Property damage on rentals

[Faustin Hoover]

Hello all I do not own any rentals yet but I am looking. I have a question for those who do own them. If you have a tenant who damages your rental property and you try to bill it on their credit card you have on file but it is maxed or they don't have enough on the card how do you go about trying to get the money? Will collections work or do you have to go to small claims court? What if that person doesn't have the money at all and doesn't currently have a job? Do you just lose out and have to pay for the repairs yourself? Will insurance kick in?

I'm sure this doesn't happen all the time just curious if anybody has gone through this process? Thanks in advance!

[Aaron W.]

@Faustin Hoover You will typically will not have a credit card on file for the tenant and can't charge the amount to them. You will collect a security deposit prior to the tenant moving in. You can deduct any repairs or cleaning fees needed from the deposit. If it goes above the deposit, then you can bill the tenant for the excess. If they do not pay, then it is a matter of seeing if it's worth taking them to court for damages or just eating the cost and taking it as a loss. Insurance can kick in for any large repairs that are needed.

This is why tenant screening is extremely important in owning rental properties. Although, this will not fully solve the issue, it does make a huge difference when you screen for the right tenants.

Best of luck!