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Updated about 4 years ago, 08/27/2020
Collecting rent from inherited tenants
Hey BP, I recently closed on an investment property where I inherited tenants.
One of the tenants tells me that he can only pay every 2nd Wednesday of the month, because that's when the VA pays him.
He’s current lease says his rent is do on the 1st
It’s sounds like 2 weeks of free rent to me!
I hate to say this about someone, but he seems sorta manipulative and conning to me.
Can any veterans out there vouch for this kinda pay system?
@Danny Clair I can't vouch for a system that will works best for the tenant to pay rent on time, but I can tell you from experience the first impression is everything. You must LAY THE GROUND WORK and set the STANDARD for this tenant or it could bite you. Inherited tenants are risky to begin with so don't play nice with this person; especially given the pandemic and lack of evictions going on right now.
I would tell them you're enforcing the lease they signed and expect payments on time. End of story. I'd be flexible on how payments are received because that's the nice thing to do. Good luck.
Hi @Danny Clair I have run into this several times with inherited tenants (not just with VA-related tenants, but with many semi-weekly (or bi-weekly, ur, um . . .) payment workers. Here are the things I've implemented as a result:
- Complete an estoppel agreement prior to purchasing properties with tenants in place. This will show (in theory) all agreements between landlord and tenant.
- Move tenants onto a new lease as soon as possible after acquisition.
- If a tenant is on a lease other than MTM and is not complying with the payment rhythm (due to an undisclosed arrange with the previous owner), explain to them the importance we place on integrity and how it does not serve either party to have a legal agreement that we disregard bits and pieces of. Offer to get them on a new lease with those factor built in. If they are not willing, apologize and explain that you will have to enforce the lease as it is written and agreed to, and as was disclosed in the estoppel agreement.
Hey @Will Fraser!
Awesome advice for me going forward.
My one regret is not getting the tenants sign an estoppel letter like you mentioned.
Sad thing is, it definitely crossed my mind while doing all my dd on this purchase.
Live and learn, I guess.
Thanks again
@Jaron Walling I appreciate your thoughts on this.
I definitely will stand firm with them right off the bat.
Told the tenant on month to month that I will be rising rents in October and he resisted pretty hard, but ultimately agreed to signing a new month to month lease starting in October. He knows he can’t find anything cheaper in the area with the same specs.
@Danny Clair BOOM! There you go man. Great job.
#3 Managing Your Property Contributor
@Danny Clair He isn't trying to get half a month free. He wants to pay twice a month. For some that is easier. If you are fine with him paying on the 1st and 15th and it is no extra work for you, then do it. If it requires more of your time, then charge him another $10 a month to cover that extra hassle.
Originally posted by @Theresa Harris:
@Danny Clair He isn't trying to get half a month free. He wants to pay twice a month. For some that is easier. If you are fine with him paying on the 1st and 15th and it is no extra work for you, then do it. If it requires more of your time, then charge him another $10 a month to cover that extra hassle.
Yeah, you’re right about him not getting a half of month rent free. I wanted to edit the post, but could figure it out.
He wants to pay the whole rent every 2nd Wednesday of the month. Some months every 2nd Wednesday is 14 days. My bad for the confusion. Guess my real annoyance is his current lease is for him to pay on the 1st and not the 14th
#3 Managing Your Property Contributor
Originally posted by @Danny Clair:
Originally posted by @Theresa Harris:
@Danny Clair He isn't trying to get half a month free. He wants to pay twice a month. For some that is easier. If you are fine with him paying on the 1st and 15th and it is no extra work for you, then do it. If it requires more of your time, then charge him another $10 a month to cover that extra hassle.
Yeah, you’re right about him not getting a half of month rent free. I wanted to edit the post, but could figure it out.
He wants to pay the whole rent every 2nd Wednesday of the month. Some months every 2nd Wednesday is 14 days. My bad for the confusion. Guess my real annoyance is his current lease is for him to pay on the 1st and not the 14th
If he wants to pay the entire rent on the 2nd Wed, get him to pay the 'extra' as switching from paying on the 1st to middle of the month. So the first time he pays half a month on the 1st, then switches to monthly on the 2nd Wed of the month paying the full amount each time. Remember when he moves out, his last month's rent will only be a half.
I am willing to work with people on payment plans. (SS checks are done by birthday and my husband gets his on the second Wed). If his check comes on the second wednesday, and it makes it easier for him to pay, why not do a payment plan to get him a month ahead: say his rent is $600/per month, you could collect an extra $600 over the next twelve months at an extra $50/month and then he'll be paying 2 weeks early every month.
@Jill F. That’s a good idea. I’m pretty sure he will be leaving in January from what he told me.
Guess I’ll just let him pay like he wants. I was a little worried about the payments I have on my end. My bank wants to be paid on the 1st.
I’ll just front the extra money I have so he can pay a few weeks later.