Posts Tagged ‘bad tenants’
One of the best ways that I have found to protect yourself from bad tenants, and we all know that a few will always slip though our “infallible” screening process, is to use the month-to-month contract.
If you have a tenant that you need to get rid of, for whatever reason (and I can think of a lot of them, such as painting a picture of a human face on the side of an outside wall, but that’s a story for another whole post), take the easy road.
If they have signed a month-to-month contract, you just need to send them a form saying that you are canceling the contract and they must be out by end of the next month. You have to give them a full 30 days to move, maybe more if they pay on the first and you are in mid-month when you notify them. In that case you would give them 45 days to move, at the end of the following month.
But, no matter how you slice it, it sure beats going through an eviction process, particularly if they are inclined to fight it. And, why wouldn’t they fight it since they at this point they have probably developed aggravating us into a science.
So, if there is any doubt in you mind about whether your tenant will go to the tenant dark side at some point, play it safe and have them sign the month-to-month lease.
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Below is an email that I received from someone who recently signed up for my 7-week informational course based on my book How to Start a House Fix up and Rental Business. I removed the name to protect her privacy.
It was great hearing you on Mark Maxon’s radio program this am. My son is again trying to do what you did. The first one didn’t go well. Can U tell me how U selected your tenants? Also I am in an interest only mortgage & want to get out of it. I applied for a Loan Modification & it’s been dragging on.
Any ideas? It would be greatly appreciated. Thanks again for offering your course to help folks like us.
Thank you for the note.
I think the hardest part of the rental house business is finding good tenants. In many ways, the only way to get good at it is to just do it. You make a few mistakes along the way, but you get better with each passing year.
But, there are also some key things you can do to help get good tenants.
1. Have the tenants fill out an information sheet, requiring them to list previous places they lived, list bank account info, job info, etc. Call all of their references, their bosses, and their old landlords. Verify their salary. You may be able to check county court cases on-line like we can here in Tucson. If so, run a check on their name.
2. Read through the entire contract with them before they sign it. Emphasize the penalties they face if they pay late.
3. Enforce the contract. If they pay late, call them immediately, and require that they pay the penalty (I charge 1% of the total rent per day that they pay late).
4. Get a book that describes landlord rights in your state. These books usually include legal forms that you can mail to bad tenants, to make them comply with your contract, or to evict them.
Sorry, I don’t have any knowledge about getting out of an interest only mortgage, or the loan modification process. There was recently a mortgage broker on Mark Maxon’s show. It might help to contact someone like him.
Best of luck to you and to your son.
I’ve had a married couple in one of my rental houses for 16 months. I have them mail their monthly rental checks to my PO Box, as I do my other tenants. Yesterday, they called and asked me to give them my PO Box address so they could mail in the check. They had misplaced the address. Misplaced the address? In the past they have lost their keys. They have also lost their copy of the rental contract. Last month they mailed the check to the wrong address, and had to cancel their money orders and send me new ones (precipitating yesterday’s request).
Granted, I don’t have the greatest memory in the world. I call my kids the wrong names all the time, and yes, sometimes I absentmindedly use our dog’s name when calling out to one son (in my defense, both their names start with the same first letter). But, you’d think the mailing address for the landlord is such an important piece of information that they would try to make a special effort to keep track of it. I call that a little quirky.
Quirky tenants, of course, are better than out-and-out bad tenants who won’t take care of the house and don’t pay on time. I’ll take quirky any day. In either case, it’s always comforting to remember that whoever occupies your house is ultimately helping you to achieve your goals of financial independence. Each day that you have a tenant in the house, they pay off part of your mortgage, you clear a certain amount from the rental payment, and the value of your house goes up an average of 5% each year. (Well, it doesn’t go up 5% per year these days, but that’s the 30-year average. And, we have to be grateful for the big boost in equity that we received in the 2005-2006 housing boom.)
In general, if we have rental properties and long term-tenants, that’s a pretty good situation to be in.
Speaking of quirky tenants, check out Will Ferrell in The Landlord Video.