Recently I came across a friend of mine who complaint to me that his tenant just abandon his property without paying any rent for the past 2 months.
Out of a sudden, the tenant just left without any ways to contact him. 🙄
Before we get into the nitty-gritty of what you should do if your tenant abandons your property, FIRST, you need to reduce your risk of that ever happening.
You do that by having a really good tenant qualification process.
PRACTICE PREVENTION
➡️ASK FOR INCOME SLIP
Something that my company do at our property management company when we evaluate tenants is to check their income by asking for salary slip.
➡️INCOME MUST BE 3X THE RENT
Their income has to be 3X the monthly rent.
➡️CALL THE EMPLOYER TO VERIFY (IF NEEDED)
You can even call the employer to make sure that the paystub figures are accurate.
➡️CRIMINAL CHECK
This may be easier said than done.
Anyone convicted of criminal activity, in my opinion, you should not rent to.
They just tend to come with a lot of problems.
If they have minor criminal activity that were years and years old, maybe you can consider.
➡️CASH IS KING
If someone is willing to put down 6 months of rent in advance or a large deposit, that should minimize your risk because you’ll have that buffer of capital.
Again, give yourself the best chance before you put a tenant in that property if you want that tenant to stay and pay.
➡️WHAT TO DO IF TENANT DISAPPEARS
Now once you have gone through that and placed a tenant in your property, it’s all a fairy tale ending, right?
OF COURSE NO!
Guys, this is property investment and it’s a rollercoaster of a ride.
I’m here to tell you now, if you think it’s not going to happen to you, it probably will!
So you always have to base everything on the worst case scenario.
Something that I like to tell investors is underestimate your income and overestimate your expenses when you’re investing in buy and hold properties.
Something will always go wrong, and you need to expect that to happen.
My company have placed a lot of great tenants in properties—at least we thought they were great.
But then they pack up and leave.
They just disappear like when Thanos snapped his finger.
They moved into the quantum realm I supposed. LOL 🤣
We can’t talk to them even though we call them, we text them, and we email them. They’re just M.I.A.
These things happen.
We’ve also had a lot of tenants that stop paying after 2-3 months for no apparent reason.
They just stop communicating, and we have to evict.
So what do you do?
Do you hold a grudge and file for eviction?
Go to court?
Succumb to that negative energy?
WHEN TO LET THAT TENANT GO & MOVE ON WITH YOUR LIFE
Look, in my opinion, there is enough nonsense that happens in real estate as it is.
You’re dealing with people, and when you’re dealing with people, you’re dealing with problems—from employees to contractors to agents to everyone.
My best tenants so far in my property investment portfolio are the birds in my bird nest houses. 🐥
They never complain.
I build the house and they just come and give me “rental income” in the form of their saliva. Haha!
So I think that whenever something negative happens you should learn from the experience, let go of it, and move on as quickly as you can.
You have to focus on positive energy.
My point is sometimes it can be tough to be motivated in an industry where a lot of negativity can happen.
So you have to feed yourself with as much positivity as you can.
Holding a grudge against a tenant that vacated after 3 months, and trying to collect the rest of the rent, filing an eviction, and going through the court process is going to be extra costs and extra time.
Time is money, guys.
It’s just not worth what you can potentially get from it.
The likelihood of ever collecting anything is very low, so I just think that you should let it go, honestly.
Get that property turned as fast as you can, re-list it for rent, and try to get another tenant in there.
Learn from the mistake, let it go, and move on.
WHEN TO GO AFTER A MISSING TENANT
Now, if they cause significant damage to the property and a lot of capital has to be spent to turn that property around, then yes, file a police report.
Go for second cause and hope you can get a judgment and collect something on that money.
But still, move on.
It’s something I have done and will keep doing. I have lost tens of thousands over the years due to hell tenants. It’s just the cost of doing business.
As long as you make more money than you lose, you’ll always be ahead, right?
I remember I got some great advice from a business person few months ago.
He said, “You can’t go wrong making a profit.”
If it’s RM1 or even RM100k, it doesn’t matter—as long as you’re making a profit.
What do you think?
Do you agree with me or do you disagree?
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