my first eviction

[Stacy E.]

Hi,

I've been doing this for a few years, first just renting out the second bedroom in my condo and now since I moved out of that condo I rent out the whole thing and also bought a house where I'm living and renting out my basement.  I didn't choose this profession per se; I'm actually disabled and needing to do this to supplement my income (although I have felt immense appreciation for the good tenants and proud of the way I continue to learn).

Now I am in the process of my first eviction with regards to my current basement tenant (they're just not paying me rent, everything else is fine with this person but their financial excuses have been hard to keep track of since the beginning).  My question isn't technical but more of a general soft skills thing.  

How do I keep my sanity?  I've filed the eviction, they've been served with the paperwork, and now all that's left is for me to wait for the next steps and hope I filled everything out right (Denver county's process is making my head spin, and I'm having to do this without a lawyer because of cost) while in the meantime my tenant is otherwise just ignoring all my texts and notices and also (it feels like) acting like nothing has changed, still having people over for dinner, still walking in and out of my front door like no problem...leading up to this point I've had multiple informal conversations with this person about the toll their unpredictable behavior around payments has had on me.  The personal check they wrote me upon move-in bounced (my mistake for not insisting on a cashier's check) and then they sent me a sneaky Venmo payment to cover it right before it was about to bounce with no explanation for the Venmo payment until I reached out to them.  Since then there's been partial payments spread out over multiple days almost monthly (up until this month the payments have always been a little early so that the full amount arrives by the first--again, probably my mistake for agreeing to such).  So given that this month there were zero payments of any kind, I started the eviction process as soon as I legally could...

This is taking a major toll on my already-tenuous health.  Lots of meditation?  Little treats for myself?  Recommend ACH payments for a very small-time landlord?  No partial payments from any tenant again ever, even if they're early, yes?  This tenant's current lease is up in a few months anyway, but how now do I believe in the day where I am no longer involved with this person whom I very much do not want to be renting to anymore (let alone sharing my own home with)?

Thanks for reading.

[Kevin Sobilo]

@Stacy E., relying on just a couple units for supplemental income is SCARY! This is EXACTLY the scenario I warn new investors to avoid because it is fraught with risks.

1. Since you are a casual landlord who never intended to originally become a landlord and because you only have a couple units you're never going to get enough experience to become proficient and therefore are more likely to experience negative tenant situations.

2. Also, since you rely on this income, you likely aren't prepared to weather VERY negative situations such that they could have a significant personal impact on your own personal financial situation.

3. My recommendation in general is to either get MORE units so that you become more proficient with experience. Additional units also even out the experience because when 1 unit is having troubles the other units are carrying things so that it doesn't create stress like relying on 1 or 2 units. Or perhaps hiring a PM which may or may not pencil out financially.

As for your current scenario a few comments:

1. Taking partial payments BEFORE rent is due isn't an issue. You were getting 100% paid ON TIME just not all in 1 payment. That is NOT something to complain about.

2. Partial payments COULD be an issue WHEN THEY ARE LATE. For example, if you file for eviction but accept a partial payment after issuing the eviction notice the judge is likely to take that as proof that you made a payment plan with the tenant to pay their outstanding balance and deny the eviction.

3. Why would you expect tenants to act differently because they are being evicted? Why worry about anything like that. Why tell them how this affects you personally?

You are mixing your relationship with your tenant which is a BUSINESS relationship and making it feel to you like a PERSONAL relationship. A tenant will make choices that are best for them. Your personal situation isn't a priority to them nor should it be because they are not your friends and family.

4. Why continue to engage them txting and trying to talk to them. If you're evicting them that is what's happening. Unless there is a specific reason to communicate there is no reason to. Again mixing personal relationship emotions with business relationships.

An example of a reason to talk to them might be "Cash For Keys", to offer them a chunk of cash to leave instead of going through the eviction process. They avoid the eviction and you get the unit back sooner with less hassles.

5. Yes, I do recommend ACH payments for small time landlords. I use apartments.com but there are other services as well. It provides a portal allowing tenants to make their payments. I can also bill the tenant back for ad hoc items such as damages, utilities, etc. I can also record offline payments they give me such as cash, check, money orders. So, that their portal shows a COMPLETE accounting of all costs and payments. Plus I do things like upload the signed lease for everyone's convenience. Tenants can also pay with a credit card if they are short on funds! However with credit card payments they do get hit with a fee unlike ACH payments which are free. 

[Nathan Gesner]

Quote from @Stacy E.:

You are making a very common mistake. You think you can save 10% by not hiring a property manager, then you lose far more because you don't know how to handle bad renters. You repeat this mistake by not hiring an attorney. You may think you are saving money, but your attempt to evict could be thwarted by one simple mistake in the process, the tenant could get the right to stay longer, and you'll have to start the process all over again.

The tenant acts like nothing is happening because nothing is happening. You made the mistake of accepting their excuses over and over again. They know you can't kick them out tomorrow, so they will continue stealing from you until things get serious. They are probably smart enough to wait until the court date, then they'll scurry off 1-2 days prior and move to the next victim.

I manage 400 rentals and this doesn't happen to me because I don't listen to excuses or play games. Rent is unpaid? Charge the late fee. Every time. Still don't pay? Start the eviction. Every time.

I am writing a book that speaks to this very issue. Landlords try to save money by doing everything themselves and it costs them far more. If you want your rental to be successful, you must continually educate yourself, have strong policies and procedures, and be prepared to take action against bad behavior.

The best thing you can do right now is start looking for a professional property manager. They may be able/willing to get you out of this situation and get the train back on the tracks. If not, hire an attorney to clean up the current mess, then pass it on to a PM.

[Jena Vail]

Stacy, 

Be encouraged, you're in a temporary set-back on a worthy road to wealth-building & financial freedom. This is a learning opportunity just like all challenges. You deserve great tenants respect the home you are providing. For these current tenants, I would just say try to focus on a creative win-win solution that allows them to move out ASAP without causing any more issues for you. Unfortunately Colorado is very tenant-friendly, so if you can avoid the eviction process that might make your life easier. You'll get through this, all the best! 

[Bill S.]

@Stacy E. My heart goes out to you. You are in a difficult situation. I continue to be flabbergasted at the local politicians who pass all these tenant friendly laws creating mounds of paperwork with a myriad of details and are surprised by why there are more evictions. The current long drawn out detailed and tedious process causes tenants to delay until the point of no return. If they knew they had to do something now they would if the could. If they know they can't pay they move and it's over. Now with the long delays the likelihood they will arrive at the conclusion that they they need to act is drawn out to the point of no return (full blown eviction). 

I certainly hope you did everything right (used the correct notices, etc.) because if you didn't it will cost you dearly. The laws are changing quickly here. One law (HB-1098) that just passed and was signed by the governor will impact you as well. It is called just cause eviction, where you now cannot evict a tenant that has not violated the lease. In other words you might not be done with the tenants at the end of their lease if they don't move on their own. Sorry for the bad news.

At any rate, how to care for yourself. First off - this is business and treat it as such. I realize they live in the same structure as you do so this is hard. Emotionally take a step back from it. Sure you need the money but if you can't afford the cost of doing business you need to get out of the business. I mean that with all sincerity. Sell your house and find another way to make money. Treating it as a business means that all communication with the tenants is business communication.

2nd - Stop texting them and contacting them about the rent they haven't and probably won't pay. Consider that money gone and look forward to what you need to do to get the next paying tenants in place. 

3rd - write down your lessons as you learn them. What mistakes you made in screening and what policies you will put in place (in writing) so you don't make them again.

4th - figure out what the next step is and go through it as a dry run. In Denver, after the tenant has been served then there is a court date set. This is not really a court date in that if everyone shows up, they set the actual court date for the trial. The first date is held virtually. If the tenant doesn't show then you can win by default. If the tenant does show and there is an actual trial set, go to the court ahead of time and watch the process. Observe the judges and the people. Learn the process. Generally speaking, the court is very unfriendly to landlords.

5th - Offer them a get out of jail early card. Offer to let them move out and stop the eviction. Many tenants don't know that if they move out before the court rules against them, it stops the eviction and means they won't have one on their record. Put this in writing by offering the early move-out as a way for them to avoid the eviction. Email works if they use that. If not, a type written note you hand to them personally is best. I do not recommend text for this as it's not as formal and they may not consider it. Say something like, "Our court date is x and I have been considering the situation and wanted to present you a one time offer to avoid an eviction on your record. If you move out and return the unit and keys to be by 5 pm Friday then the eviction process with stop and you will not have an eviction on your record. This offer is good until 5 pm Monday." If they take this, your are money ahead as you can start getting a paying tenant in sooner. Note if they move you will want to be sure to send them an accounting of their security deposit within the required time. It will show them the money they owe you. If they don't pay, you can pursue them in small claims court.

6th - Let the process carry itself out. This happens. It is not the end of the world. Learn from it, do better next time and move on.

[Chris Seveney]

Quote from @Nathan Gesner:

Quote from @Stacy E.:

You are making a very common mistake. You think you can save 10% by not hiring a property manager, then you lose far more because you don't know how to handle bad renters. You repeat this mistake by not hiring an attorney. You may think you are saving money, but your attempt to evict could be thwarted by one simple mistake in the process, the tenant could get the right to stay longer, and you'll have to start the process all over again.

The tenant acts like nothing is happening because nothing is happening. You made the mistake of accepting their excuses over and over again. They know you can't kick them out tomorrow, so they will continue stealing from you until things get serious. They are probably smart enough to wait until the court date, then they'll scurry off 1-2 days prior and move to the next victim.

I manage 400 rentals and this doesn't happen to me because I don't listen to excuses or play games. Rent is unpaid? Charge the late fee. Every time. Still don't pay? Start the eviction. Every time.

I am writing a book that speaks to this very issue. Landlords try to save money by doing everything themselves and it costs them far more. If you want your rental to be successful, you must continually educate yourself, have strong policies and procedures, and be prepared to take action against bad behavior.

The best thing you can do right now is start looking for a professional property manager. They may be able/willing to get you out of this situation and get the train back on the tracks. If not, hire an attorney to clean up the current mess, then pass it on to a PM.

 ^^^^^^^^^^^^^^ This Right Here^^^^^^^^^^^^^^^^^^^^^^^

As mentioned, you asked how to deal with this mentally and Nathan answered that question - get a property manager to deal with tenants. Yes it is a cost but as mentioned when you know what hits the fan, they will save you time and money and will pay for themselves 5x over. 

[Michael Smythe]

Hire a PMC if you can't keep your emotions out of your business challenges.