We, as landlords, cannot afford to wait for the rent. Trouble is, many tenants believe we can. Enough tenants to populate a large city believe we get to keep as our own all the money they pay us in rent. We don’t have mortgages, insurance, taxes, maintenance or management expenses to pay. They have visions of us rolling in dough, and like Scrooge McDuck, having a huge vault where we keep our ill-gotten gains, and daily going in to roll around and play in our money—the money we snatched from them.
Some of our tenants wake up on the 22nd of the month and find themselves in the predicament of having more month than money and having to choose which bills to pay. How do they go about choosing who gets paid this month and who gets to wait? They use two criteria to decide.
One, who is going to hassle them. Two, who will report their nonpayment to a credit reporting agency. So our tenant sets his pile of bills on the table and goes through them.
Electric bill: “I paid it last month, they won’t call me and bug me, and they never report it to a credit-reporting agency.”
Visa bill: “Whoa! If you don’t pay them, they call you, they hassle you, and they send notices to credit reporting agencies.”
Phone bill: “I didn’t pay them last month, so I guess they have to get paid now. They’ll shut you off if you don’t pay. At least they don’t report you.”
Cable bill: “They won’t report you, but they will cut you off. If they cut me off, I can’t watch baseball on four channels at the same time. Gotta pay them.”
Car payment: “Gotta pay that one, too. If I don’t, they’ll come and get my wheels, and report it to a credit agency.”
THE RENT (landlord one): “I have such a nice understanding landlord. He won’t hassle me. I can call him and tell him I had some emergency. Let’s see, what will it be? Uh, kids in the hospital is always a good one. He’ll let me slide a couple of weeks, then I can call back and get him for another couple of weeks. Best part is he never reports me to a credit agency. That’s a big bill, too, I can pay a bunch of other ones if I don’t pay the rent. Besides, the landlord’s rich, anyway, he can afford to wait. I think the cell phone company would like to get paid before they cut me off.”
That, or something really similar, is the thinking that goes on in the mind of a tenant who has more month than money. Why do tenants do that to landlords? It’s because we don’t make sure they know from the beginning that paying the rent comes first, period.
Imagine the difference with a landlord who takes a different attitude.
THE RENT (landlord two): “I’d better get that check written right now. It’s the 29th and the rent is due on the first. If it doesn’t get there on the first, that jerk is going to call me. Besides, I won’t get the prompt-payment discount. Then, he’ll bug me some more. On the 25th of next month there’ll be a notice posted on my door reminding me of the importance of paying the rent on time. I remember one month when I tried to not pay the rent, he called reported me to that RealChek company, and they reported it to a credit agency. That ended up costing me a bunch when I had to pay a higher interest rate on the car I bought because of my lower credit score. Gee, maybe I should hand deliver the check.”
From the beginning landlord two made it clear that the rent was the most important bill. Many landlords use a move-in checklist so they don’t forget anything. One checklist item explains to the new tenant that the rent is due on the first and late on the second. We need to make clear that we will always collect late fees from the tenant or deduct the late fees from the security deposit, after which the tenant will have to make up the deficit in the security deposit. We need to make clear that we begin eviction proceedings the first day they are legally allowed. Finally, we need to make clear that if the tenant pays the rent late more than three times in a year, we will terminate the tenancy or will not renew the lease.
Tenants can think whatever they want about all landlords being rich. They can imagine mythical vaults crammed full of money. There is no cure for this particular piece of ignorance that we, as landlords, can provide. Regardless of the mistaken notions of tenants, we still need to make clear that prompt rent payment is vital. If we don’t make that clear, if we don’t stress the importance of on-time rent payments, if we don’t believe with all our hearts and minds it’s important, neither will our tenants.