Rotten Or Fresh: How To Review A Delinquent Tenant

Real Estate

Mike McMullen is the CEO of Prominence Homes and the author of Build. Rent. Sell. Repeat! 

Renting out property in 2020 is no easy task. The CDC’s eviction moratorium expires at the end of December, and before then, landlords will be faced with some hard decisions. When a tenant’s rent is late, landlords will still have to make mortgage payments, and as fees pile up, eviction starts to look pretty tempting.

However, a nonexistent tenant can be far worse than an inconsistent tenant. So before filing an eviction, or even sending the pay rent or quit notice, use the following questions to help discern whether you are dealing with an irredeemably bad apple. 

Have they been tardy on rent payments in the past?

2020 has been a bad year for just about everyone. It’s possible that your tenant has had a streak of bad luck amidst the pandemic. They might have temporarily lost their job or been forced to say goodbye to a loved one.

If the tenant has been with you since before January of this year, check their record. It’s easy to get tunnel vision, so try your best to zoom out. Take a breath. Go for a walk. Then return to the paperwork and see just how far back the problem goes. It’s possible that your tenant (and your billfold) will flourish if given the time and space to do so.

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Do they avoid communication?

You’ve sent the notice, posted the letter or knocked on the door yourself; you’ve done your due diligence to make contact and yet they continue to dodge you. Is this a sign of negligence?

Yes, but there may also be more at play here than simple avoidance. A 2014 eviction study conducted by the MacArthur Foundation found that some tenants view “duck and dodge” methods as deferential rather than evasive. Put simply: your tenant might be avoiding conflict out of respect for your authority. They know they can’t pay up (yet!) and instead of clashing with you over the missing balance, they seek to remedy the problem before speaking with you directly.

Regardless, you are losing cash and you’re wasting time and energy trying to hunt them down. You’ll probably need to confront them at some point, but bear in mind that your tenant likely doesn’t view you as “the bad guy,” but rather “the guy in charge.”

Do they follow all other terms of the lease?

This is a pretty simple question, but quite effective at cutting through all the social baggage: Are they following the other terms of the lease? If they’re not, you’ve got a bigger problem. If you don’t know whether they are or not, consider conducting a maintenance inspection. However, keep in mind that tenants who are elderly or who have disabilities could have legal recourse under The Fair Housing Act should you try to evict them for things like hoarding or general messiness.

When dealing with someone who has always followed the rules, mowed the lawn and refrained from smoking, consider keeping them around. Remember that some tenants will do active damage to your property, and a broke tenant is better than a destructive one.

Conclusion: The Hidden Costs

Finally, it’s worth noting that eviction is a beast of its own. It takes a financial toll on tenants and owners. Though the expenses will vary from state to state, costs quickly add up between all the filing, court and litigation fees. Not to mention the three to four months of lost business you can expect as the process runs its course. All told, you’ll lose a substantial sum. Consider other options, such as meeting with the tenant to construct a payment plan or offering a “cash-for-keys” deal where you reimburse them for moving expenses so long as they agree to be out by a certain date.

In the end, renting is a business relationship. At some point, you’ll be forced to make cold financial choices, but make sure to avoid snap decisions based on the rotten present market. If you hold out, there’s a chance something fresh will grow in your near future.


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