I have seen the current economy take it's toll on some of my tenants here in Brevard County Florida. A couple have been laid off. Some have had hours cut at work, Some have lost their jobs. Good things happen to good people. Some have less than desirable spending habits. Regardless, of what the issue is...some rents, from some tenants, are becoming a bit more difficult to collect.
So, we have been setting up payment plans with our own tenants. Some can afford to pay $200 a week, while they've got the money in their hand, rather than wait to gather a full $800 for the month. Some cannot get the full amount together, as it is a bit too tempting to have that all at once, and they're afraid they'll spend it. Some are better with their finances than others. In some situations, depending on the individual tenant, I will agree to take payments, that suit their lifestyle, that will work best with their pay periods.
Let me qualify this by saying I will NOT, UNDER ANY CIRCUMSTANCES ACCEPT PARTIAL PAYMENTS FROM A TENANT IN MOVING INTO A PROPERTY I HAVE. I also will not accept partial payments from a tenant that has not rented from me for a period of time. I must know them and feel comfortable with setting up such an arrangement. I will also say, in taking payments I will not allow one month to flow over into another month.
However, landlords must be cautious, as in some states, if you accept a partial rent payment from a tenant, and they do not come up with the rest of the rent, you cannot begin eviction proceedings until the beginning of the next rent payment due date, ie; after the first of the next month (or whatever due date your lease specifies). So, you can lose time in an eviction. And, time is of the essence to a landlord in an eviction.
First, check the laws in your state before agreeing to partial payments. Accepting partial payments can put you in a precarious position, if you're not careful. For me, I only set up a payment plan with tenants that have been renting from me for over 2 years. BUT REMEMBER, THIS IS NOT ALWAYS THE BEST OPTION FOR EVERYONE! Do your homework FIRST!
Fortunate for me, I have not yet had to evict a tenant that is on a payment plan. (There's a first time for everything in the rental business, I know.) It may sound a bit ironic, but I have found that the ones that set up a payment plan are not the ones getting evicted. It's the ones that don't care, that don't bother to set up a plan, that don't or can't pay.
As a landlord or property manager, have you noticed a shift in the market with your tenants?
Do you take payments from your tenants?
This article is authored by Sandy Shores, Melbourne FL REALTOR.
that for you
I have definitey seen more and more tenants having problems paying their rent on time. We always have to usual ones who never pay on time, but in the last couple of months the number has gone up! We do not take partial payments. On the other hand several tenants have broken their leases in the last couple of months due to jobs lay offs. Hopefully 2009 will be a better year!
Sandy - I can't believe anyone wouldn't pay you....you look so mean and threatening....oh, that is right, you have a daugher that can lift them over her head.....ok, I'll pay!
We've had a few tenants that have been laid off over the past few months and several that have had their hours cut back. Honestly I'm okay with setting up a payment plan with someone if they've been good tenants in the past. Generally I find that the tenants who contact us directly to work out a payment plan are already great tenants. They've just fallen on hard times. The ones I have trouble with are the ones I have to track down in order to work out a payment plan. To date I've only had to evict 1 tenant who was on a payment plan. And I really shouldn't have put that tenant on a payment plan in the first place.
Hi Sandy, I think it is wonderful that you will work with your tenants. It says alot about the kind of person you are. I think you are a very smart business woman with a heart :-) You're the best!
Sandy,
So far I have not been approached with this issue. I only have one rental so far. Your posts are always so interesting to me because it helps me to see what goes on in being a landlord of many properties...
Thank you,
Ann Hayden in windy Wildwood Missouri
This is really good info, Sandy and a good caveat for the soft-hearted landlords out there.
Hey Kelly, Thanks for the feedback - I suppose the layoffs are rippling across the nation. I understand why some don't take payments - you must be cautious. Fortunately, haven't yet lost a tenant due to the economy. Take care and have a wonderful New Years.
Hey Fred, How are you? You are soooooooooooooo funny. You know, it's funny, but my husband and I both collect the rents, and we take turns playing good guy, bad guy. We have different tenants that we each deal with...and he gets the rent from some and I get the rent from others. I have a couple that I have to be really, really firm with - I served one with a 3 day eviction notice over Thanksgiving because she thought I was kidding - she doesn't think I'm kidding anymore. Business is business and with some tenants you have to be firm and not allow them an inch.
I have learned the hard way about being nice. You will get burned badly. Go through the process and have noticed posted and you will be amazed how money comes out of the woodwork. The more you drag on the inevidable the more your personal business will be dragged with it. It is tough to be tough, but either they are going down or you are. EVERY person that we have struck a deal with have ended up failing to pay completely within a couple of months. Not some....every one. Because you are the landlord, tenants think that you are extremely rich and that you should share in the burden. They have no understanding as to why we can hold off payments for a couple of months.
Hi Justin, I think you hit the nail on the head...the tenants that are interested in a payment plan are typically the ones that are a bit more conscientious. The ones that don't bother are the ones that you really have to watch out for. Love hearing your point of view here. Take care.
Sandy, Are you talking about your personal properties or client's tenants? I try to be careful not to be a good guy when the landlord tenant law might be affected. I can be a good guy with my renters but I have to firm with my clients tenants, does that make sense?
HAVE A HAPPY NEW YEAR SANDY!!!
Hey Miss Mary, I try to be careful, and it depends on the tenant on what I decide to do - with some, if you give a tiny bit, they try to take complete advantage of the situation. Not good! So I am cautious which tenants I allow on payment arrangements. For a couple of mine right now, if they knew I had a heart they'd run me over.
Hey Ann, Thanks for stopping by. I just write about what works for me, in my area. Every situation must be considered on a case by case basis. And every landlord must be cautious and make sure they fully understand the laws in their area. Take care.
Hey Debra, Landlords must always be cautious in the decisions that they make - every tenant is different. Just be careful and do your homework. For some, working with them is considered a sign of weakness to them and they'll take advantage of the situation.
Hi Tim, Being a landlord can be difficult -there's no question about that - and it is definitely not for everyone. And, I do agree that taking payments from some is NOT a good idea. I have 2 tenants that have been paying me rent in payments for over 7 and 8 years and they pay me every month. It works for me with those two. I have 2 others that I would never, ever consider taking payments, as they would take advantage of the situation - if they don't pay on time - they are served with a 3 day eviction notices - and typically they come up with all the rent on the 3rd day. So, every situation is definitely different. It's a tough, tough business that you have to be on top of all the time! I agree that it is not good for tenants to believe that you have anything at all. I tell all of mine that if they don't pay me the rent, then I do not have the money to pay the mortgage payment - and I could lose the house to foreclosure. I know many landlords that drive up to pick up their rent in a Mercedes Benz, dripping with gold - BIG MISTAKE!
Hey Paul, How are you? I should have clarified myself, I was referring to my own tenants. And they must each be looked at on a case by case basis. As I mentioned, with some I would never try to be a "good guy" - they would think I was weak. With a couple of others, payments work out perfectly. I do not work out payment plans with my owner's tenants - gets too sticky, and then it's my neck on the line - and as you and I mentioned, we must remain cautious of landlord/tenant laws. Take care.
Sandy,
I am sure it really does depend on the situation.
Be careful this evening,
Ann
I put language in my lease stating that partial payments will only be accepted at the option of the landlord. A lot of tenants are struggling right now and better to have a tenant that is trying to pay than a vacant apartment.
Hey Ann, I agree, that it completely depends on the situation.
Hi Rob, I agree, that some tenants are struggling right now. Getting good tenants is difficult today - having an empty is not a good alternative. I agree, work with the tenants that you know you can work with - great advice.
No good deed shall go unpunished. I don't like agreeing to let the tenant pay late. I leave it to the tenant to borrow elsewhere or make the decision to move. If they can't pay they will have to sweat it out while the owner decides to evict or not.
The key is to rent your property at market or below so the tenant sees the value and figures out their problems on their own.
Hi Robert, Thanks for your feedback. I agree, that renting a touch below market does typically keeps tenants in your properties for longer, as they won't move, unless they find a better deal elsewhere. Have a great day!