This is a great learning opportunity! I've suffered through many similar tenants myself so I speak from 100% personal experience. I have transformed from a weak landlord that constantly got stepped on to one that is now fair but significantly more firm. I follow the lease and the law and expect the tenant to follow it also. I only allow adults to sign the lease so we are all adults. Right? Any deviation from that agreement ultimately costs me hundreds or thousands of dollars in losses. If I mess up, I'm financially responsible. If the tenant messes up, I now choose to not be financially responsible for their issues. My rental education was quite expensive so I'm hoping you can find a cheaper university for yourself.
You need to shape up your tenant requirements and screening process. A solid screening process will screen out 90% of the bad apples. Here are some of my core requirements. Verify everything the applicant provides 100%.
Require 3X rent or more in income.
Require a minimum credit score. I use 620, but your risk appetite may vary.
Perform full background checks including payment history, civil, and legal issues.
Take a serious look at problems revealed in the background check. If the tenant didn't tell me about them on the application, they are denied for lying.
If they did tell me and I allowed them to move forward to the background check, I will consider infractions on a case by case basis but may still deny the applicant. Many times issues are downplayed but actually are serious.
Don't rent to people who have been evicted.
Don't rent to people who don't have a steady job history.
Call the landlord before the last landlord and ask about the applicant.
Collect a complete security deposit and full 1st month's rent before handing over the key.
Never sign a 2 year lease. There is no benefit for the landlord.
The reason of non-payment really isn't something I'm interested in hearing any more and is not my problem. I clearly explain this to every tenant at the time of lease signing now. I tell them I'm flexible on a lot of things but I have zero flexibility for late rent, crime at the property, and negligent damage to the property.
I do tell my tenants that I will allow one late payment and only if there is a good reason AND they tell me before its due AND they have it paid in full by the 5th of the month. Zero exceptions to this policy. Even after this, I've had late payments, but never had a tenant reach out to me proactively before its due to let me know.
If a tenant doesn't pay rent but instead uses that money for a new toy, vacuum cleaner, car payment, vacation, food, medical needs, or otherwise, I don't care. You can finance most of this stuff or pay for it later. You showed me you made 3X or greater income when we signed the lease and therefore you have the money. If you lost a job, you had better showcase your great skill that allowed you to make 3X rent and get another job quickly. I am not your parent and I won't use my emergency fund to support you. Where is your emergency fund? It is important to make it more important for the tenant to pay your bill than any of their other bills.
A chargeback as you mentioned is without a doubt an automatic eviction. Period. It is FRAUD and illegal. The excuse that their information got stolen and then the criminal just so happened to have the correct apartments.com login credentials and then made a payment on your behalf flies like a lead weight. And even if this miracle happened, rent was paid. Why would they do chargeback for a rent payment that was rightfully due? No judge would believe that for a second and neither should you. This tenant paid you late multiple times, discovered you do nothing, and then took it up to the next level.
Through similar experiences I now have zero tolerance. I have no grace period. A rent due date of the 1st and a grace period of 5 days means to the tenant that the rent is due on the 6th as that's the real date they must meet. I now charge a daily late rent fee. Its reasonable, but adds up over the course of a week. On the 5th with no rent, I'm submitting a pay or quit 5 day notice. On about the 10th day, if not paid in full, I'm engaging my attorney to deal with this.
I also use an online payment system and only accept payment in full with all fees and fines. No partial payments for me anymore.
A tenant will either pay late fees each month, or may get themselves evicted, or more likely, they will shape up and become a great tenant.
