Who’s in Charge Here?
September 1, 2011
I just got a call from Rick. About a year ago, Rick had been referred to me and asked me to put together a lease.. He was wise to do that because he had a lease form he had downloaded free from the internet. That lease form of course had numerous errors and illegal clauses, clauses that could have lost him evictions, and that I was happy to point out.
He also showed me the rental application of the people who wanted to rent his house. One look at it and I told him that I would never rent to these people. But he had already committed. Oh, well.
The call I just got from Rick was to ask how to evict these people. It seems they haven’t paid rent for this month and in previous months, the rent is between 15 and 20 days late. Plus, he said he had never asked for a security deposit, and the tenant never paid him the last-month’s rent, as agreed. The tenant wanted to pay the last-month’s rent but never had the money. Rick didn’t do anything about it because he felt sorry for her what with the four kids and all.
The problem is, of course, that Rick has a lease, which means that booting a bad tenant involves more than just sending a 30-day, no-cause notice to move. Landlords have to actually terminate a lease for cause.
The lease is up at the end of November, in about two and half months. I told Rick he could terminate for cause, but that would take at least 30 days and maybe more if he had to go to eviction court, even though Arizona is a relatively landlord friendly state. After all, he would have to send the notice, give the tenant 15 days to repair her damage or 30 days to move. If that didn’t happen, then, after the 30 days, he would have to terminate the tenancy. If she didn’t move, he would have the eviction court ordeal, for which Rick has zero experience. That puts it into November, close to the expiration date.
The best thing to do, I told him, was to simply send the tenant a letter saying that he would not be renewing the lease and that he expected her to be out no later than 11:59 pm November 30. He should also remind her that she still owes the rent for the rest of her tenancy.
Was that an ideal solution? Of course, it wasn’t. The ideal solution was to never have rented to these people in the first place. But the chance for that to happen is long past possibility.
A good solution would have been to send the correct the deficiencies or move letter the first month, but Rick didn’t do that either. And he didn’t do it for any other month that the rent was late.
The key here is to figure out who’s in charge. Obviously, Rick wasn’t. His applicant, soon-to-be tenant was. And she continues to be in charge to this day.
Taking control of a property back once given up is far more difficult, not to mention aggravating, than keeping it in the first place.
Obviously, Rick would have been in control at the beginning if he had rejected this applicant, but he didn’t. Obviously, Rick would have been in control if he had demanded on-time rent payments beginning with the first month the rent was late, but he didn’t. Obviously, Rick would have been in control if he had collected a security deposit and the last month’s rent, but he didn’t.
Rick hates the landlording business. He hates it because he lost control. If we are to love any business, an important first step is to be in control of it. No tenant is going to give us control. We have to take it and keep it.
We need to think like professional. That is the important first step in being successful in this business. Professionals pay attention. They expect to be successful. They play the real estate investing game to win, not just to survive. The take control and keep control.
That’s what we all must do if we expect to avoid ending up like Rick.
About the Author: Bob Cain
Some 30 years ago Bob Cain went to a no-money-down seminar and got the notion that owning rental property would be just the best idea there is for making money. He bought some. Trouble was, what he learned at the seminar didn’t tell him how to make money on his rental property. He went looking for help in the form of a magazine or newsletter about the business. He couldn't find any.
Always ready to jump at a great idea, he decided he could put his speaking and writing skills to work and perform a valuable service for other investors who needed more information about property management. So Bob ferreted out the secrets, tricks and techniques of property management wherever he found them; then he passed them along to other landlords.
For over 25 years now, Bob has been publishing information, giving speeches, putting on seminars and workshops, and consulting for landlords on how to buy, rent and manage property more effectively.