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Hi, I’m Jaci Green, I have been with Team Beachbody as a coach for over two years now, helping people transform their lives through fitness and proper nutrition.
“Owning Up” – Confessions of a Real Estate Investor
As I was writing this post, I was reminded of Malcolm Gladwell. In his book,”The Tipping Point”, he describes on incident on the New York subways that became the tipping point for massive changes. You may remember the incident, it was widely reported.
New York subways were notoriously dangerous in the 1980’s with frequent muggings, robberies, homicides and the like. The incident involved a middle-aged white male who shot and killed four black youths that were about to rob him. The fallout from the incident was the impetus for action that included enhanced authority for transit police to arrest and detain individuals for the protection and safety of the majority of transit users. Continue reading “Monitoring and Adjusting Tenant Behaviour”
“Owning Up” – Confessions of a Real Estate Investor
Happy New Year! The Cheque Is In The Mail!
On the RENTS Facebook page, there was a recent discussion about charging a penalty for late rent payment. It seemed appropriate at this time as the January 1st rent payment is one that is most likely to be late.
Overspending at Christmas is the biggest culprit. There is immense pressure to spend, buy gifts that are beyond people’s means and much of this pressure is coming from the media. It’s refreshing to travel to Japan – a Buddhist country and to Australia, where Christmas is not as hyped – but I digress.
In this post, I will share three of my experiences of dealing with late rents on January 1. The tenants and their situation dictated a different response.
Judy was a single mom with a daughter entering grade 1 when she first moved in. She worked at several “disposable” jobs making minimum wage but had the support of a loving mother and stepfather. Judy had been an ideal tenant leading up to January 1, she had paid her rent in full on time for the previous seventeen months.
Judy called me on December 30 to tell me she was short for January’s rent. During the discussion, she said she didn’t have the $650, but she could get $550. I told her I would get back to her after I had talked with my wife – we play good cop / bad cop when dealing with tenant issues.
I called Judy the next day with the news. If she could have the $550 ready for pick up, we would forgive the remaining $100. This was to a be a one time thing and not to be expected again. Judy was appreciative, so appreciative that she stayed another four years without missing a single rent payment.
Judy 2 also was a single mom with a eight year old daughter. She had a very good job with Telus which was why she was selected as the tenant. Judy 2 moved in November 1. When January 1 rolled around, no rent was received. I waited until January 3 before calling. During the call she mentioned she would be late with the rent. She explained that it was her daughter’s birthday December 24 and with Christmas, she overspent on gifts.
Judy said she could have the rent by January 15 when she got paid next. I explained that this was not satisfactory. The problem with falling behind on the rent is catching up, and once the rent was half a month behind, it was virtually impossible to catch up without some serious pain.
In the end, Judy paid $600 on January 7 and then the remaining $350 on January 15. Since then Judy 2 has paid her rent in full and on time.
The Brothers Grimm, or is that the Grim Brothers?
During the early days of owning this property, I used a rental agency. Two brothers were placed in one of the units November 1. During the month of November, I voided our contract with the agency on unrelated issues. Once we – my wife and I, took over management, I met with our tenants to let them know of the management change and to introduce myself. It was then that I discovered that the two brothers had brought in a third roommate, contrary to the RTA; this was a red flag.
This was before the days of PayPal and interac e-transfers, so on the first of each month I would go door to door and collect rents. On December 1, I visited the Grimm brothers. I was told that they didn’t have the rent ready and wouldn’t have it available until the 15th. I said this was unacceptable – there were three people, all working, so each only had $225 rent to pay. They said if I didn’t like it, they could give 30 day notice. I relented and we came to a compromise about paying December rent in installments with the promise that January’s rent would be paid in full on the 1st.
What bothered me most was the attitude of the brothers. There was a certain arrogance in their behaviour, and they were physically intimidating – closing in on my personal space and using an aggressive tone of voice. I thought of them as common thugs.
There was another incident mid-December. I called to give 24 hour notice of entering the property as I wished to inspect and replace the furnace filter. Once again, there was this attitude about allowing me or rather a reluctance to allowing me to enter. In the end they complied. I arrived at the appointed time and parked at the rear of the building; just in time to see the brothers hustling out a lactating female pit bull with a litter of newborn pups. This was not a good sign; what else were they hiding?
I decided then that I wanted these brothers out, and made a plan. On January 1, I went to collect rent but expected that they would pull the same routine as they did December 1. I expected an aggressive reaction to my planned suggestion so I brought back up, I brought my wife. She may only be 5 feet tall but she is a pit bull in her right.
On January 1, I knocked on the door, the brothers were in a good mood as they invited us in. Their parents had stayed the night after a New Year’s Eve party. When I asked for the rent, they said they didn’t have it. I said that was unacceptable and that was not they promised last month. Once again, with an aggressive response, they said they would give 30 day notice if that was what I wanted.
Little did they know, that was exactly what I wanted. I had the written notice already prepared which I asked them sign and asked their parents to witness.
Epilogue: On the day of the move out, they wanted us to come over immediately and have the security deposit would be returned in full. I allowed them to rent a steam cleaner and do the carpet cleaning. Once again I brought my muscle, I mean I brought my wife along anticipating some drama. Through the inspection, there were a few small issues that I chose to ignore to avoid confrontation.
At end, just before I wrote the cheque, I tried to turn up the heat to dry the carpets and the furnace wouldn’t go on. I went down to check the pilot light, it was off and I couldn’t get it started. I didn’t notice at the time, but afterwards my wife remarked about how the brothers attitude changed. They went from debating every issue to “give us the money” and let us get out of here. I gave them the cheque.
The next day, the locksmith was by to rekey the place. I also called a plumbing and heating company to look at the furnace. They found that the main gas intake at the meter had been turned off and locked. A call to BC Gas confirmed that they did not turn off the gas and had not locked the meter. I still think I got away cheap.
I have shared three January 1 experiences. My response was different to each of them because of the relationship I had with each. With those you trust, you are more forgiving; others you are less so.
With Judy 1, I liked that she contacted me first to alert me to her situation. This was a tenant I liked and trusted; I wanted her to stay because she was one those highly sought, “low hassle” tenants. And she proved me right. $100 forgiven and yet she stayed for over six years; $100 / 72 months, cost to me – $1.40 per month.
Judy 2 was a new tenant and a bit of unknown. I wasn’t ready to give up on her right away. I didn’t like that I had to make the initial contact but her references were good and there were no indications of problems during earlier conversations. I wasn’t about to let her off the hook though, and I did mention how it would be a challenge to catch up. I think this aggravated her; “I’ll show you” attitude came across when agreed to payment terms. She was able to meet those terms and there have been no issues with rent since.
The Grimm brothers lived up to their names, causing mayhem and havoc even after they left. I went with my gut feeling and got them out as quickly as possible and I was lucky that they left so shortly. It was not surprising to see their names in the Court Docket file of the local newspaper in later times.
My final thoughts on the subject of late rent payments: take a look at the bigger picture, are the tenants people you want to keep or are you better off with different people? Work with those you want, and cut the ties with those you don’t.