If you plan to rent properties in the real estate business, you have to prepare for the unfortunate circumstance where a renter may stop paying rent. While every landlord hopes to never deal with a tenant who cannot pay rent, you cannot always predict your tenant’s life events or financial hardships.
According to U.S. News, many renters fear being unable to pay rent.
What situations do landlords face?
Several common scenarios compromise rent payment. One of the most common occurs when a tenant loses his or her job or has financial trouble. The tenant may inform you he or she cannot afford the rent or may ask for an extension.
Other situations include the tenant refusing to pay rent or being consistently late with the payment.
How can you work with your tenant?
If your tenant does not outright refuse to pay rent, you may be able to work with him or her on a solution. In some cases, a tenant may simply need an extension of the due date. You can include a late fee or if your renter has a spotless record, you may waive the late fee for a one-time late payment. You may even consider offering flexible prices for a specified period until the tenant can pay you in full again. Not only can kindness maintain tenant loyalty, but if you have to evict a tenant, you can show that you did try to work with him or her.
In addition to payment plans, you can also offer to use the tenant’s security deposit to pay rent. This forfeits the security deposit upon moving out.
If you have a tenant who does not pay rent, you may have to resort to eviction. Additionally, for renters who may pay rent late, you may decide not to renew the lease.