My Tenant Lost his Job

[PEERless]

Well, it's finally happening even in resort towns. My tenant just called to let me know that he can no longer afford to live in my apartment. We'll meet on Saturday to decide what to do. The three courses of action I can see are:

1. Enforce the lease.
2. Dissolve the lease.
3. Discount the rent or otherwise negotiate to keep my tenant.

Enforcing the lease and demanding payment for the upcoming 6 months seems unlikely. Can't squeeze blood from a stone.

Dissolving the lease seems like a way to cut my losses, but then I have to find a new tenant in the middle of a recession.

Discounting the rent is something I'll probably have to do anyway to attract new applicants, but a little rental income is better than no rental income. Isn't it? Or will this set a precedent as a pushover landlord?

Help! :nonod:

 

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[Bilgefisher]

Do you have an early termination clause in the contract? Ie: one months rent or forfeit of deposit to terminate the lease?

 

[randallg99]

ask lots of questions - did the tenant get severance? is tenant being transferred? unemployment benefits? etc... etc... tenant will probably be able to pay rent for a couple of more months at the least. is there another job lined up?

if all else fails, tell tenant you'll let him off the hook if he finds another tenant

keep us updated - I am hearing rumors about state job cuts and a lot my tenants in one area are employed by the state gov't. this has me uneasy.

 

[PurEnergy]

I just discounted a tenants rent to keep the house filled. Sucks but it's better than the alternative right now. In my opinion this is not the time of year to try and fill a vacancy. If it were me I would work with the existing tenant as much as you can afford. Don't change the terms of the lease in writing. Make it a verbal thing between you and the tenant.

I will now start eviction or post the notice to "pay rent or quit" as early in the month as possible in case the tenant decides not to pay. Every day you do not start the eviction is another day you will make the payment rather than the tenant. If you lower the rent just tell them that as a matter of business you will start posting these every month like every apartment across the country does.

If a house is going to go vacant I would prefer it to be around April or May. That way you can get the house back in shape and rented quickly. Hopefully this will also get the house back on track to the next lease ending at this same time. If you get yourself on a schedule of being vacant every December...that's no good.

Try to stay on good terms so as not to get your place trashed.

My two cents worth

 

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[PEERless]

Do you have an early termination clause in the contract? Ie: one months rent or forfeit of deposit to terminate the lease?

Early termination in my lease involves forfeiture of the deposit and full responsibility for all rents to the end of the term(i.e. probably unenforceable).

ask lots of questions - did the tenant get severance? is tenant being transferred? unemployment benefits? etc... etc... tenant will probably be able to pay rent for a couple of more months at the least. is there another job lined up?

if all else fails, tell tenant you'll let him off the hook if he finds another tenant

His company is moving its office a few hours away, so the commute is prohibitive. As far as new jobs, we are in the off-season right now. There may be some new service jobs in the winter, but nothing new in his skill-set (carpeting).

I like the idea of letting him off the hook for a new tenant, but I may have to let him off the hook anyway...

 

[MJ DeMarco]

:ears:

 

[Runum]

This is the classic example of why leases aren't worth the paper they are written on. Things might be different in your state. In Texas the court won't make him pay for the remainder of the lease. They MIGHT make him pay for one month so you can get a replacement. You are probably going to lose him. I would try to have a friendly, frank discussion of where he is, what his plans are. Keep in mind he owes a lot more than just you. All of this is going on in his mind. If you get the feeling at all that he will leave you better get your signs up and get ready to begin the interviews. Sounds like he's on his way out within a month or two. The last thing you want is for him to live there 30-45 days and no pay. You better start saving your pennies. Good luck Skyler.

IMHO, the only thing a lease is good for is making you abide by tenant law and to show the bank that you have a lease for future financial concerns.

 

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[rcardin]

need a lot more details to make an educated decision

Being the 12th already he is either telling you he cant afford next months rent or he is already behind. if more than 5 days late serve 3 day pay or quit Get out early!

If not late offer 1 month's extra payment after move out to not trash his credit and not to trash the place

Can it be rented as a weekly rental for the ski season?

Worse case scenario, you will be out until mid January at best. The worst time to go empty is Nov-March because of the school schedule.

 

[PEERless]

This is the classic example of why leases aren't worth the paper they are written on...

He's been a dream-tenant thusfar, and I think he really wants to keep me as a reference. Hence: him saying we need to sit down instead of him bailing without explanation.

Being the 12th already he is either telling you he cant afford next months rent or he is already behind. if more than 5 days late serve 3 day pay or quit Get out early!

If not late offer 1 month's extra payment after move out to not trash his credit and not to trash the place

Can it be rented as a weekly rental for the ski season?

Worse case scenario, you will be out until mid January at best. The worst time to go empty is Nov-March because of the school schedule.

He's not late. Instead of prorating the first month, we started the lease on the 17th, so he's fine.

It CAN be rented as a weekly, but not without sinking some cash into the furnishings necessary to make that happen.

And now may be a bad time to lose a tenant in the real world, but here in ski resort land winter brings all kinds of seasonal workers, ski-bums, and "6-month wonders." Applicants won't be a problem, but my price may be driven down by the local and national economies.

Maybe I'll just get an ad in the paper and on the radio again and start pushing traffic to my site.

 

[bflash98]

Seems like you could make a deal with the current tennant so that he is responsible for the rent until you can find a new tennant. This would motivate him to keep the place clean and help with showings.

Sounds like there is need for winter housing so you could find someone to rent for the winter months maybe at a little discount but it would be better than leaving the place empty if the current tennant is not going to cover the rent for the empty months. Then you could look for a more long term tennant in the spring...

 

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[hatterasguy]

Personaly if his rent check isn't in by the 17th I'd start the eviction process. He is going to screw you a bit because by the time you get him out its going to be well into the ski season.

Tell him if he wants to keep you as a reference he should move by the end of the month without you having to evict him. Tell the next landlord he is the best thing since sliced bread.

Money talks, BS walks, and everyone has a story.

I have been around rentals my whole life, my family has a ton. Everyone has a sob story, most are broke lieing bums.

 

[hatterasguy]

This is the classic example of why leases aren't worth the paper they are written on.

I agree leases are worthless, you won't get any money out of them, and trying is a waste of effort. But you can probably keep his deposit for what its worth.


Leases set the ground rules, do no let the tenants change that. The lease should spell out what actions will be taken if the check isn't in by X date. Those actions should be taken, this is a business not a charity. The bank doesn't give a damn if your late on the mortgage thats for sure.

If you make an exception for one tenant what about for another? Is it fair lowering the rent for one and not another? Ask Steve how he handles this.

 

[yveskleinsky]

...I agree, ask SteveO.

On a side note, can you get the guy to put the rent on a credit card?

 

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[Bilgefisher]

I think you have the right idea by sitting down and working out an agreement with him. Both sides can see some satisfaction.

On a side note lawsuits do work sometimes. The first investors I worked with had a tenant under a two year lease that left with no explanation after month 6. They won a settlement of the entire 18 months left. Came out to like $23,000 judgement that is being paid through garnished wages over time. (Funny part of that one, had the tenant simply asked to break the lease, he would have gotten out with a 1 month penalty fee. ~$1250)

 

[Runum]

I think you have the right idea by sitting down and working out an agreement with him. Both sides can see some satisfaction.

On a side note lawsuits do work sometimes. The first investors I worked with had a tenant under a two year lease that left with no explanation after month 6. They won a settlement of the entire 18 months left. Came out to like $23,000 judgement that is being paid through garnished wages over time. (Funny part of that one, had the tenant simply asked to break the lease, he would have gotten out with a 1 month penalty fee. ~$1250)

That's the thing about Texas, no garnishment except for taxes and child support. You can win a judgment but, unless they have real property, you can't enforce it. Also, the thing about references, they usually don't care about negative references. They just tell their next landlord they have been living with a relative.

 

[Bilgefisher]

That's the thing about Texas, no garnishment except for taxes and child support. You can win a judgment but, unless they have real property, you can't enforce it. Also, the thing about references, they usually don't care about negative references. They just tell their next landlord they have been living with a relative.

Really? Don't tenant background checks to verify this? I ask because I honestly don't know. Haven't had to do one yet.

 

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[Runum]

Really? Don't tenant background checks to verify this? I ask because I honestly don't know. Haven't had to do one yet.

It depends on how recent the eviction is. If it was within the last month, then nope it probably won't show up on a background check.

 

[PEERless]

Personaly if his rent check isn't in by the 17th I'd start the eviction process. He is going to screw you a bit because by the time you get him out its going to be well into the ski season.

Whoa, wait! He's not screwing me. The rent has been paid up, and he's moving out of his own accord by the 30th. I told him I would love to renegotiate a new lease at a lower rent, but no money is no money. He's moving home with family.

So, I've got a new ad in the paper that doesn't specify the rent amount. Actually, it just says "Recession Discount!" LOL. It just sends them to my website. And since the application process is pretty automated (download app, write $20 check, mail) I look forward to the same kind bonus revenues I made last time I advertised my place.

I may come out with a negative cashflow for a few months (or years) but I'm still happy to own real property in a beautiful part of the world.

 

[rcardin]

I agree with Runum. I went through the eviction process a couple of years ago and won a judgment for almost 1800.00. Unfortunately there is no way to collect it.

 

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[hatterasguy]

Oh well if he is moving out on his own, thats really the best solution. This way you can rent it again quickly without having to go through the eviction process. Great news!

 

[PEERless]

Great news. I'm also trying some Facebook advertising this time. Targeting people in the surrounding 5 states with interest in climbing, snowboarding, or skiing.

 

[Yankees338]

Great news. I'm also trying some Facebook advertising this time. Targeting people in the surrounding 5 states with interest in climbing, snowboarding, or skiing.

Interesting! Let us know how that goes.

Is it reasonably priced? PPC? I have no idea how it works.

 

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[PEERless]

PPC, and I've posted a little bit about its awesome reporting here. In one day and <$5, I got 6 clicks and two application downloads. And we all know how much I charge to apply. Cha-ching!

 

[PEERless]

UPDATE: This ended very well. We parted ways as friends. He treated my property like gold. It looks wonderful. And he turned me on to two great possibilities for my next tenants!

 

[Runum]

Congrats Skyler. Good news indeed.:cheers:

 

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