New Landlord Forum – Tenant Debt and Tenant Screening

Thanks for reading my blog.  I try hard to respond to every email I receive, but I receive more and more every week.  It is getting hard to keep up.  I started a forum that will address tenant debt and tenant screening issues to help answer the commonly asked questions.  Please help me get the forum off the ground by registering and posting your questions.

The forum url is: www.theinformedlandlord.com

Thanks,

Bill Gray

Bill@thelandlorddoctor.com

www.thelandlordoctor.com

Copyright 2009

Landlords Who do Not Screen are Shooting Themselves in the Foot

Of the 20 to 30 emails I receive per day from landlords with tenants who owe them money, 5 or 6 are from landlords who did not screen their tenants before they rented to them and are now upset that the tenant burned them.  I shake my head when I read these requests for help.

For whatever reason, the landlord rented to someone who “looked okay” and then got upset when the tenant burned them.  Would these landlords buy a used car sight unseen?  Or show up at a dog shelter and say, “give me any dog, I don’t need to see it or know anything about it.”?  Of course they wouldn’t.  As absurd as this sounds, it is basically how they run their rental business.

An Organized Landlord Has Less Tenant Debt and More Profit

An organized landlord is a more profitable landlord.  I have reviewed many thousands of tenant debtor files, and one thing is certain; by looking at a tenant file after the tenant moves out, I can usually tell you fairly accurately how the property is being managed.  A well-organized landlord who documents everything has less tenant debt, and, as result enjoys more profit.

Organize your files logically and consistently.  At least half of the files I review are little more than a pile of unorganized papers thrown into a file folder; and often very important documents are missing

Apartment Association of Southeastern Wisconsin Tradeshow and Educational Seminar

I am scheduled to speak with members of the Apartment Association of Southeastern Wisconsin September 16th.  I look forward to meeting members and talking with them about how to collect their tenant debt. 

Contact: Tim Ballering “10th Annual Landlord Tradeshow & Educational Seminar” for Apartment Association of Southeastern WI on Meetup

Serb Hall, Milwaukee, WI on Wed Sep 16, 12:00 AM

When a Tenant is Behind in Rent, When Should You Call it Quits?

Today I reviewed over eighty tenant debt accounts and noted that the average balance due is significantly higher than a year ago. With the exception of the most expensive areas (such as California, New York City, and the northeast), the average amount of tenant debt is normally between $2500 and $3000.

I separated all accounts over $4000 and took a hard look at them to determine why there were so many high balances.  The answer was that landlords allowed tenants to go month after month paying little or no rent, before they were eventually evicted or the tenant skipped out. This is obviously a sign of the times.

I assume landlords are allowing tenants to live in their units for three to four months without paying rent for one of two reasons:

Landlords Should Consider Settling Tenant Debt

Some of my most uncomfortable moments have come when talking to landlords about considering settlement offers.  Often, the landlord is so emotional about the debt he or she is owed that settling is not an option.

After 12 years of reviewing tenant debt accounts, I can tell you with certainty that landlords who seriously consider settlement offers recover much more money than landlords who don’t.

If a previous tenant makes a settlement offer, he or she is looking to resolve the debt for some reason right now.  Maybe he is trying to rent another place to live, or trying to obtain a mortgage or another loan. For whatever reason, he is motivated to pay you.  If you ignore the offer, he may find another way to rent or get a mortgage or loan without paying you.  This may be your only opportunity to collect even part of what you are owed.

My Previous Tenants Were Roommates – Who Owes Me the Money?

In most cases they both owe you.  First of all, each individual over the age of 18 should have signed the lease.  If this is not your policy, change your policy today.  There are several important reasons for requiring all adults to sign the lease, but for this article we are speaking simply to who owes you money.

Assuming your previous tenants moved more than 30 days ago, you should now report each of them to all three major credit bureaus – Experian, Equifax and TransUnion.  My article, “Tenant Moved Out – Left You Holding the Bag” explains how to determine how much, if anything, you are owed.

How do I Hire a Collection Agency to Collect my Tenant Debt?

Handing my tenant debt immediately to a collection agency is not my first preference.  Myself, I would first report the debt to Experian, Equifax and TransUnion, and let the ding on the debtor’s credit report work a few months before I gave it to an agency that will charge me a hefty commission.

Collecting tenant debt is much different than collecting other debts, such as credit card debt.  A collection agency represents you and your business, and you could be taken to court should they violate the law.  And, just as important as

Evicted Tenants – Will they ever pay you?

Are you certain your old tenant won’t pay his or her bill?  Landlords tell me several times a week there is no way their previous tenant will ever pay what they owe.  As I said in a previous post, if you have a crystal ball that tells you he won’t pay you what he owes, why didn’t you use that magical crystal ball before he became a tenant?

The truth is nobody knows whether the balance will be paid or not. The one way you can make sure not to get paid is by putting his file in the drawer and leaving it there.

Think about it.  Your tenant moved out with the knowledge that you were owed money. The renter might not have known how much, but most likely understood it was some amount.  After moving, the former tenant either hoped you would not go after the debt, or did not think you could.

Tenant is Long Gone – But the Debt was Never Paid

So, you gave your old tenant the opportunity to do the right thing and pay his debt; he gave you the salute and moved along without paying you a penny. He or she has now been gone over thirty days.  What do you do now?

Doing nothing is not an option!  In fact, doing nothing is a bad business decision.  It is not fair to you, your business or your other tenants.  Try skipping a credit card payment and see what happens.  They will be on you like white on rice.  Those who don’t pay their bills raise the prices for the rest of us that do pay ours.  Rent is no different.

In my previous post, I explained the process of determining how much you are owed, and notifying the debtor.  I recommended giving him 30 days to respond.  If