What is your late payment rental policy? Post 218

Coach Mitch’s REFLECTIONS™


On a landlording site an interesting question got a lot of response.

The Question

What is your policy toward on time rental payment? Do you have a Zero Tolerance, ZT, for late rental payments, or do you work with the tenants and their situation?

To be Late Payment Tolerant or Not to be Late Payment Tolerant – That is the Question.

I have been a landlord for a long time. I have had a few good tenants, but sadly, with most tenants, the story has had a sad ending. My religiously oriented cultural training is to be empathetic. My rabbi tells me to be smart but to also be considerate. I’ve never been able to figure out how to be considerate and still be smart, i.e. still get paid.

G-d has been good to me and I’ve carried people waaaay too long on several occasions. Yes, I made their problems my problems. From the many hard core responses, my rational seems to be a silly, even foolish attitude. However, how would you feel if you were confronted with legitimate hard times and received no help?

I am an ardent Constitutionalist. I believe all the welfare programs are unconstitutional. However, this country was built on the reality of neighbors helping neighbors. Those who have extra have an obligation to help those who have less. Landlords have extra and have a moral obligation to help. I did not say legal obligation – I said moral obligation.

Because you do not help, the government says that there needs to be a legal obligation to help; so government inserts itself and we end up with our current welfare society. As a consequence, we feel less moral obligation to help because the government takes our income via high taxes to sustain itself and the welfare class. It is a vicious circle.

Naturally, we become cynical and justify our hard attitude by saying that tenant’s lie – which, of course is true, they often do lie. Sadly, the hard attitude has hard personal consequences, because we become hard people. Our country suffers when landlords, a part of the Achieving Class, becomes similar to the Miscreant Political Class.


The Question

If one of your tenants calls you up and says “I lost my job and I will be late with rent this month”…what is your first response?

If you practice Zero Tolerance with no exceptions,…what exact words come from your mouth next?

If you don’t have a Zero Tolerance policy,…what is your first response to this tenant?

Do you ‘work with them’ until they find another job?

Does it make ANY difference if this is a 6 month tenant or a 6 year tenant?

Typical Answers:

Yes, I work with long term tenants:  12 of 30
Yes, I work with short term tenants:  6 of 30
No, I practice Zero Tolerance:            12 of 30

Best quotes

What I say: “I’m so sorry to hear about (excuse). How will you be paying the rent to prevent eviction?”

History is my guide: I have never had a tenant who lost their job get caught up. There is no sense stretching out the inevitable.

I have a saying that I coined from bad experiences, “Tenants are like fine wine. Everyone eventually turns to vinegar”

If a landlord wants to let someone slide that’s his/her choice. Gather your family around the dinner table and explain to them you are making a business decision to lose money, probably a few thousand before it’s done – enough money to pay for a family vacation or a new car for the teenager.
Another question

So, if you are cutting your long term tenants a break on unpaid rent and not the newcomers, is that discrimination?

Performance based decisions. It’s not a yet protected class like sex orientation or woman with children or age.

Unfortunately, there are some landlord’s who will have to be hit over the head with an expensive discrimination lawsuit before they will believe. I see the day coming when “working with residents” will have to become a written policy, and it will have to be ALL or NONE to avoid the appearance of discrimination. Seems like society is creating protected / equal-rights groups faster than ever before. I don’t discriminate against anyone for irrelevant reasons, but what is relevant or irrelevant is quickly being redefined and in some cases it’s nuts. Income source, for example, absolutely is relevant! Judgment proof renters are much more risky in terms of WILL they default and how can I collect my money if they do.

Good answers from other landlords

“I do not practice zero tolerance. I would have more turn over than anyone could imagine. Mortgages, car loans, credit cards … everywhere has a grace period before late fees and being reported to the credit bureau. Life happens. Life is not black and white … there are many greys and blurred edges. Yes, I understand the tenants have most times made a choice to pay something other than the rent. My tenants do not have available credit, their friends and families are the same socio-economic tier so they have nothing to give/lend them. I’ve been a landlord a long time. For many years I was WAY too lax. Then I adopted my own method of zero tolerance but that was a sure fire way for them to be out the door because struggling to catch the rent up was a struggle … another $150ish for court costs made it impossible. I now work with them – how depends on the circumstances and the tenants themselves. I want something coming my way. I need to know why they don’t have the rent (“something came up” isn’t good enough). Going to another pet peeve of mine, I talk to my tenants – I do not text cryptic several word messages back and forth … we have a real down to earth, sit at the kitchen table discussion.”


“If you don’t pay your rent, I am paying your rent and I’m not going to pay your bills for you.” They seem to get that. I don’t want to hear a reason as it doesn’t matter to me. It doesn’t matter to my bank what my problems are: they just want their money. Me too. Everybody has their share of problems in life, including me. I too have low income tenants whose life is on a thread. Yet they make choices where their money goes and I make them understand that if they want to keep a roof over their heads, I get paid first. My current problem children still have cable, internet, the latest cell phones and rent a center crap AND THEY SMOKE. Don’t tell me you don’t have money for rent.”


“It’s best not to allow a tenant to make their problems, your problems. But if you’re dealing with paycheck to paycheck people it’s going to happen. It’s much less likely to happen if you don’t have rentals that deal with folks living on the margins, unable to acquire emergency funds or unwilling to give up their love of large dogs, smoking, boats, etc… So you just have to decide what you’re willing to tolerate and manage. There is really no right or wrong way. I’m pretty firm overall. But I’m more tolerant of the tenant whose bank account was locked for a few days due to fraud than one who bought new car tires and figured they could pay their rent late.”


“My tenants are usually one step away from a disaster. So first, I want them to contact me and tell me there’s a problem. I don’t want to have to chase them after the grace period. But second, in order to “work” with them, I want them to have some of the rent….say 50%. I explain this by saying I don’t want to be the only one “working” in this situation. I want them to be working too. But then I expect the balance by the 15th. If they don’t have it I file. The bottom line is that if they can’t pay by then, they’ll have trouble with the next month as well. They may not ever get back on track. In my area there are churches, the Salvation Army, etc. that can help with rent. I’ve received some or all of my rent form them in the past. Here Salvation Army will only pay half. The fact is that friends or family should be the ones they turn to, not me. I can only think of one woman who ever managed to work herself out of a situation.”


“Some might think I’m too hard on residents. Or cynical. I MUST testify that when we finally got firm on ZT, the residents pay. Even the ones with perfect excuses. 75% pay and stay. Only 25% leave or must be evicted. Many of THOSE 25% were planning on leaving/skipping anyway. Some of the 25% had made up their minds to ride out the eviction process for some free rent. Cannot argue with stats. It flushes out the ones who planned to stiff you so we know earlier. Stop accepting excuses! Treat everyone the same. When I stopped playing God, trying to decide which excuse was worthy or a lie, my stress level went waaay down. My life had been ruled by “exceptions”, such as they were sick or a long termer or job loss. 6 years is great but the past does not mean they are a great tenant today. And don’t believe a 6 year-er won’t nail you in court over mold or lead based paint with a free atty. Often Work-With-Me is code for “I used your rent money for a deposit on my new place and plan to skip. I was hoping you would not notice like in months past.” Newbies believe the tenant will get caught up. We used to pride ourselves on the ability to “work with people”. I have literally $500,000 in court judgments that says “Work-With-Me” does not work. (hmmm…WWM…ZT conquers WWM!) Experienced LLs who check their own stats know these situations are often the beginning of the end. Typical real life example: Tenant lost job. Said he had a new one, just needed time for first paycheck. We offered to put him on Pay-Day-Plan so he would only need one week’s worth of rent to stay in the house until his first paycheck came in. Because he was lying and was running out of lies he blamed us. His negative reaction stirred us to do some checking. We verified the old and the new jobs just like screening -he lied. Fired some time ago, used up all his savings to pay last month’s rent, and had only applied at the new job, was not accepted. He waited out the eviction process for some free rent, then filed BK as soon as the court made its judgment. I believe they were working on the BK during tenancy, advised by their atty to wait it out for free rent (most landlords would give 2-3 months + 30 days for court) and wait for the judgment so it could be included in the BK. I say this because the tenant was very cooperative and agreed to everything at court. What did he care?! It was all going to disappear anyway! Newbies believe good residents are always good resident. Experienced landlords know that good residents can go bad over time. Life happens and the only way we know things have soured is when the rent is unpaid, often months after they went bad. First it’s “can you work with me”, then “I’ll get you caught up next month”, then they stop returning phone calls, then they either skip or force us to file in court, leaving a fat mess and damage. Newbies might think this talk cynical. I prefer to say we operate with open eyes, real people, real statistics, and put appropriate protections in place. Run your business like a business.”


“The phrase ‘Adopt or Evict’ springs to mind. Your rental contract is a legal document. Be firm but fair.”


“The company I work for has over 7,000 tenants. Landlord-tenant laws favor tenants. Sec. 8 is big on discrimination. The first & foremost thing my company drills into every resident manager’s head is that you cannot discriminate. You have to treat everyone exactly the same. Believe me there are people out there who can’t wait to take a landlord to court for any reason whatsoever so they can get something for nothing. I explain at lease-signing that there are no exceptions, I can not treat them as a special case because then I am discriminating against everyone else. Prospective tenants will ask all the time to speak to the owner and ask to be made an exception to the rules for whatever it is they want to be entitled to. The answer is no. If I make an exception for them, then there would be no reason for rules. The buck stops with me. This is a business and I am not their den mother.”


Have you made up your mind?

I’ve had rentals seemingly forever. Long ago I made the decision to flip so that I wouldn’t be subject to the vagaries of the political winds and the good will of bad tenants. Flipping allows you to make a big profit and not have tenants.

If you have had enough of being your bosses’ whipping boy and if you want to strike out on your own…

See Coach Mitch’s “Ridiculously Simple System…” ™ for details.

G-d Bless US

Mitchell Goldstein - Coach Mitch
518-439-6100 until midnight EST

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