb.) they will probably not have the money to pay.

If you move them forwards (ie. was due 15th Feb. now due the 1st March) they may have the money to pay (unless they are irresponsible and spend it on beer, cigarettes and video games, etc... before they pay you).

Good Luck!

[Drew Sygit]

Before you try raising rents or changing rent due dates, you may want to thoroughly inspect all the properties and ask the tenants about any problems they know of. 

To raise rents to the market, you may have to raise the product to the market also - which could get expensive.

Also, if you decide to get rid of tenants that can't afford increases, watch your overall cashflow! You may not want to get rid of them all at the same time.

[Matt Ziegler]

Christen G. Thanks for your post. we were just looking to develop a similar document after a new tenant caused a toilet clog by flushing wipes! This has been very helpful.

Thanks again!  

[Leah Spurlock]

Thank you all for your thoughts! Much appreciated!