Achieving financial independence is accomplished through both thinking and acting, or working, smart in all areas of landlording. A part of thinking smart is learning how to deal with hard-core tenants. Learning to act like a businessman or woman with respect to landlording is difficult for many investors. Recently, one of my students commented that he goes through phases, he’s either too easy or too hard. “Right now,” he commented, “I’m too easy on my tenants.”
Investors must put procedure into landlording as do other businessmen. For example, when someone wants a gallon of milk, they pay for it or they don’t get the milk. That’s procedure. There’s no compassion built into the process. It’s not religious or feelings based. It’s cut and dried, just like your procedure for landlording should be.
Landlords must always be one step ahead of their tenants. Simply having procedure isn’t enough. Investors must build creative thinking into landlord-tenant relations. Certainly, we must be creative to buy whole sale, which is truly a creative art in itself. Why can’t we mold ourselves a new, creative way of dealing with tenants? We can. As you’ve found out, tenants are savvy and professional in their own right.
Talk about creative, tenants can obtain hundreds and hundreds of dollars annually, in addition to all their welfare, SSI, health care, and food stamp benefits. They obtain money, food, clothing, and utilities through churches, utility companies, agencies like
Am I suggesting that many tenants work the system? You bet I am. They not only work the system, but the system itself perpetuates and literally encourages them to do so. For example, no agency will help with utilities unless and until there is an actual shut-off or notice to shut-off. Why pay gas? Why pay electric? Why pay water? Why pay rent? Logically, it would be stupid for poor tenants to pay everybody on time. Essentially, you’d have to be a moron to not take advantage of the system.
Welfare will provide a one month’s free rent check once a fiscal year. Why wouldn’t they take advantage of that? In the process, if your landlord is a marshmallow you’d be on top of the world. Understand that you have a long way to got to even catch up with the street smarts of tenants, let alone being one step ahead of them like I am. You need to start now. It takes the wildest ideas to outdo and outsmart these folks. That’s a fact. My procedures are woven with creative ideas, and as you know now, they better be to stay ahead of the game.
Case Study.
As most of you know by now, I collect my rents in person. This way I find out early that I’m not going to get my rent and I give an eviction notice on the second of the month. That’s procedure.
When I went up to collect her rent, she stated that she was going to move. I said, “That’s fine, but just in case here’s your eviction notice.” She knew the drill because we had gone through it before. I dropped back a week later and she again stated that she was not going to pay rent and she would be waiting until the last minute to move. I’ll hand it to her, at least she was forthright.
I suggested that if she moved immediately I would pay her $100. She said, “No.” After she received her court papers she called me. She stated that she still wanted the $100. I agreed that she would receive the money if she was out by Wednesday. She did not move then either.
The day before the hearing was Sunday and she again called me. She wanted to know if the $100 deal still stood. I said that it was now $50. We set a time that day and I changed the locks while she finished moving. She signed a move-out statement that she and all occupants were out of the apartment and anything left in the apartment was abandoned.
Changing locks immediately and getting a signed statement are procedure. Paying tenants to move is an example of building creative thinking into landlord-tenant relations. Tenants work the system. Why can’t you? Now you have the opportunity to create an environment for success with creative strategies, like this one.
Most of the time tenants want an agency to pay rent for them. When serving them with the eviction notice, suggest that they take that notice to an agency for help. That agency will inform them that they require the actual court papers, but at least this will get the ball rolling. You, too, can work the system.
Stay one step ahead of tenants:
1. Hand out eviction notices A.S.A.P.
2. File those notices A.S.A.P.
3. Always keep the lines of communication open. (Never be mean or argue with tenants.)
4. Return many times to negotiate a move-out settlement and/or get updated on agency payment.
5. Send tenants who owe and desire to remain to agencies for assistence. Actually name agencies who might help them. Tenants need direction. Surprise them with the suggestion and the location. Help them work the system, thereby helping yourself.
6. Get a signed tenant statement admitting that the tenant and all occupants are totally out of the unit and anything left in the unit is abandoned.
7. Change locks while tenant signs move-out statement, (Found in Contracts, Etc. and Streetwise Landlording Home Study.) Tenants could take money from you and not move. Get the statement, keys, and change locks before money is paid.
8. Only pay what you must. Measure the losses with respect to the timely tenant move-out and co-operation to what you will pay for the move-out. Take into consideration tenant’s deposit and damage, court costs and attorney fees.
H. Roger Neal™
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