landlord seeking help

[workmyfingerstothebone]

Been a landlord of a SFH for 10 years, same tenant since I started.

Renters are continually late on the rent, probably 7 out of the last 12 months.

They do pay but sometimes it's at the end of the month, which then causes them to be late the next month and so on....

Overall decent tenants but they continually seem to have "hard" times which effect paying rent on time.

I've assisted by returning half their rent deposit and using their security deposit as rent payment one month, which they're paying back each month.

Also offered a half month rent for the holidays once hoping this would get them back on their feet.

Only minimal rent increases each year, which should be helping them out.

The rental is about $300/month below market which I could charge tomorrow and get.

So I've painted a nice picture of myself. But am I really....

I issued a 3 day notice to quit or pay rent on the first of the month as I'm done chasing after the rent each month.

But then again, maybe that's just part of the job.

I also issued a 60 notice to vacate the property.
Renters paid the rent so I rescinded the 3 day notice.
But still kept the 60 in effect.

I believe I've been fair but listening to the renters one would not think so.

One comment was "sure, we are late but we pay every month and don't complain about the late fee".
This comment caught me off guard.
Is their an appropriate amount of "lateness" allowed before removing tenants?
Overall I like the tenants (been their 10 years) and if not for chasing after the rent monthly I would still rent to them.

I wonder if I used overkill by issuing a 60 notice to vacate?

So, asking renters and landlords to chime in.



Am i a horrible landlord who should rescind the 60 day notice or am I gullible as hell?


Thanks for any input ..... solutions or remedies....

 

[nancyfrank232]

This is why I don’t manage my own rentals. My PM follows eviction rules to the letter and they increase the rents each and every year to market rate

Giving people leeway with money is a form an enabling. I wouldn’t be doing the tenants a favor, I would be encouraging them to continue bad behavior

 

[JDARNELL]

It is easy to get in this trap with a long term tenant. I have done it myself to an extent. But keep in mind you risk your capital to provide them a place to live. Follow the rules or move on. I had a tenant who was a great guy but always late. Moved him on after a few months. My life is much better off. Your not running a charity.

 

[Just_Steve]

Even my bank gives me a 15 day grace period to pay my mortgage, not that I ever used it.

 

[OldShooter]

Management 101: You get what you reward.

You have been rewarding late rent with extreme tolerance for so long that the tenants expect it. That is a sticky situation. In 20+ years as a residential landlord I never got in as deep as you are. Smarter? Luckier? I dunno. I'm not criticizing here.

My approach might be to create an "absent authority" who requires me to get my rent collections in order. Probably I would blame "my banker." Then I would tell them that "my banker" was looking over my finances and saw what has been going on with the rent and he has told me that I cannot continue to tolerate the situation. (Hence I am not the bad guy.) Then just start pressing. Maybe increase late charges, take legal action, etc.

Another important consideration is whether, if evicted, the tenants will trash the house. This can be really expensive and hard to collect damages from them. So you have to keep your antennae up.

Best case is that they decide to satisfy this mythical evil banker by getting their payment history up to snuff.

 

[calmloki]

No good deed goes unpunished. I'd hazard a guess that you have demonstrated a long standing pattern of accepting late payments and are now trying to change the rules the tenants have relied on. If the tenants get all eager to go to court things may not work in your favor. Not a California resident, but do have decades of one bedroom rentals in Oregon.
You do need to enforce the contract, and you need to crank up the annual rental amount. We went for decades not raising the rent for existing tenants , then went (with trepidation) to bumping the rent $10 or so. Tenants loved me. Then Oregon got really tenant friendly and took away no-cause evictions and restricted rent increases. Landlords like me were stuck with low rents. Now we have been bumping the rents more substantially every single year trying to play catch-up with market rents. Since our rental income on each property is higher the value of each property is higher. If I get any comment from the tenants at all it is that the rents are lower than anywhere else. Still have a couple "pet" tenants whose rent goes up substantially less than others, but I view them as my own private self chosen charity.

Good luck - stomach churning and poor sleep and all -

 

[pb4uski]

...."sure, we are late but we pay every month and don't complain about the late fee"....

"True, but I have to chase you for the rent every month which is a continual hassle that I shouldn't have to deal with and I'm sick of it.... also, I'm charging you $300 less than what the market will bear.

So you have two choices:

1) set up an automatic monthly transfer for the rent to me with your bank and if it happens as it should then you can stay... if there is even one, temporary failure then you agree to vacate before the end of that month OR

2) move out at the end of the 60 day notice I recently gave you and I'll take my chances on a different tenant."

 

[HillCountry]

I give 5 days grace period. After that, it will be $100 per day for late fee.

And if the tenant give you too much headache, just raise the rent.

 

[OldShooter]

OP, you can communicate a wide variety of tough policies and ultimatums but I would encourage you to do it inside an absent authority scenario. Otherwise you are clearly the adversary and blowups can and do happen.

Working with an absent authority you can sit with the tenant on his side of the negotiating table and say things like "How can we work together to satisfy my absent authority?" I am like a one-trick pony with this negotiating technique and it is amazingly effective.

 

[jkern]

I think you have endured enough. Stick with the 60 notice and move on to new tenants.

 

[pb4uski]

OP, you can communicate a wide variety of tough policies and ultimatums but I would encourage you to do it inside an absent authority scenario. Otherwise you are clearly the adversary and blowups can and do happen.

Working with an absent authority you can sit with the tenant on his side of the negotiating table and say things like "How can we work together to satisfy my absent authority?" I am like a one-trick pony with this negotiating technique and it is amazingly effective.

The OP might use their vendors as that absent authority.... the mortgage company still expects to be paid even if you're late with the rent, same for the city for property taxes, etc... so those parties become the absent authority.

 

[HpRyder]

Your not a horrible landlord, but merely renting as a hobby not a business.
I had a tenant pull the same excuse. I gave them a "happy clause" letter. I told them I depend on their on time payment to pay mortgage, insurance & property tax. I showed them how much it cost me in late fees if they were late and I was late. A lot greater than their current late fee. I gave them three choices:
1) pay in full on the 1st of the month & if not a larger daily late fee,
2) pay 1/2 plus a 20 admin fee for payment on 1st & the other 1/2 plus a 20 admin fee for a CASH payment on or before the 10th, with a larger daily late fee for late payments. All payments directly to a dedicated local bank account.
Or 3) move out NOW or by the end of 60 day notice.

You might also visit the landlord site: www.mrlandlord.com/landlordforum/ for other landlord opinions.

 

[workmyfingerstothebone]

Wow, I didn't expect such a one sided stance on this.

I thought there would be more push back to keep the tenants on.
So, the plan is to stick to the 60 day notice understanding full well it could push to 3 to 6 months. This is Cali after all.

Also we are prepared that they could damage the property.
Basically, a worst case scenario.

It amazes me how people become "entitled" when a good deed is done for them.

Even worse, tenants blame the landlord for all this, however, paying the rent on time would have not gotten them into the situation.

Now I'm an unscrupulous landlord according to the local newspaper, putting tenants out during the holidays

Lesson learned.

 

[HpRyder]

Since your in Ca, if your not exempt under the new Ca rent cap law AB 1482, GET THESE TENANTS OUT before Jan 01 2020 or you will be stuck with them for a long long long time and then pay them a relocation fee of at least 1 month rent.

 

[calmloki]

Since your in Ca, if your not exempt under the new Ca rent cap law AB 1482, GET THESE TENANTS OUT before Jan 01 2020 or you will be stuck with them for a long long long time and then pay them a relocation fee of at least 1 month rent.

Ayup. Laws that have the unintended consequence of turning marshmallow landlords into embittered law adherents..

 

[The Cosmic Avenger]

Management 101: You get what you reward.

You have been rewarding late rent with extreme tolerance for so long that the tenants expect it. That is a sticky situation. In 20+ years as a residential landlord I never got in as deep as you are. Smarter? Luckier? I dunno. I'm not criticizing here.

My approach might be to create an "absent authority" who requires me to get my rent collections in order. Probably I would blame "my banker." Then I would tell them that "my banker" was looking over my finances and saw what has been going on with the rent and he has told me that I cannot continue to tolerate the situation. (Hence I am not the bad guy.) Then just start pressing. Maybe increase late charges, take legal action, etc.

Another important consideration is whether, if evicted, the tenants will trash the house. This can be really expensive and hard to collect damages from them. So you have to keep your antennae up.

Best case is that they decide to satisfy this mythical evil banker by getting their payment history up to snuff.

Huh, thanks for mentioning "absent authority", OldShooter! I use this a lot, I suppose, but never had a term for it, and now that I do it makes it easier to remember to use it where appropriate.



I think it's a great idea especially because it has the potential to reduce any malicious damage during evictions. I mean, there's no guarantee, but if the absent authority is constantly cited as the root cause for the penalties, it's possibly the tenant might have more sympathy, as you're basically putting yourself in their position of not being able to pay said absent authority due to their actions.

 

[Amethyst]

Re: tenants indignant at being told to pay on time: we had tenants who did pay on time, and to hear them tell it, we should be praising them for this.

Fact is, most tenants do pay on time and they don't make a big deal of it. What causes some to think that makes them special? Do they always think they're saints when paying their bills?

Anyway, I support invoking the financial advisor, mortgage company and anything else you can think of. Get these tenants flying straight, or find better ones. Good luck!

 

[braumeister]

Maybe after ten years they think of it as "their" house and simply resent being asked to make any payments at all. Bad situation.

 

[OldShooter]

... I think it's a great idea especially because it has the potential to reduce any malicious damage during evictions. I mean, there's no guarantee, but if the absent authority is constantly cited as the root cause for the penalties, it's possibly the tenant might have more sympathy, as you're basically putting yourself in their position of not being able to pay said absent authority due to their actions.

Yes. That's the key to it. You are no longer an adversary. Instead you want to work with them to satisfy the absent authority. Everyone is familiar with the concept (think car salesman taking your offer to the absent sales manager) but once you recognize it and think it through it is something that works like a dream in many situations.

My business partner and I had a manufacturing business for about 12 years. Every once in a while there would be a significant negotiation. In all of those I don't think anyone noticed that they never saw both of us in the room at the same time. One of us was always absent, usually my partner.

We have an elderly friend who needed to buy a car. I coached and taught her for about an hour before she sallied off to the Toyota store. I'm sure the sales people were high-fiving with joy when they saw a slight, elderly woman come through the door. At their first offer she simply said "Frank won't let me spend that much money." This went three rounds then, as I told her to do, she stood up to leave. That action produced the offer she finally took. At the time, Frank was so alzheimer-y that he didn't even know Margaret's name. But it didn't matter. It wouldn't have mattered if Frank didn't exist. The dealer finally made Frank happy, got the deal, and I'll bet they never realized that Margaret had played their own trick on them.

 

[thumbs]

I feel the OP's pain.

I have several residential rental properties that are professionally managed, and one I manage myself. I have learned over the years that I am not a very good landlord.
If you can find a good property manager, I would suggest you go that way. The $300 below market value should be more than enough to cover property management fees.

You will likely make more money, and have less headaches.

Then again, I have had property managers who took more management from me than the tenants ever did...so make sure you do your reaserch.

Good luck!

 

[stargazer08]

You should go to Mrlandlord.com and read their Q&A forum. You will learn a lot from them.

 

[Senator]

Charge a late fee. 8% of the unpaid amount.

With 24 renters that I manage of my own, rarely do I get late rents. I have not missed a rent payment in 10+ years.

 

[foxfirev5]

After running through the full gambit of renter, investor, and landlord if I felt compelled I would simply invest in REIT's, REIT ETF's or even REIT CEF's. While waiting for my next no brainer RE opportunity I invested in RQI, a RE CEF back in 2016. The only difference between that and physical RE was that I was able to see the volatile nature of the investment on a daily basis. Now it's up substantially while paying great income. However if I sell I still have nothing reasonable to buy in physical property. It all balances out.

 

[Ginny]

Hire a lawyer if they are not packing right away. The landlord tenant laws are a trap tor the do it your selfer. Do not communicate with them again. They have excuses to pay and I can guarantee they will have excuses to move. Some people are flakes and slackers and it always surprises those of us who take care of our affairs promptly.

It is ok for you to take care of your financial affairs as you see fit. You must get rid of this stress of the slacker non paying tenants asap!!

 

[Luck_Club]

Slow paying tenants are always slow paying. I've had a couple where the 5th would come and go and no check. call's etc to finally get it. PITA! Moved to post dated checks and 1 slow payer moved on, and the other writes the checks so they are dated to correspond to the pay day and I no longer have issues, just have to hang on to the check longer than expected.

My advice is raise rents, and go fishing for a better tenant. The $3600 extra a year won't hurt either.