By Jeffery S. Watson
I’m dictating this while on my way to meet with a contractor and a tenant to collect 3 months of unpaid rent before having lunch with my oldest son. The tenant had stopped paying rent due to a COVID illness and domestic issues. When I commented in an online forum that a tenant of mine was this far behind in her rent but was current on her $ 625 a month car payment, it was interesting to see the reactions my comment provoked. Many said, “Evict her!” or “Throw her out!” or “Ask her if she wants to sleep in her car!”
I thought about those comments and realized that the old landlord Jeff would have done just that and would have been left with 3-4 months of unpaid back rent and a beat-up house. Instead, using some property management techniques I learned from my friend David Tilney and his lovely wife Mary (more about them in a coming email), I was able to coach my local property manager and the tenant back into line. Here are a couple of the tips I learned from David and Mary.
Be firm, but the tenant has to know that what they are saying to you is being heard, received and understood. As best you can, you need to show sympathy with their situation so you can then work with them on devising a plan for them to take responsibility for getting caught up on their rent. If they will work that plan, everything will be OK.
That is exactly what this tenant of mine did. She found resources, switched to a better paying job, and consistently communicated with me and my property manager. Adjustments were made, and payments were collected. By the time you read this email, not only will the tenant be caught up on rent for June, July and August, but she will have also paid part of September’s rent.
When reflecting on my long career as a landlord, I shake my head in frustration at myself over how much money I lost because I failed to learn how to manage properties as I should have. I’m convinced that if I had put a better property management system in place, beginning with good, quality properties being managed correctly, had screened tenants properly, and had consistently communicated with tenants to make sure they felt heard and respected, I could have avoided some of the hassle, headache and loss that I sustained during the 2007-2012 housing meltdown. I ended up selling properties at a significant loss because I couldn’t profitably manage them.
Over time, I recognized that property management was a weak element in my game. I stepped it up, attended classes taught by David and Mary Tilney on multiple occasions, and it has made a significant difference in both my bottom line and in my net worth.
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Jeffery S. Watson is an attorney who has had an active trial and hearing practice for more than 25 years. As a contingent fee trial lawyer, he has a unique perspective on investing and wealth protection. He has tried over 20 civil jury trials and has handled thousands of contested hearings. Jeff has changed the law in Ohio four times via litigation. Read more of his viewpoints at WatsonInvested.com.