Photo: Flickr user Hey Paul

Because I’m soft, I’m not out about $1,200 with an empty apartment to rent, I’m now sitting on about $1,200 worth of debt, an apartment I can’t rent until my lackluster tenant vacates (November 1), and potentially another two month’s of unpaid rent.  Stupid.

I have made an appointment with the local tenancy board for October 26 to pursue by debt and enforce eviction, but because the system is so shitty I’ve got to wait 6 weeks to even get in front of them and present my case.  I’ll win, then I have to wait another 10 days for the appeal period.  Then, if the tenant is still in the building I can give her 5 days to vacate.  This equals two months of unpaid rent, unless by some miracle she decides to pay me.

I doubt this will happen since she has no incentive left to pay.  She knows she’s moving, she knows I can’t forcibly remove her until November, and she knows collecting her debt will be difficult at best.  I fucked myself.

Oh, and on top of this one of my new tenants screwed up her second month of budgeting and still owes me a full month’s rent for September.  Supposedly I’ll get that payment on Sept 20.  Then she has a mere two weeks to come up with October’s rent; highly unlikely in my opinion.  We’ll see how this works out.

Lastly, another tenant (new again) owes me a further $95 for late rent.  I feel they’ll get caught up as they work hard and seem to take paying rent seriously.  I need to get everyone back on track because I can’t afford to keep floating mortgage payments while waiting for tenants to pay up.

I guess its hard ball from now on.

UPDATE:

I’ve collected the outstanding rent from all other tenants, with the exception of the one who’s leaving October 31.  I served that tenant with a notice to appear at a tenancy hearing scheduled for October 27, 2009.  She says she’s going to pay me ‘what she can’ but frankly I have little hope of seeing any money.  If she doesn’t pay anything by the end of the month I’ll give her a 15 day Notice to Quit and see if that encourages her.  Realistically, I can’t enforce it until the hearing, but it may get some money out of her.

I must tread carefully so she doesn’t cause problems with me trying to rent the place to a new tenant.  Or more likely so she doesn’t go crazy and make my life difficult full time.  I’ll be glad to have her gone.

To go back a bit in time, one of my tenants who’s been great in every other way (except she’s never been on time with rent) just recently moved out.  One month ago I did my usual phone call to find out when she’d be able to pay me, but instead of giving me date for payment she informed me that she needed to move.  This wasn’t entirely surprising since she’s had such difficulty making rent, but filling vacancies is the most time consuming landlord activity I deal with.  I advertised the apartment with very little interest until I offered a rental incentive of 1/2 a moth’s free rent.  So instead of being out another whole month’s rent, I’m only out 1/2 and the flat is now rented with a great tenant.

I have another tenant in the same building who’s been paying me rent in small increments and never on time.  As of July 1 she now owes me $1,125.  To make matters worse she’s a bit of a nutcase.  The last time I had verbal discussion with her she threatened to call the police because I was in her apartment without permission (I’ll have to write a seperate post about this one).  Without going into details, I stopped by to ask her about the rent when I was in the neighborhood and she didn’t like that very much.  You see she wasn’t returning my phone calls and I had no idea what was going on.  Long story short, she got upset that I was looking to collect MY money and threatened to call 911 if I didn’t leave.  I’ve been communicating with her by email ever since.  According to my last message from her I can expect $700 next week.  We’ll see.

And finally, the last tenant (in a different building) has been pretty good at getting me paid on time until July.  In the past she bounced a couple of cheques, but always got caught up quickly.  This month she informed me that she has to move as she can’t afford the rent any more!  After the initial shock wore off, I now realize this is actually a good thing.  This way I can get her out and a new, paying tenant, in with minimal loss.  By the time I keep the damage deposit, I’m only out 1/2 a month’s rent.  But alas, there’s the hassle of filling the vacancy.

Anyway, things seem to be coming to a head all at once.  I guess that’s what you get for having a whole string of month’s with no issues.  Karma.

The back story is that this tenant was about a week behind on her rent and I was due to come over that day and collect the balance.  I got a call around 7:00.  The caller-ID told me who it was, but I could barely tell what was going on as my tenant couldn’t string a sentence together.  After informing me of her love life issues, financial situation, and general happiness with life she tells me that she’s got some of my rent, but not all.  Then she says: “…I love you.”  So what do you say to that?

She was way too drunk to reason with and the last thing I wanted to do was set her off by pressuring her to pay the whole rent.  So I said I would head over shortly to collect what she had.  You see, I was also wondering if I’d even get that much if I didn’t get over there before she spent it on another trip to the liquor store.

Fortunately, my wife was out with the car and I had some time to think about the situation before I could head out.  I could picture the scenario:

1. Show up to collect rent
2. Get in some fight with tenant because she wasn’t paying the full amount
3. Tenant claims some form of sexual assault
4. Yikes!

About 30 minutes later I phone her back (she doesn’t answer) and I leave a message saying that something came up and I cannot make it that night.  She probably passed out.  I avoided what could have been a major shit-show.

Funnily, the tenant calls me the next day wondering why I didn’t come by and remembers nothing about our phone call.  Funny for that.  Anyway, I did collect the money she had and obtained post-dated cheques for the balance and future rent payments.  She’s now fully up-t0-date.

The second tenant first went into arrears last month.  She owes a monthly rent of $675.  Unlike my first tenant she did not notify me that she did not have enough money and I didn’t learn of it until the cheque was returned NSF.  On that occasion she claimed to not know it bounced nor that she did not have enough money in the bank to make the payment.  Although I was suspicious, I waived my usual $25 late-payment fee and told her to let me know in advance if she was going to be short in the future.  That way I could hold her cheque and not have to go through the hassle of collecting the rent all over again.

On the second of this month I received a text message (yeah, you heard me right, a text message) from this tenant asking me if I could hold her rent.  I was not happy.  First of all I had already deposited all the rent money, and second, text messaging is not a reliable way to work out a late rental payment with your landlord.  I’ve never texted with her before.  The next day I called and not so politely informed her that it was unacceptable to text me the day after rent is due asking for a reprieve.  This time I’m holding her to my $25 late fee and I’m now expecting this money on March 12th via Interac Money Transfer.  We’ll see.

Finally, I noticed a third cheque returned in the amount of $55.  This is from a tenant who has the first $620 of her rent paid by the provincial assistance program (that’s a nicer way of saying welfare), the remainder of her rent is paid by post-dated cheques.  This is the first time she has been in arrears and I know have to chase her down and start the collection process.  The trouble here is that I want her to know I’m serious about collecting rent on time, without being too ‘mean’.  I think its important to have a good relationship with your tenants, have them respect you, and ultimately want to pay you rather than have them hiding from you when it comes time to collect rent.  That being said, if you’re too nice and you give them too much leeway you can find yourself unable to enforce rules or collect your rent at all.

Now, your probably wondering how I manage to meet my mortgage, insurance, and operating expenses while I’ve got tenants behind on rent?  I can afford to have one tenant behind and still make all my payments without dipping into my own pocket.  I cannot afford to have three tenants in arrears for an entire month.  I’ve mitigated this risk by staggering my mortgage payments out over the month.  I have one payment on the first, another on the seventh, and my last on the 20th.   I can afford to have only one tenant in arrears past the 20th, otherwise I have to make up the shortfall in cash-flow myself.  Of course, I never let my tenants know that I am set up this way.

You’ll find that it can be pricy to have your payments pushed back into the month because you need to cover the additional interest expense incurred over the days you delayed payment.  It will, however, be worth it if you don’t have to take the money out of your own pocket.

Update:

I have received my $650 from my regularly late, but reliable tenant and she’s now up to date.  I have received $500 of the now $700 due from my ‘texting’ tenant.  This time I was informed about the short-fall via email.  Hmm, I guess she doesn’t like the phone.  I’m now expecting the balance on Thursday.

With my first rental property, collecting rent was pretty straight forward.  My tenant lives in the flat above me so it’s just a matter of knocking on the door – there’s no hiding from me here.  Now, my other two properties are a whole different story.

Normally I collect post-dated cheques from each tenant when they sign their lease.  Because they’re eager to get the keys to their new place you can pretty much ask anything of them and they’ll come up with it.  The issue arises when these tenants don’t have a full year’s worth of cheques, a cheque bounces, or they’ve renewed and you need to collect more cheques. On a side note, I really need to find a economical way to get electronic deposits for all my rent.

This Febrary, I had two tenants who missed their rent.  One bounced her post-dated cheque and the other owes me a slew of cheques for the remainder of her lease.  I can afford to have only one tenant behind on rent before I have to start taking money out of my own pocket to cover my mortgage payments, so this is a pretty big deal.  The tenant who owes me her cheques hasn’t made her rent on time for a number of months, but has been reliable at getting me paid up with little fuss.  She deposited her rent directly into my bank account only 7 days late.   Just today I was able to collect $550 of $675 owed to me from the second tenant.  I’m expecting to collect the balance this coming Friday.

Fortunately I know have enough money to cover my mortgage payments while I wait for the rest of the money to come in.  Hopefully she manages to come up with her rent on time next month as that’s only two weeks away!