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Another Partial Payment..

February 18, 2013

I had my first partial payment of 2013 already. On Friday, I picked up $200 that was originally due the first of this month. I really don’t like partial payments, but sometimes it’s just part of the business.

past due1

These partial payment issues are tough and you just don’t find much on this topic in all of the RE books. I am always firm with these tenants and give them my usual speech. It more or less includes the following elements:

  • I talk to them about the danger of falling behind. You need to tell your tenants that after they make that second payment (usually after they get paid again in 2 weeks) the full rent for the next month comes around very quickly. I reminded my tenant that February is a short month, so this makes it even tougher.
  • I then listen to their explanation. In this instance my tenant just got fewer hours at work and her husband hurt his back on his job. She assured me her work schedule was back and she was getting some overtime this week. Her husband was back on his feet and was already working again. You need to determine quickly if they have fallen off the cliff or just stumbled on a crack in the sidewalk.
  • Get everything in writing. I like to write receipts that show what they paid, what they still owe, when they will pay it, what are the consequences if they don’t, etc. I wrote about this in another post here. Getting this history in writing just formalizes the conversation and lets them know how serious you take this issue. Of course it also eliminates any “I already paid you this month” or “ I said I was just going to pay the rest next month” or any other “confusion”. This is critical for your cash payers.
  • Don’t waste your breathe on converting them to savers.  I would not recommend giving them the ‘Suze Orman’ treatment. The concept of a 6 month emergency fund does not compute with my Class C tenants. It just creates this relational issue between you and the tenant that will not improve the situation.
  • I tell them the roof over their head is the most important thing. A bit of a scare tactic, but I remind them shelter for their family should be the #1 priority. I recommend they late pay their electric or water bill before their landlord. I tell them my late fees are more expensive than the utility company or other obligations and if they are not then perhaps I need to alter them. This is about as rough as I get and I save this one for last.

In the end, this particular tenant had a good story. They paid $625 on time and only delayed $200. If it was the reverse, I would have been more concerned. Other than the partial payment, they have been good tenants. It’s just one of those areas of landlording that needs to be handled firm yet delicately at the same time. I feel over time you develop this ability to look deep into their eyes, watch their body language and you can get a sense of truthfulness and sincerity from them.

 Related Post:

How to handle partial payments from a tenant

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From → Landlord

2 Comments
  1. Richard permalink

    Am just curious if I can send u an email. Had a couple of questions. You may be able to use them to give you some ideas for future blog posts. Love your blog as it provides usable real life knowledge for buy and hold single family home real estate investors. Thanks,
    Richard
    PS: feel free to delete this comment from your blog as it doesn’t speak to this posts topic

  2. Richard,

    You can send me an email at landlordinvestor@gmail.com

    I am always looking for new content ideas.

    Thanks.

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