What happens if my tenant stops paying rent?
It’s wonderful to have an ideal renter in your property. Everything is taken care of as if it were their own house, and the rent is always paid on time. But what happens if your tenant fails to pay the rent? Hopefully, this isn’t something you’ll have to deal with as a property investor. Whatever the case, it’s critical to understand your rights and what to do if your monthly payments cease. Continue reading for an outline of what to do if your renter fails to pay rent.
Be mindful of your mortgage
The majority of property investors have a mortgage on their property. Having monthly cash flow from rental payments is vital whether your property is negatively or positively geared. Tenants may stop paying their rent for a variety of reasons, including financial difficulties, job loss, illness, or living above their means. Just like money put aside for repairs and maintenance, setting a few months of the mortgage payment aside can lessen the initial tension while necessary actions are performed.
Keep your insurance up to date
When your tenant fails to pay the rent, having enough landlord insurance coverage might come in handy. If you have rent-loss insurance, you may be able to file a claim to be paid for missing rental payments if the renter fails to pay.
Keep open communication with your property manager
If you have a good tenant who is going through a rough patch and you’re okay with it, you might have your property manager negotiate and agree with the tenant to make partial rental payments followed by bigger or more frequent payments to make up the difference in the near future. Because your property manager should already have open lines of contact with your tenant, taking the time to check in with them before issuing infractions can be a more amiable place to start, especially if they’ve been a good renter in the past.
How to escalate late or no rental payments
If it seems that your tenant will not pay their rent, your property manager must take the steps required by your state’s tenancy regulations. The legislation varies each state, most notably in terms of when a breach notice or notice to vacate can be given.
- In general, the following procedures should be taken to address (and perhaps evict) a tenant who is not paying their rent:
- Try to initiate communication with the tenant to see if they can make a payment arrangement.
- Serve a 3 Day Pay or Quit Notice
- Prepare the eviction paperwork
- Begin the eviction process in the courtsIf applicable, follow the steps in your state to claim the tenant’s bond money to cover the missed rent payments.
Late rent payments can be frustrating. Having your property manager maintain clear communication while taking the necessary actions in your state to promptly address the situation will help you get your rental money flowing again sooner rather than later.
Please keep in mind that this post is not intended to provide financial or legal advice. Before making any choices for yourself, please speak with your expert financial and legal advisors.
