Obviously, you hope that your property manager will do a good job in finding a qualified tenant for you. Typically, a good property manager will do an extensive background search to determine prior rental history, job and income, debt load, and any past infractions that a landlord may have had. However, many times, people lose their jobs or face medical emergencies and other financial hardships. In these cases, the tenant will delay paying rent or not pay rent at all. That’s when you have to rely on your property manager to solve this problem for you.

Serving a Pay or Quit Notice

Most property managers will follow a one-size-fits-all procedure for handling delinquent rents. It usually goes like this: rents are due on the first of the month and considered late after the third or the fifth or the tenth. Immediately after that, the property manager will send what’s known as a Pay or Quit Notice to the tenant, giving them five or 10 days to pay their rent 100 percent in full, including all fees and balances, or the tenant must move out. If the tenant doesn’t pay the rent by that time, then the property manager files for eviction and the property will become vacant.

Why One Size Does Not Fit All

I recently heard of a situation with a tenant not paying rent because that tenant was facing a financial hardship and brought in $900, but the rent was $800, the late fee was $65, and the property management fees were $150. Obviously, that adds up to more than $900. The property manager refused to accept it, and filed eviction against that tenant. The property became vacant and the owner, instead of collecting $900, had three months of vacancy, turnover costs, and new leasing fees for the property manager.

Creating Cooperation Instead of Conflict

We think that the process of immediately sending out a letter for a Pay or Quit creates an adversarial relationship. Our concept is to create a positive relationship with that tenant to make the tenant want to renew every year. That will create a long term, positive cash flow for the owner. So, our procedure is a little different. When the tenant is late on their rent, we make a personal phone call to the tenant. We ask what happened. Sometimes, the tenant will say they were a few days late in mailing the payment, and we’ll get it the next day. In some cases, the tenant will say
he lost his job or her car broke down and so there isn’t enough money. We’ll try to establish a payment arrangement with that tenant.

Before we finalize a payment arrangement, we look at our history with that tenant. We consider whether they pay on time normally. If not, we look at how quickly they get caught up. We consider how long they have lived with us and whether they complain a lot about unnecessary items. All of these things make a difference in determining whether or not it’s
worth entering into a payment plan. Sometimes, we do have to file for eviction and lose the tenant. However, our procedures minimize those times so we can develop a long term relationship that turns into long term profits. Everyone wins in this case.

If you have any questions on eviction procedures or anything pertaining to Indianapolis property management, please contact us at Harvey Property Management.