Tenants And Bad Debt

While I was searching around the internet today I ran across a guy who had an internet business. He would provide a service for people then let them pay for it later, since the service was frequently time sensitive and people needed it by a deadline.

He said:

• “This has proven to be a reasonably successful system and in the past two years I have not had one bad debt.”

I about fell out of my chair – I am really shocked that anyone doing business does not have bad debts. That shows you how dealing with tenants and rental property will really warp your business viewpoint.

This is what I would say about the rental business:

• “This has proven to be a reasonably successful rental business but in the past two years there has never been a month that I didn’t write off some bad debt from a tenant not paying.”

Every month I know someone is not going to pay, I just don’t know who. When they don’t pay I send a 3 day notice, then I turn it over to an attorney to complete the unlawful detainer - the legal term for an eviction.

I used to do the paperwork for evicting tenants myself but it just turned into too much work.

If you own very many rentals (sometimes just one) then you just have to get used to the idea of kicking people out it’s part of the business. Sometimes it’s sad, sometimes it’s a real pain in the butt. But after a while it’s just all business.

Now I always try to give them the notice in person if I can, sometimes they won’t talk to you or answer their door when they are home. Running out of money can do funny things to normal people. Anyway, if I can talk to them I tell them it’s nothing personal and I understand they have a sob story. Although I don’t say it like that.

Going over this make me realize how hearing 1000’s of explanations why the tenant does not have the money has brought me to a place where I really don’t even listen much as they are rattling on. I am analyzing their story to try to pick out one thing.

Will they be able to come up with the money and how fast.

After I listen to their story I tell them by law I am required to give them a 3 day notice, and then I have to file at the court house this give them about 30 days until the sheriff shows up and then they have to pay or leave.

I break down all the days and actions and costs for them, and try to sound understanding while I am doing it. They seem to really respond to this and I have found if I talk to them they are much less likely to destroy my property before they leave.