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When Tenants Won’t Pay

A business emptying his pocketsNo landlord likes to deal with non-paying tenants, but it happens more often than you might like to think. This is one of the main reasons people hire property management companies in Phoenix. It is far easier to let someone else handle the main issues for you, however, here are some tips for those property investors who are acting as their own landlord.

Getting non-paying tenants to pay up or move out can be difficult. Most, if not all, will have a sob story to tell and ask for a free month, or special payment arrangments. In some extreme cases, that might be the right thing to do, but remember that this is your business and they have signed a contract to honor their payment obligations.

The first step is to remind the tenant that they are late with the rent. This can be done verbally the first time, but the next warnings should be in writing, with copies kept on file. In fact, record keeping is essential in this situation. Make sure you always have everything on hand to answer questions about payments.

Ideally, your lease contract will include a clause that allows you to charge a late payment fee. This might be 5-10% of the rent amount or a specific dollar figure. Be sure to include this when you are billing the tenant to cover the extra costs associated with dealing with the late payment.

Do not give the tenant a chance to say that they didn’t realize you were contacting them. Deliver the letter to them yourself or make sure that it is in their hand. You can also call to let the person know that you are expecting payment shortly. Ask when they will be catching up on the rent so that they can give you the exact date. Then follow up on that.

If the tenant still hasn’t paid on the agreed upon date (which should be in writing) you will have to take things further and threaten legal action. Bringing in a lawyer is a last ditch effort, but one that may be necessary.

Exceptions to the Rules
Not every situation requires a harsh hand. You should evaluate the situation on its own and consider who the tenant is and whether they have been decent renters or not. Those who have an excellent reputation and have always paid on time might be allowed a little leniency. Someone who repeatedly pays late or skips the late fees might have to go.

If you would prefer not to deal with this rather unpleasant side of being a landlord, consider hiring one of the several property management companies in Phoenix. You can enjoy the income from the properties without the hassles of non-paying clients. That will be taken care of for you by the actual rental company.

Contact Real Property Management Phoenix Metro For A Free Quote – 602.368.5730