It is most certainly an agonizing moment when a Landlord receives a call from a tenant explaining reasons for being unable to pay the rent for the month. This situation rightly sparks a series of reactions. This includes the impulsive “old-out new-in” routine to the more somber firm insistence that the tenant should pay up soon. The landlord must begin by understanding the delicate nature of the situation.
The Cost when a Tenant Takes a Vacation
The first thing to understand is the old myth about leasing: A newer tenant at a higher rent rate will overcome the loss faced due to the previous tenant. According to national second quarter figures it was found that the average cost a property suffered when a tenant chooses not to renew the lease to a property is $3,900. This also applies to situations when a landlord decides to foot march the tenant and grants a “pay or leave” option. Remember, when a tenant leaves it leaves a vacancy loss, costs you time, and wages to turn and re-rent the apartment. Then you have to maintain the whole place and hence face the hard costs of a maintenance team to have the property ready for the new resident. Hence even if you raise the monthly rent by a legally competitive margin it will still take several months, if not years, to recoup the loss.
Managing the Proper Way
If you haven’t received such a call or it has been a while since you received one, then he best one word advice is: plan. How do you begin with a plan? By simply knowing the story of your tenant:
Know your tenant’s history of tenancy,
Know the current emotional as well as financial condition of the tenant,
Once you have that information in your hand you will know right away how you can best deal the situation. You will know your first line of action (firm, understanding, or a middle ground). The most important thing is that you will know that a call is on its way before it comes.
When the Call Is Here
Do the following and you will come out clean:
Give yourself some time. Do not engage in decision making on the call. Even if you are clear on the decision, hold back. Rethinking avoids any legal confrontations.
Insist on a written agreement. If you decide to defer the payment to a different date, put it on paper. This adds a temporary change to the lease while it protects you from extensive court procedures in case the tenant voices a default. In case of a default you can legally evict the tenant as per the agreement.
Have one-on-one meeting at the tenant’s unit and discuss the situation and the alternative methods (agreement) you have in mind.
