Don’t Let Rotten Apples Spoil Your Success

Learn these simple rules to keep problem tenants in line

I’m a strong believer in the 80/10/10 rule.

80% of your tenants will be fine. They’ll do just what they’re supposed to, nothing more, and nothing less.

10% will be fabulous – the kind that go above and beyond, taking care of the place as if it were their own.

Then there’s the other 10%. It’s a small percentage, but they’re out there. They’re the problem children, what I call the rotten apples. They don’t pay the rent, they don’t follow the rules, they are generally a pain in the rear. And no matter how diligent you are, you’ll have one sooner or later.

For your sake I hope it’s later – but you don’t want to wait until you’re in the situation to figure out how you’ll respond.

* Spell it all out in the lease. Your life will be much easier if you clearly spell out your rules – and the consequences of breaking them – ahead of time. Lease language is too big a topic to cover here, but suffice to say that a lease should be very specific and detailed, particularly about rent payment procedures. Don’t just stick the last page of the lease under the tenant’s nose and ask them to sign it – go through it with them page by page and make sure they understand. You may even ask them to initial next to key sections to make sure they get it.
* Follow through. If your lease says that you will charge a late fee for any rents paid after the 3-day grace period, charge the late fee. (I recommend a late fee of $50, to make an impact.) If the lease says that you’ll issue three days notice of eviction after the grace period expires, mail those notices. Do it as a matter of course, each month, for each and every tenant, regardless of their past history or circumstances. You can’t let some tenants slide and crack down on others – remember, this is a business and this is a professional relationship.

Most tenants will respond to the three days notice letter quickly. That’s great – but you still need to charge them the late fee. If they send you a check that doesn’t include the late fee, send them another 3-day notice for the late fee. They have to know that you are going to apply the rules every single time no matter what. And if they don’t comply…

* Don’t be afraid to evict. A lot of people shy away from eviction proceedings because they think it’s expensive and full of drama. It’s not fun, but it’s a necessary thing if you’re going to do real estate investing. When people don’t pay their rent, or damage your property, they might as well be stealing money out of your pocket. And if you allow that to happen, you’re not going to be successful.

Before you’re in a situation where you have to evict, learn how the process works in your area. Visit your county courthouse in person or online and ask for the tenant/landlord handbook – most jurisdictions have one. Read it all and keep it handy. In most places, there are a series of steps you need to follow. Some of them do involve fees, but they don’t add up to much – in most Florida counties, a landlord can evict a tenant for under $200. That’s nothing to sneeze at, but consider it an investment toward generating positive cash flow from the property again. You can pay an attorney to do it for you, but it will obviously cost more. And none of it is difficult – it just requires some patience and time to walk the necessary papers through the process.

Along the way, you can continue to talk with the tenant in a pleasant and professional manner. Explain the steps you are taking and what their options are. Don’t take it personally and don’t get sucked into what’s going on in their lives. They may have very good reasons why they’re behind on their rent – they lost their job, they got sick, their car broke down – but you can’t make exceptions for that when you’re running a business.

The tenant generally has several points along the way to settle up and avoid eviction. But if they don’t, chances are they’ll be long gone before you come with the sheriff to change the locks. I’ve never had a confrontational eviction – and I’ve been doing this a long time.

Hopefully, you won’t encounter too many rotten apples in your real estate investment career. But armed with this information, you can act quickly and confidently when you do.

Russ Whitney story is proof in becoming financially independent or build a nest egg so you can enjoy your retirement years.If you want to learn first hand from Russ Whitney. Visit us at: http://russwhitney.com/