OK, in this post I want to answer a very common question I get from tenants so I can help you as a Landlord understand the matter better.
The question is of course, “If my Landlord doesn’t fix xyz, can I stop paying rent?”.
The simple answer is “no”. You must ALWAYS pay your rent. But you do have recourse using the Courts or Landlord and Tenant board. The tenant can file a complaint after first informing the Landlord in writing of the problem that needs fixed and waiting the time period in the act.
Recently, a Landlord came to me with this same question. The tenant was withholding money for repairs which were verbally explained to him and never written down (big mistake on the tenant’s part). He asked if the tenant was allowed to do this and I said no way!
It happened to be a particularly bad tenant the Landlord was trying to remove in order to sell the property anyway and the thing the tenant did not realize is he opened up the door that would have himself removed that much faster.
In other words, if the tenant is not paying rent, serve them with an eviction for non-payment of rent immediately. The process can be found in more detail under this blog post (How To Evict a Tenant).
OK, I happen to know this particular Landlord would NEVER let his properties get in bad shape and it was simply the tenants way to stop paying rent (AKA, steal from the Landlord).
So Landlords, never let a tenant not pay rent for any reason. If something needs fixed, have them submit in writing to you a maintenance request and FIX IT!
If you are a tenant that happens upon this post, be sure to be active in your tenancy. If work is required and is not being completed, don’t just stop paying rent (as you are going to be kicked out for this). Instead, use the process the legal system has in place to remedy it.
Most people ask me these three questions when they know I do house rentals.
How do I get rid of a bad tenant?
How do I rent a house fast (or rent a house that just won’t rent)?
What rental paperwork do I need to have/complete?
Let’s take them one at a time.
1) How do I get rid of a bad tenant?
It’s actually very simple and can be achieved in as little as 20 days but more likely a little over a month.
Eviction for non-payment of rent is of course the most common method. Usually a bad tenant to me is a non-paying tenant so this works out perfect. You can read How-to-evict-a-tenant for more info on evictions.
The other method is to of course pay them off. I have forgiven a month’s owed rent in return for an immediate vacancy of the property. Do not go overboard on this and do a cost analysis. In other words, which is cheaper: eviction proceedings or forgiving money you were never going to see anyway? Be sure to have them sign the appropriate paperwork. In my area, I can have them sign a form that if they do not vacate by the agreed upon date, I can file a much faster eviction.
2) How do I rent my house fast?
Simple answer! By knowing how to market your property in these current times.
But what does that mean?
It means finding out how people are searching for rental properties in your area. In my area, that happens to be using Kijiji.ca. In some areas Craigslist.com may do better or even a local news advertiser. I strongly advise against using a larger newspaper as all you will get is useless calls instead of qualified leads.
Having trouble renting? Something is wrong then as the rental market is huge right now in this current economic climate. Is it the property’s condition? Perhaps the price is just a bit steep. Either way, remedy both quickly.
3) What Paperwork do I Need?
Renters Application: Be sure to use an application to weed out any potential problems as well as to gauge a future tenant’s reactions.
Credit Check: Available online. Check out the link to the right >>>
Lease or Rental Agreement: Perhaps the most common form you will need for your property. Knowing the difference between the two and what is important in the contract is vital.
Rental Receipt: By law, you are to provide your tenant with this document when asked. Be sure it contains all the relevant information the law requires. You can find a rental receipt template here.
Checklists: No one can remember everything all the time. I make use of rental checklists to make sure I am not missing anything as well as to have all the information in one place in the case of an eviction. It is hard for a bad tenant to fight against pure evidence and these checklists will provide that.
Quite recently, I had the scare of my life. I thought I was going to get beaten out of my rental property due to the actions of a “career tenant”, “professional tenant” or simply a “con-man and con-woman”.
What is a “career tenant”? It is someone that plays the system in order to live rent free for as many months as possible.
IT IS A LANDLORD’S WORST NIGHTMARE!
This couple had actually lived 9 of the past 13 months rent free due to bugs in the Landlord and Tenant system.
Talk about frustration! Here I am, the one guy that should have caught this, the one Landlord likely within a thousand mile radius that should know how to mitigate the losses of a bad tenant…
AND MY HANDS WERE LITERALLY TIED.
No matter how hard I tried, I knew these tenants were going to ruin what it took me 3 years to build.
“How is this even possible”, you ask?
What happened that had my spouse asking me with tears, “Can you promise me we will NEVER rent a house again?”
And why did I answer without hesitation, “I can’t promise you that.”
What happened was my sister was supposed to move into my hometown all the way from Las Vegas and was to rent my house (I had an extra house I bought earlier). However, the tenant I placed 7 months earlier simply stopped paying rent and refused to leave.
I was pretty sure when I put them in my house this was going to happen eventually because when I placed them, I knew they were coming from bad financial circumstances (typical in this economy). But I relied on the fact that I have always been able to get someone out before a loss incurred (because I collected a last month’s deposit and the system USE TO take one month to get someone out). And under normal circumstances (in a normal economy) it would have been true.
So here I am sitting with a $200K house with no way to pay the bills and a tenant that completely refuses to leave and a sister in need of a rental house making $60K/year in a very steady job.
Again, talk about FRUSTRATION!
LUCKILY I BEGAN THE EVICTION PROCESS THE DAY AFTER HE WAS LATE ON RENT.
I served him the Notice of Eviction for Non-Payment of Rent, just as I always do IMMEDIATELY upon non-payment.
The time came and went and I immediately filed an Application for Eviction of Non-Payment of rent. It cost us $170.00.
But here is where things were different. I’ve only had to file twice ever out of 150 tenants I have placed for Landlords. And the first guy left before the court date and nothing was lost.
What happened was, I had to mail the application and wait several weeks to serve the tenant. Previously I was able to do this the same day.
So this delayed the eviction action by almost a month because not only could I not serve him the eviction application, the court date was about 2 weeks past what it should have been due to too many applications and the pending holidays (all this the tenant knew was going to happen, by the way).
So by the time I got him in front of a Judge (called an “Adjudicator” in my area), I was already in the hole.
We tried mediation. Completely useless! The Mediator and the tenants’ Lawyer suggested I let them remain in the property until the New Year.
THIS WOULD HAVE EQUATED TO FOUR MONTHS OF FREE RENT.
I said “no way” and the Mediator asked me, “Don’t you want all this to go away to be able to sleep at night?”
My answer was, “if the tenant did not leave, we would not have to worry as the bank would eventually take the house over…they would be the ones without a place to sleep at night.”
HELPLESSNESS KEPT ME UP AT NIGHT…EVERY NIGHT!
His lawyer then played a dishonest legal trick to delay the action over a week which he was later reprimanded by the Judge for doing (be sure you keep good records of EVERYTHING, especially maintenance and all communication with your tenants).
So I began a real investigation of these two individuals and found out they did the EXACT same thing to the previous Landlords.
This bold couple was actually occupying two $200,000 homes at the same time WHILE ON WELFARE!
CAN YOU BELIEVE IT! AND WELFARE WOULD NOT DO A THING ABOUT IT!
The other Landlords had almost been financially ruined and had two children (we have three girls) to support. They had actually been taken for 6 months rent before they fell for the Mediator’s tricks and caved (be strong people!).
What was worst is they even tried to help him find another place by giving him a good reference letter (this is the reason I say check two Landlords back, but in their case they had papers that showed they owned previously and I later found out their home was repossessed).
THE TENANTS’ PREVIOUS LANDLORDS WERE WILLING TO HELP ME IN COURT! YES!
So here I have a huge stack of papers, going up against a dishonest couple that would not leave my house and let me put in a paying proven tenant immediately. (By the way, I would advise against putting a family member into a rental but my sister had rented another place of mine in Las Vegas for 12 years).
What happened was they went onto welfare the last week before the court date and retained a legal aid lawyer (same modus operandi they used before). The welfare office actually told me to kick them out as they could not even afford a hamburger, let alone an $1100/mn house.
AND THEN IT GOT WORSE!
They began causing problems where the police had to be called out several times to my property as they were baring access to my property so repairs can be performed (that they had caused and had their lawyer say I was not repairing).
Each turn I took I was being stopped. Legal, moral, anything. It was my worst nightmare! Here I am supposed to be the expert on rentals and I could not do a thing.
So I sat down with my spouse and we came up with a plan.
We were going to play this guy just like he played us, except honestly. We began to collect tons of evidence that would show what he was doing and have him out in a little over a week.
The day of the second court date, I was ready and CONFIDENT.
The night before I told the tenants’ lawyer I had the ace up my sleeve and to tell his clients word for word, “I DO NOT BLUFF!” (the tenants are known gamblers, by the way).
The tenants’ lawyer tried to negotiate one last deal that night and the next day.
I REFUSED. I WAS WILLING TO GO DOWN WITH THE SHIP.
Question was, “Where they?”
So here we are sitting in court. I had a terrible cough that day and sounded sick. Several cases went by and we were nearly the last ones. Luckily I had sat in on many of the procedures earlier to know what to expect.
On the top of my stack of evidence I placed a photo of the last house they lived in for 6 months rent free from scamming the Landlords. The tenants had to stare at this for about an hour. At one point the tenants stepped outside to confer with their lawyer. I knew I had them.
IT WAS NOW MY TURN!
My spouse was a witness and was asked to leave the room. She later told me she had her ear to the wall to listen in as she saw me so calm and wanted to be there for support and help.
The tenants had 4 legal aid lawyers with him (3 student lawyers and the professor of the University Law School!).
So here I am, one Landlord going up against 4 lawyers and 2 tenants whispering back and forth.
I didn’t need ANY of the evidence (just the content in my head).
Their lawyers told the judge they didn’t deny the money owed to me. They just needed time to move out as the man had medical issues and they had to go onto welfare to survive (which was his defense on the last Landlord he scammed).
I told the judge I had someone to rent the place today (my sister had given me a “Letter of Rental Intent”). The tenants are on social assistance which will pay for their moving expenses and a place for them to move to today! I repeated that welfare told me they should not have even rented it in the first place.
I also told the judge they had did this same thing to the last Landlord…at which point she stopped me cold and said it has no bearing on this case.
I then said I have medical issues of my own, three kids and a new spouse to support and there was no way I could do this if these tenants were allowed to continue to live rent free in my house, preventing me from making income.
I also asked she consider the delay that the legal aid lawyers had already created unnecessarily and include that in her decision.
She decided they would be evicted in the standard manor minus one week for the unnecessary delays (caused by the Lawyer).
I HAD FACED MY WORST NIGHTMARE (A BAD TENANT)…AND WON WITH HONESTY!
I put the house up for sale that same day and it sold very quickly for $100 less than I had paid for it (this was great considering most houses were losing 25 to 50% of their value in that same time frame.
My sister ended up having to rent another place because of timeframes of her starting her new job. Helping her find a place was another story to itself…
So, what did I learn and why did I tell my wonderfully patient spouse why I could not promise her to never rent a house out again?
I learned buying and renting houses in a bad economy WITHOUT FEAR is the only way to become a real estate millionaire. Facing the worst fear of rentals — bad tenants — is the only thing that is going to let me become that millionaire.
SOME OF THE GREATEST FORTUNES IN HISTORY WILL BE STARTED IN THE NEXT FEW YEARS.
You see, 99 of 100 people out there will not touch rentals because they are so scared of that monster. That is why 5% of the population holds 90% of the wealth. Conquering that fear of mine has put me well onto the path of wealth.
Wealth is ultimately created with real estate.
I know that with certainty.
This is why I told my spouse I would not promise her to not rent houses anymore. Because I fully intend to make it to the top 5%…and I now have the soldier’s experience to get there…
…Just like you will.
Best, John (a bad tenant survivor)
P.S. The other thing I learned was that I should have had another month’s rent in reserve to be able to holdout longer for the broken Landlord and Tenant system. More on this in future emails/blog posts.
You may want to check out the rest of this blog or specifically this post:
Is not a nefarious character or associates with said characters.
Never been served by a previous Landlord.
Has never asked a unit be repaired.
Paints the place for the Landlord.
etc.
The reality is that this tenant is VERY rare. And if I did come across one, they usually garnish a rental reduction on the order of 20 to 40%, which a typical Landlord is not willing to reduce to.
People have pets, if someone has perfect credit they likely qualify to own a home and know this (especially in the current buyers market). People have kids, smokers smoke outside, some have had experiences with bad Landlords. In other words, there is always something.
Which is why most experienced Landlords define a good tenant as:
Someone that pays on time all the time.
Someone that does not destroy the place.
Some that expects the same from the Landlord (repairs are done quickly).
As an example, I have seen tenants that were messy as hell, did drugs on a regular basis, played the home theater a bit too loud…but paid the rent on time each month without question and when they returned the unit it was spotless.
I have seen Landlords make $1,000 cashflow a month in the WORST areas of the city because they understand that you can fix a hole in the wall but it is VERY hard to find a consistently paying tenant.
John’s Advice
Landlords: If you want a good tenant, be a good Landlord and attract the best.
Tenants: If you want a good place and good Landlord, make your rent the top priority of your finances. NEVER miss the rent. Return the unit BETTER than you got it. Do this and Landlords will line up to get you into your next place.
You used to be able to rent houses with all utilities included.
This practice is rare now.
Why? The high costs of energy are making too much of an unknown for Landlords. In other words, they would never be able to determine how much they are making (or most likely losing) from month-to-month.
Enter the utility cap solution. I don’t know who to credit for this but it is a great concept I’ve used with success.
Here is an example of how it works:
The tenant rents a house for $1,000 inclusive with a $200 cap. The tenant puts a deposit of $1000 when renting the place. This means that the Landlord will pay the monthly utility bills up-to $200. If it goes over $200, the Landlord has the right to keep the overage from the deposit money.
This is a very fair setup as a tenant knows they have to keep the windows closed in the winter and the Landlord knows how much their cashflow is per month.
When I rent a house I take F/L/SD. This means “First Month’s Rent, Last Month’s Rent and a Security Deposit.”
If the tenant cannot come up with it I take “First Month’s Rent and Security” because my municipality does not let me dip into the last month’s rental deposit to pay for things such as damaged floors, doors, etc.
However, you have to be very careful these days with the laws surrounding this tenant security deposit.
I’m a People’s Court Junkie. I have seen about 5 cases recently where a Landlord keeps the tenant’s security deposit long after they move out for one reason or another (most were not valid reasons at all except the Landlord spent the money and didn’t have it to give back).
The problem arises when the tenant goes back to get it, and the Landlord incorrectly held it back, the tenant is then entitled to as much as three times the deposit. So on a $1500 deposit, you will owe them over $4,500 + legals.
If you are going to keep the deposit, be sure to have proof of damages in the form of before and after pictures, a move-in and move-out checklist and anything else possible. Also be sure to follow the procedure as outlined in your local “Tenant Security Deposit Act/Laws“. This may involve a time-sensitive letter so be sure to review your State/Province Act/Laws as soon as you become a Landlord.
Never be afraid to ask for these deposits as it may be the only way to get your money in an eviction situation — but also be fair with your tenant and give them their money back with interest if they are due it.
If a house is clean and everything works, it will rent. Period.
I have rented places in the worst area of the city next to drug dealers, prostitutes, massage parlors, you name it.
How?
Someone wanted to live there and I made the price comfortable for them (a deal they could not refuse and the Landlord could make a living on).
If a house is not renting after you have had traffic through it, you either have the price too high or something is physically wrong with the place. Call people back that have looked at the place and ask their honest opinion. Maybe 1 of 10 people will let you know that they didn’t like the fact that the cupboards in the kitchen were falling off the hinges or the yard was not cut and it looked rundown just because of that.
Don’t believe people that tell you a place is unrentable. If it is not renting, fix why people are not renting it, fix it fast and rent it fast.
Even the best of Landlords needs to one day deal with bad tenants.
What is a bad tenant?
To me it is either a tenant that is not paying rent, destroying your property or breaking the terms of their Lease Agreement or Rental Agreement. The most important one being, “Not Paying Rent”.
Why?
Because your rental is a business and without income, you are not IN BUSINESS. So it is VERY important to know how to evict a tenant (or get your money) quickly to get back on track.
What Can You Evict A Tenant For?
You can begin the eviction process for one of the following issues below:
1) Non-payment of rent or consistent non-payment of rent (most common).
2) End of Lease/Agreement
3) A pet is making too much noise, is a nuisance to other tenants or considered dangerous.
4) The tenant is in violation of their lease agreement or rental agreement (too noisy, not keeping unit in order, overcrowding, etc.
5) The Landlord wishes to take possession of the unit for themselves, family members or new purchaser (at the end of a lease term or sale).
Eviction Process – US
The process can take as little as 20 days, if the process is started right away. Here is the general process (each State/County/Province may vary):
Serve Tenant a 3 to 5 day “Notice to Pay or Quit”. I also include a stern Eviction Consequences Letter outlining the costs that they may incur as a result.
If not remedied, file a “Application for Eviction” in your local county court system. There is a cost to this step but cheaper than continue to lose rent.
Have it served by a Process Server or someone other than the Landlord or someone under the Landlord’s employment.
A “Return of Service” is completed and returned by the Summons Server. A court date is set 7 to 10 days later.
If the tenant wants to fight the action, they will be required to file an “Answer” or “Appearance” before the court date.
On the court date, the Judge will decide the outcome and if you are awarded a “Judgement for Restitution”, the Judge will set an eviction date 3 to 7 days hence.
If the tenant has not removed themselves, you can file a “Writ of Restitution” with the local Sheriff’s Office whom will remove the tenant.
The difference for Canadian Landlords is in the name of the forms, time requirements and you do not have to have a Process Server summons the tenant.
OK, in this post I want to answer a very common question I get from tenants so I can help you as a Landlord understand the matter better.
I am a Platinum Ezine Author on the subject of Property Management.
Long post but valuable story…
Each Landlord I meet tells me the same thing:
You used to be able to rent houses with all utilities included.
John J. Adams, Rental Sytstem Expert.
