Home Tenant Issues So your tenant can’t make rent?

So your tenant can’t make rent?


You should never put yourself in a situation where you are 100% dependent upon your rental property generating an income; the idea behind owning income producing properties is to build wealth, not to allow you to keep living paycheck to paycheck. There will be situations where your property may be vacant for a month, or where your tenant cannot pay rent on time.

In the latter situation, where your tenant cannot pay rent on time for whatever reason, you need to evaluate the situation and think logically about the problem. Approach the situation with a little grace and a lot of class. If you have done your due diligence during the screening process, then your tenant had no intention on being in this situation and is probably more than a little embarrassed as well.

Show some compassion and possibly a little leniency, but never let them slide

Keep in mind that every one of us can end up in a bind, some of use are just a little better prepared than others. Put yourself in your tenants situation. How would you like your landlord to approach the situation? People respond better to kindness, rather than someone coming at them with guns blazing!

Think about the situation as a whole. How long has your tenant been leasing the property from you? Are they habitually late, or is this the first time? If the tenant is brand new, say at most 4 months into their lease, you will need to sit down and try to get to the bottom of the situation and try to assess whether you believe this will be a common occurrence or simply a one-time thing. It could be that your tenant had some unexpected car repairs and can work out a repayment plan with you, or it could be more severe such as a job loss or long-term hospitalization.

The answers to every situation cannot be addressed through a simple blog post like this, but I discuss the few situations that I have encountered.

Late Rent

I have a tenant that has been in one of my properties for over two years. Periodically they will send a text message letting me know that they can’t pay rent right now as “something” came up. This has been everything from emergency room visits with one of the children to car troubles. As I said before, you need to look at the whole situation and not just focus on the one moment. In every situation it wasn’t that they could not pay rent on the 1st, it was that they didn’t have full rent. I would accept partial payment, at least 2/3’s of the rent due and then assess the tenant the standard late fee of $50.00.

I will always try to work with my tenants and treat them with as much respect as possible. When you work with your tenant and try to help them through any tough times by being kind and a little lenient, your tenant will start to treat you like a friend and not want to ruin the friendship.

Death in the family

When the family income suddenly plummets, now is the time to act your best. One of my properties is occupied by an elderly couple along with one of their adult daughters and two grandchildren. When one of the elderly couple was hospitalized and subsequently passed away, if there is any time that you need to show some grace, it would be now. With mounting medical bills due to the recent ambulance ride and hospitalization along with the funeral costs, the tenants were no longer able to pay full rent. There were just too many sudden bills that were causing them to drown in new debt and too much stress to deal with after a death.

I offered to do anything I could, within reason, to help out the family. This family had been renting my property for over three years without a single late payment or any other incident. I reduced their rent by 17% for 6 months, giving the family time to grieve without worry and figure out a way to get a grip on the current medical bill situation.

I followed up the verbal reduction of rent with a letter stating the reduction amount, the length of time that rent will be reduced, the expected date that rent will return back to its full amount, as well as the expectation that within that time period, if the tenant feels that they will not be able to return to paying 100% of the rent, they will be serviced with proper notice to vacate.

We’re Broke!

The phone call stating that my tenant was broke was by far the easiest but the most costly on my part. In all reality, I am the one to blame here as I did not due my due diligence when investigating this tenant. I was in a bind, had just done some significant renovations to the property, and my wife was due to deliver my daughter at any time. I wanted this vacancy filled so bad I could taste it!

The call came in that my tenant no longer had the means to pay rent 8 months into their lease. If this had been spring, summer, or early fall, this wouldn’t have been a problem; it was late October. Who wants to move so close to Thanksgiving or Christmas? Or in the middle of winter for that matter?

I ultimately found a new tenant after a four-month vacancy. This was one of my biggest learning experiences and why I try to perform a thorough background check on my tenants; it costs too much not to.

Questions? Comments? Contact DIY Property Manager!

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