If you are a real estate investor, the odds are that you’ll be renting to tenants at some point.
And if you’re renting to tenants, at some point you will need to file an eviction. It’s not a matter of if — it’s a matter of when.
Every opportunity comes with its downsides. For real estate investors, dealing with evictions is an unfortunate reality. But, there are things you can do to make them less painful (for both you and the tenant) as well as things you can do to avoid them from happening in the first place.
- Be kind, civil and respectful
The eviction process has evolved over time to be a civil way of resolving uncorrected tenant violations. It’s a process that allows time for the tenant to either appeal or correct their violation. There’s no need for you to get “tough” and “take things into your own hands.”
In fact, one of the nice things about living in a society that upholds laws is that you are technically not the one who’s making the final decision — it’s the legal system that does.
A simple, “I’m sorry, but it’s important that we follow the due process of the law” is going to be far more effective when explaining things to your tenant than a shouting lecture. In fact, a tenant is far more likely to correct his or her error if you are pleasant and respectful rather than angry. Even in the event that you do have to have to evict a tenant, you’ll feel better throughout the process if you keep a positive attitude as much as possible.
Remember also that eviction laws vary by region. Be aware of what those laws are and never overstep them.
- Considering giving the tenant a chance to “opt out” first
In many cases, I’ve been able to avoid the eviction process altogether by coming to terms with the tenant first.
One time I had a couple of young guys renting an apartment unit who I (and the police) discovered had been involved with some illegal matters. After the charges were pressed I sat down with them and asked if I could help them find a better place to live. They quickly agreed to move out as soon as possible.
In cases like these, you can have an “opt-out” agreement prepared that they can sign, relieving them of their obligations in return for leaving by a certain date (the sooner, the better). This way there is “no harm, no foul” and neither of you has to go through the drawn-out legal process.
- Make sure you have a good lease written up
There’s only so much you can do about a tenant you’ve already let in who you have to evict — but when it comes to avoiding that problem, there’s a lot you can do upfront.
I always recommend finding a good attorney to help you write up a lease. Think carefully about everything you want to go into the lease, and be sure that any new tenant understands and has read it thoroughly before signing. A well-written lease will make the eviction process easier later on since you will have it as a continual reference.
You may ask: do I need an attorney with every eviction proceeding? Not necessarily — it depends again on state/local laws. It’s always a good idea to have one in your contacts list, though, depending on what situations you may find yourself in at some point in time.
- Have a solid system in place for pre-screening tenants
Prospective tenants may be annoyed by the need for credit checks and proof of income/employment, but there’s a vital reason you need these criteria when you select a tenant.
A proof of income is not a 100% guarantee your tenant will pay the rent every time, but it’s the one of the most accurate metrics you can use. I recommend requiring that tenants earn 3x (monthly) the amount of the rent — this leaves a cushion for them with other expenses, including the unexpected.
Credit checks are not solid proof of responsibility, either, but they are still a good indicator. If your tenant has had a dip in their credit, be sure to find out the reason. Make sure they are doing their best to build their credit back up.
Finally, a list of references is always good to have. Being able to talk to an employer or former landlord should help you get a real feel for the level of responsibility in your prospective tenant.
What about “second chances”…?
“Everyone deserves a second chance” is a refrain we’ve all heard many times. You may wonder how this applies to evicting a tenant. Should you decide to give some tenants a second chance, based on their situation and your “gut feel”?
The problem with this approach is that it quickly becomes inconsistent. How do you know for sure that this person over here deserves another chance, while the other person over there does not?
The legal process of eviction usually has second chances built right into it. Typically tenants have at least a month and sometimes multiple months from the time you file for eviction until the time the law enforcement comes to escort them away. During this time, the tenant has the continual opportunity, at any point, to correct their violation.
Evictions are not a fun topic, and these days they can be downright controversial. However, remember that they are a part of the legal system, and at least in theory the laws are designed to be fair to both tenant and owner. They are a “last resort” after doing everything you can do on your part to remind, warn and implore your tenant.
Finally, having a good vetting system in place ensures that you will have to do far fewer evictions. Hold to your standards, and both your and your tenants will be happier for it.