Ten Common Eviction Mistakes

[Ronald Starusnak]

EVICTIONS CAN BE A NIGHTMARE

You did your due diligence, you purchased a property after running your numbers, you found a great tenant, checked their background information, verified their income, and followed up with their references but after all of that work; they stopped paying rent and they're not leaving. It doesn't take long for a non-paying tenant to turn your cash flowing property into a nightmare.

Becoming Emotional

Some savvy investors who've been doing this for a long time will like to tell you that they do not make any real estate investing decisions based on their emotions and I'm here to tell you that's a lie. It's hard not to be emotional, we are investors of course for income but many of us love the real estate industry and we love what we do and therefore we are emotional; we're emotional about the properties we've purchased, about the cash flow, about the negative things within the industry, and we are all humans and sometimes we can make connections with the tenants and if you take any advice from this article let it be this: do not become friends with your tenants.

There is a big difference in being a great landlord and being their friend. It may be difficult but it is absolutely crucial that you treat your tenants as customers. Essentially that is what they are, you must remain professional at all times and do not cross that line. I'm sure at some point in our lives we have all had a family or friend that has borrowed some money from us and never paid it back, perhaps it wasn't a lot of money and perhaps you pretend like it wasn't a big deal but you know deep down that you have changed your view of them.

Set your policies and do not stray from them. It will be much more difficult to evict a tenant if you are being empathetic. Things happen, people lose jobs, emergencies pop up, but as mean as this sounds: that's not your problem. There are charities out there to help people down on their luck and you're not one of them and if you pretend to be, you'll be down on your luck yourself and you can bet your ***, the bank isn't going to care about your sob story.

Not Signing A Lease

Maybe they're a family friend, a family member, or you looked the guy in the eye, shook his hand, and you just knew he could be trusted at his word. Don't let this happen to you, ALWAYS utilize a professionally drawn up lease. There are numerous resources online to find templates, ideas, things to add, and how to delivery them to your tenant. Make sure your lease details these basic items: Rental Price, Payment Frequency, When Rent Is Due, Late Fees Or Non Payment Penalties, Lease Length & Expiration, Move Out Notice, and What Happens if They Move Before Lease Ends. There are a lot more clauses to consider but those are the basics.

Disabling The Utilities

So you've got an ******* in the property, they're milking you and they know how to play the game. They're costing you money, you're not getting your monthly rent but you're still paying the taxes, insurance, mortgage, and other holding expenses and you can't keep shelling out your personal cash much longer. You're tempted to call the power company and the water company to have the utilities disabled. It's a great tactic but it's illegal unfortunately. Landlords don't have many protections going for them. Make sure you're utilizing the correct avenues to remove non-payment or non-lease abiding tenants from your properties.

Accepting Partial Payments

If you're owed $1,500 and you're looking to pay some of the ongoing bills with your property and your tenant doesn't have the full amount but they offer you $200 and you accept it. You've now entered into a situation where you could be legally disabled from filing for an eviction. The acceptance of a partial payment is a new contract of sorts and can reset the time in which you have to file an eviction. Let's say your lease states if a payment is 10 days late you will file an eviction and on the 9th day you accept a $200 payment. You may now have to wait another 10 days from the date of accepting that partial payment before you can file the eviction.

Conclusion

The simple fact of the matter is this; real estate investing is great but if you're investing in rental properties in a city like Syracuse or Rochester, then you're going to get people who need to be evicted no matter how well you screen the tenant. Lower income areas have higher eviction rates (unless they're section 8 rent). Be prepared and if anything about the eviction process scares you, hire an eviction attorney, read everything you can online, and / or hire a reputable property management company and ask them what their eviction process is.