When Your Really Great Tenant Suddenly Cannot Pay The Rent

By
Real Estate Broker/Owner with North Shore Suburbs & Chicago Real Estate

Upset"I can't pay my rent right now."  If you are a landlord, this is about the worst sentence you can hear coming from the other end of the phone.  Either that or "there's something leaking from someplace and I don't know where it's coming from."  But, if you get the call that your tenant suddenly cannot pay the rent, how do you react?  This is a recent call from a fabulous tenant who in the past has paid rent: On Time.  Religiously.  Every Single Month.  For Years.  From a business standpoint, the answer is simple.  You have to approach the situation purely as a professional and deal with it accordingly.  You have to maintain consistency and follow the same procedures for everyone.  It's nothing personal -- it's just the pitfalls and consequences of doing business.  What many tenants don't realize is that as a landlord, you still have to make mortgage payments on the property, pay your property taxes, utilities, scavenger, and maintenance costs -- and the list goes on.  Nevertheless, there is always the other side.

From a personal standpoint, this is a challenging dilemma.  Here you have a renter who is understandably upset and frustrated.  Up until now, he has been a wonderful and responsible tenant.  But, times are tough.  He's having trouble making ends meet.  He's lost his job or his clients aren't paying him so therefore, he can't pay you.  The trials and tribulations described during the conversation pull at your heartstrings because deep down inside, you're basically just a big, old softy.  Personally, I truly feel badly when people are struggling.  Especially good, decent people who have hit some difficult moments in their lives.  Yet, all you can do is listen with a sympathetic ear while trying not to lose your composure.

 

I have to maintain some perspective.  Trust me -- in this situation, everyone is unhappy and there are no winners.  It's not easy.  I know, I know ... no one said life would be easy.   

Posted by

carie shapiro

Connect With Me

Connect with me on Linkedin

Come Back & Visit Me

 

subscribe

close

Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Wallace S. Gibson, CPM 01/05/2012 09:24 PM
  2. Fred Griffin Tallahassee Real Estate 01/17/2012 03:21 PM
Topic:
ActiveRain Community
Groups:
Active Rain Newbies
Realtors®
Dedicated Bloggers
"Whacked"!!!
Diary of a Realtor
Tags:
landlord tenants rental market leasing

Spam prevention
Show All Comments
Rainer
158,244
Anthony Daniels
Coldwell Banker - San Francisco, CA
SF Bay Area REO Specialist

I've never dealt with an outright "I can't pay my rent".  It has always been a laundry list of lame excuses.  It usually starts with a delay of a few days but once it happens for 2-3 months in a row, you know there's trouble brewing.

This scenario needs to be dealt with calmly but very firmly, else your tenant will make a sucker out of you.

Jan 06, 2012 12:24 AM #35
Ambassador
2,067,890
Fernando Herboso - Broker for Maxus Realty Group
Maxus Realty Group - Broker 301-246-0001 - Gaithersburg, MD
301-246-0001 Serving Maryland, DC and Northern VA

For many years, I dealt with this issue with many of them. .and my trick was always never to becomes friends with them. . as cold as that may sound. . I preferred that way because it was easier to make the decision of eviction

Jan 06, 2012 12:37 AM #36
Rainmaker
1,406,127
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Carie, renting houses is a business transaction. When you have bills and a mortgage to pay, you've got to keep it on a business level.

Jan 06, 2012 12:38 AM #37
Rainer
52,588
Jeanne Gregory
RE/MAX Southwest - Sugar Land, TX

I'll work with a good tenanct who has a bonafide problem.  I once had a tenant tell me she couldn't pay the rent because her daughter had to go to cheerleading camp that month.  Please

Jan 06, 2012 12:38 AM #38
Rainmaker
535,355
Gay E. Rosen
Julia B. Fee Sotheby's International Realty - Larchmont, NY
As Real as Real Estate Gets!

Carie - I totally commiserate with you and great blog... Someone has applied for a rental I have listed, and their credit isn't so good... the tenants wrote tot heir agent thanking her for being so kind as if we weren't.... we all want to be kind, but just as you say a landlord has bills too .. and needs to know the rent will be paid... Best, G

Jan 06, 2012 01:00 AM #39
Rainer
182,269
Debi McKamie
McKamie Real Estate Services, LLC - Waco, TX
Realtor®/Property Manager

I understand your dilemma.  It is often times hard to remove the personal feeling and follow all of the rules for property management.  Being in property management for years I have had this situation arise more than once.  I do feel sorry for people who are having difficulties, however, if I must do the job I have been hired to do and to treat everyone the same.

Best wishes to you.

 

Jan 06, 2012 01:29 AM #40
Rainer
38,651
Erika Madsen
Fathom Realty - Gilbert, AZ
Fathom Realty - Southeast Valley District Director

We recently had this occur on a property we own in Toldeo, set up a "catch up" payment schedule... and are holding our breath that it works out... the last thing we want is that place vacant during winter!! 

Jan 06, 2012 01:47 AM #41
Rainmaker
2,550,994
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Most excellent subject matter and presentation of same. I have been there and it is as you say. I have also had the dreaded water leak and we don't know where story too and many others. I have handled them and they are unpleasant but remain a fact of life. On the rent issue, I have always bent over backward and made allowances giving as much as I can while protecting the core issues. I will help people move, give references, except less rent and explore the scenario for creative solutions. While I found it to be very unpleasant and unsettling for all people involved, doing the right thing and acting out with compassion during difficult times honors the conscience of all involved...thank you Carie

Jan 06, 2012 03:01 AM #42
Rainer
240,130
Carie Shapiro
North Shore Suburbs & Chicago Real Estate - Evanston, IL

Luis:  I agree, it's hard sometimes.  Thanks for sharing the solution that has worked for you :)

Joan:  It is a good question.  It's the answer you could get that might not be so good.

Donna:  Working on the solution.

Sid:  Yes, the "being consistent with everyone" side of business I was talking about.  That way, everyone knows the score.

Jordon:  You are so right.  Having a property manager would take all the emotion out of it and keep it business.  And, it is business!  Best of success in 2012 to you too :)

John:  Good point.  It is a business!  Regarding bankers and angst ... Hmmmm is right :)

Goran:  Yes, I've read a few votes for property managers so you don't have to deal with situations like this!

Chuck:   You're right ... the bottom line is you gotta do what you gotta do!

Jo:  It's always better when everyone is happy :)

Kathy:  I agree.  No issues with most people.  Then, once in awhile something happens!

Jan 06, 2012 03:18 AM #43
Rainer
4,111
Pamela Secord
Lighthouse Realty - Abbotsford, BC

I'm just starting a new career as a Property Manager and all of your sharing is quite helpful. I am in the process of building my portfolio and am open to any suggestions.

Jan 06, 2012 03:43 AM #44
Rainer
240,130
Carie Shapiro
North Shore Suburbs & Chicago Real Estate - Evanston, IL

Shannon:  I'm so sorry to hear about your current situation.  Good luck in getting back on your feet soon!

Wayne:  Bad things happen to good people ... isn't that the truth!  I've had some first hand experience with that one, my friend:)

Wallace:  Right!  You cannot lose sight of the bottom line!

Greg:  Yes, abiding by the terms of a written lease and following consistent procedures, although not always easy, seems to work everytime!

Nina:  Thank you for the advice!  It does seem like some people try to make their issues your issues.  And, you're right ... you have to stay mindful of the fact that this is business, and landlords still have to take care of their financial responsibilities.  I would have the same obligations to my landlord if the circumstances were reversed.  Thanks for your thoughtful comment :)

Mark:  You're right ... there are many variables involved.  And, sometimes it can get complicated!

Anthony:  I agree.  You can't let the situation get out of control!

Fernando:  Good advice.  Helps take the "warm and fuzzy" part out the predicament!

Michael:  Yes, it is important to keep it on a business level.

Jeanne:  I had to laugh at your comment :)  I've heard a lot of excuses, but never that one!

 

Jan 06, 2012 04:13 AM #45
Rainer
240,130
Carie Shapiro
North Shore Suburbs & Chicago Real Estate - Evanston, IL

Gay:  I agree!  We all want to be kind -- but business is business, right?

Debi:  Yes, it is hard to remove the personal side sometimes.  But, like you said, even though it's not always easy, you have to follow procedures and treat everyone the same.

Erika:  Glad to hear you were able to work something out!  Will have my fingers crossed for you :)

Richie:  You're absolutely right!  Acting out with compassion while protecting the core issues is always the best possible scenario :)

Pamela:  Congratulations and good luck in your new career!

 

Jan 06, 2012 04:24 AM #46
Rainmaker
810,239
Evelyn Kennedy
Alain Pinel Realtors - Alameda, CA
Alameda, Real Estate, Alameda, CA

Carie:

We faced the same situation in November.  A long time tenant told us she could not pay her rent any more.  She had occasionally been behind but had always caught up.  But she reached a point when she had to move home to her family.  We hated losing her, but we had to let her go.  We now have great tenants in the unit and look forward to their continued tenancy.

Jan 06, 2012 04:43 AM #47
Rainer
240,130
Carie Shapiro
North Shore Suburbs & Chicago Real Estate - Evanston, IL

Evelyn:  Some clouds have a silver lining ... it's interesting how things turn out sometimes, yes?  Congratulations on your new tenants :)

Jan 06, 2012 05:49 AM #48
Rainer
28,056
Robyn Heathcock
IRG Real Estate - Frisco, TX

Very hard dilema, I would tend to be gracious and give time, but I have to serve by owner. I do not like to be in that position, seems to happen more now a days

Jan 06, 2012 06:20 AM #49
Rainmaker
270,269
Steve Warrene
Your Town Realty - Lower Burrell, PA
Pittsburgh Real Estate Investment Specialists

Carie, I had 17 rental units at one time.  Most of my tenants were there for years.  When that situation came up I would have a meeting with them and help them find a solution.  It's tough when someone that you like and trust that has been there for a good amount of time.  But in the end, like you said... we have to pay the expenses.  So if they were in there for at LEAST 2 years and they can not make the rent payment on time I would give them a break on the late payment.

Jan 06, 2012 07:02 AM #50
Rainer
8,358
Rob Thomson
Jupiter, FL

Sometimes someone just needs a break. If they have been 'religiously' on time and have come across a rough patch, why not help them out? They may just be having the most stressful time of their lives. I'm sure the last thing you want to do is be the one to push someone over the edge. Yes you have expenses but who doesn't. And theirs now seem like a mountains. In the end, you may walk away being ahead that they see not only a landlord but someone they can count on and they will do whatever it takes to help you and your property later on. They may just see God's love through your actions.

Then again if they are repeat offenders, let the business side take care of it.

Jan 06, 2012 08:16 AM #51
Rainer
240,130
Carie Shapiro
North Shore Suburbs & Chicago Real Estate - Evanston, IL

Robyn:  I agree.  It seems to be happening more and more these days -- and it never feels good to be in that position.

Steve:  Yes, it's always tough ... but especially when it involves a tenant with whom you've had a lengthy and positive rental history.

Rob:  It's usually a very complicated situation and never easy for both parties, that's for sure.

Jan 06, 2012 08:41 AM #52
Rainer
107,937
Ted J. Macy
Top Agents Atlanta Metro - Milton, GA

I have great tenants who always paid on time, then they decided to move, and said "use the security deposit for the last month's rent". told them I could not and wanted the $$$l. They move out without paying and left about $4500 in damages to the property. Threats of a low suite got the problem resolved, but the property was still vacant for a month while it was cleaned up and freshened up, took about 3 months to collect.

I know where you are coming from, good luck.

Jan 17, 2012 04:00 PM #53
Rainer
240,130
Carie Shapiro
North Shore Suburbs & Chicago Real Estate - Evanston, IL

Ted:  Sounds like you know that unfortunately, we all have our horror stories.  Thanks for stopping by!

Jan 18, 2012 03:31 AM #54
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainer
240,130

Carie Shapiro

Ask me a question
*
*
*
*
Spam prevention