Too much of late fees - what to do with tenants?

Posted June 16th, 2008 by Max Chirkov
in
Photo of Max Chirkov - from Phoenix, AZ.

I rent out my house in Myrtle Beach, SC and 3 months ago a new family moved in. I was very loyal at the beginning and allowed them to pay half of the deposit 1 week later (they had some family emergency). They didn't pay it as promised, and brought only half of the rent money when the next month rent was due and asked me if I could allow them to use the deposit to pay for that month. I denied their request and told them that this money will go toward the deposit, so they still owed me the rent money.

They've been late on the rent money for a month and been telling me different stories and every time the money would be on Friday, or Monday... but never were.

I have a friend who was helping me out with the house for over 1.5 years now, but he is not working for management company, so there was not much he could do besides calling them and leaving notes in the door.

After I got fed up with my tenant's stories I hired a management company. They delivered a warning notice last week that tenants have to pay this month rent by Friday, otherwise on Monday the management company will file an eviction notice. So, the tenants called and told them that they will drop off the money monday Morning.

Now, the main question:

The tenants owe me $2,100 in late fees. If they pay the rent, I would assume they wouldn't play games anymore since the management company is pretty serious about evictions. Should I reduce the late fees in order to keep them in the house and at the same time still teach them a lesson? I realize that $2,100 is a great sum of money in late fees, especially when you pay only $1,000/mo rent.... at the same time I don't want to be a "nice guy" any more.

What do you think?

P.S. I'm new to renting, so I would appreciate any advice.

June 18th, 2008
glenn -
1
point
You should ask the following question - if you go after the $2,100 in late fees will you lose the tenant? If you lose the tenant how long will the house be vacant before another tenant will occupy the property? If the house is vacant for 2 months, you will have a $2,000 loss. You might consider a promissory note for the total amount or negotiate a lower late fee with payment in full.
June 18th, 2008
Post Author: Max Chirkov - Phoenix, AZ
Photo of Max Chirkov.
0
points
Thank you Glenn! Unfortunately tenants never showed up with the payment, even though they called in. The management company was supposed to file an eviction yesterday.
June 18th, 2008
glenn -
1
point
You might to check with the management company to determine if they report deficiencies to credit bureaus or if they refer accounts to a collection agent. You would also have to check to determine how the lease was written - in some cases you can't do the above while in other cases you can pursue. The management company should be able to guide you regarding this.
July 11th, 2008
Post Author: Max Chirkov - Phoenix, AZ
Photo of Max Chirkov.
0
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Yes, the management company reports deficiencies to credit bureaus.
July 11th, 2008
Post Author: Max Chirkov - Phoenix, AZ
Photo of Max Chirkov.
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Well, the first eviction notices was served - the tenants decided to drag their tail and keep wasting my money that I don't have, so they applied for a court hearing, which was scheduled for July 30.

Some one told me that in some states if tenants declare bankruptcy, the eviction stops. I asked my management company about this and they said they never heard about it. While this law may not exist in South Carolina, it doesn't give me much confidence that I won't get in any further trouble with the tenants.

Does anyone know what's the worse thing I can expect to come out from this hearing? My management company assures me that the tenants will be evicted after the hearing.

July 31st, 2008
Post Author: Max Chirkov - Phoenix, AZ
Photo of Max Chirkov.
0
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Update: The court hearing was yesterday - judge gave my tenants time till Sunday to move out, otherwise, he said, they will go to jail. I only hope that they leave my house in a good condition and I will be able to rent it again very soon.
August 5th, 2008
Post Author: Max Chirkov - Phoenix, AZ
Photo of Max Chirkov.
0
points
Finally, $2K later in loss + stolen chandelier and my tenants are out. I'm happy this nightmare is over, still need to do some cleaning and touch-ups... hopefully I can get some nice people to rent to this time.
April 7th, 2009
glenn -
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I see you got the tenants out - did you find some nice people to rent the home this time around?
April 15th, 2009
Post Author: Max Chirkov - Phoenix, AZ
Photo of Max Chirkov.
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Sorry I missed your question, Glenn. Yes, I found new tenants, but nothing is perfect - in the last 6 months I received 14 violation tickets from the HOA each assessed at $50. My HOA is nightmare. There is fault of the tenants, but mostly, it seems to me, the HOA is trying hard to make easy money. Tenants paid half, and I'm still waiting for the half of the fines to be paid me back. At least they are on time with their rent.
April 16th, 2009
glenn -
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points
No problem Max. Two things - 1) some HOA's are hard pressed to keep a positive cash flow, due to people not paying their HOA, especially when they are a potential short sale. Are there many potential short sales in the neighborhood? 2) Maybe the next time you should increase the rent to cover the HOA fees and pay the fees yourself and avoid the hassles??? Hope things start to iron out for you.
April 21st, 2009
Post Author: Max Chirkov - Phoenix, AZ
Photo of Max Chirkov.
0
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There are not many short sales in the community, Glenn. From what I've seen so far, there is one or two short sales listed and I saw only one foreclosure sold in January. I'm considering selling my house short as well... this has been too much trouble for me and I'm loosing money every month for the last 2.5 years... plus, with the current market, it doesn't look like I can break even within the next 2-3 years... it just doesn't make sense renting 1 bedroom apartment in Phoenix, while own a 3 bedroom house in SC. As far as increasing the rent - I'm already at the market price and raising it doesn't make much sense at present time.
April 21st, 2009
glenn -
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Max, it sounds like you could do a short sale, because the job relocation and the financial drain it is causing you. It is not like you were a real estate investor looking for the quick flip nor looking to attempt to make money from an investment. I am so sorry hear that you are in this position. But, I am sure that Matt will give you some guidance in this matter.
April 6th, 2009
lisa
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Yes, it is true if they file bankruptcy they can ask for their eviction to be delayed. I filed bankruptcy myself in Charleston and it is on my contract. If i am facing an eviction to let my attorney know right away so they can get a stay on the eviction. Your management company should know this or maybe you need a new company.

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