December 16, 2014
6 Things Landlords Should Avoid
How a landlord responds to late rent payments can have a big impact on the overall outcome and the length of time it takes to resolve the problem. Regardless if the property is in Hawaii, Nevada, California, or any other State, proper notice must be given to the tenant. Here are some key things to avoid:
- Treat everyone equally: Don’t fall victim to claims of discrimination. Be sure to treat all tenants the same way when they are late on their rent. The last thing you want is a discrimination claim during an eviction hearing.
This does carry over to family members as well. It’s harder for landlords who self-manage their rentals when compared to those who hire a property manager as typically it becomes more emotional. In general, when using a property manager, the landlord can point blame on the management company stating that it’s the company policy. When allow a family member to rent a unit, landlords should always be upfront and tell them that they will be treated the same as everyone else. If they pay their rent late or cause damage to the property, then they will be held responsible. This is not always and easy thing to say, but it’s important to be upfront about it in order for the tenant to understand what is expected of them
- Be objective: At the end of the day, owning rental property is an investment which is viewed as a business in the eyes of the IRS and the judicial system. Keep in mind the long term effects of allowing a tenant to stay in the property and making concessions. Will this have an enabling effect with the tenant and create an ongoing problem, is this a good time of year for the property to go vacant, how well is the tenant taking care of the unit, etc.
- Do not over sympathize with the tenant. It’s important to consider the tenants personal situation and compare it to how you would expect most people to respond given their circumstance, but be careful not to become overly involved in their predicament. As an investor, you need to look out for the best interest of your rental property. Hiring a property manager can assist you with this as it helps remove the landlord from the situation allowing them to be more objective.
- Waiting to put the tenant on formal notice: It’s important for landlords to put a tenant on notice once the rent is considered late. The type of notice can vary from state to state, in Hawaii, California, and Nevada, the tenant must be given a 5 day notice to pay rent or quite the lease.
- Not putting the tenant on notice at all: Life can be difficult at times and a tenant may have a legitimate reason for paying their rent late. However, it’s sometimes hard to tell whether the tenant is telling the truth or in other instances determining when they will actually be able to pay. The best practice is to continue to put the tenant on notice. If they contacted you, feel free to politely let them know that you will be putting them on notice but so long as they follow through on what you agreed to, then they have nothing to worry about.
The purpose of this step is to avoid having to send the tenant notice later on because they didn’t hold up their end of the bargain. This way you already started the notice period so you don’t have to wait another couple days or weeks before proceeding to the next step.
Verbal notice is not enough. Be sure to send notice to the tenant which leaves behind a trail of bread crumbs in order to document that you notified the tenant of the late rent payment.
Over the years as a property manager, I have developed a simple 3 step process for putting the tenant on notice which works great in Hawaii, Nevada, and California:
1.) Send the notice certified mail
2.) Also send it using certificate of mail
3.) Finally, have a copy of the notice physically posted at the rental property.
You may choose to hire a process server to help with some of these steps but there is a charge for this service and not every state may allow you to pass those charges onto the tenant. When preparing the notice, be sure to document the different methods that are being used to put the tenant on notice along with any tracking numbers on each of the notices. This is another good way to create a paper trail.
A quick note about sending something using certificate of mailing: This is similar to a receipt book which the post office can issue you upon request. Essentially you are mailing the notice regular mail, but you are having the post office confirm that the piece of mail was sent by stamping their seal along with a date stamp. The purpose of sending the notice this way is that it is treated like regular mail so it will be delivered or forwarded like any other letter, unlike certified mail which sometimes needs a signature or will not be forwarded.