Pay or quit

Pay or quit

Rent is due on the first and late after the fifth for most rental properties. See if this scenario sounds familiar.

 

It is 5p.m. on the fifth and you get a frantic call from a tenant. They’re giving you every reason under the sun for paying late.

 

They say things like, “Please, please give me until next Friday.”

 

Next Friday comes. No payment. Before you know it, two months have passed, and you still haven’t been paid.

 

Can you relate? Most of us can. Contrary to popular belief, landlords are human. That’s the reason we’ve all been in this situation.

 

Waiting to see if your tenant does what they promised can easily get you into trouble. So what should you do? Start the ball rolling as soon as possible.

 

On the sixth of each month, we notify anyone who has not paid. They are told to pay what they owe or move from the property. This is called a pay-or-quit letter and looks like this:

 

Dear Mr. and Mrs. Tenant,

 

The purpose of the letter is to let you know that we did not receive your rental payment this month. This means you are in violation of your residential lease contract.

 

Your account is now delinquent in the amount of $550.00 in unpaid rent. (This sum includes your late monthly payment of $500.00 plus a $50.00 late fee.)

 

If we have not received your full delinquent payment in certified funds by 5p.m. on the ninth, you will need to move from the property. Otherwise, we will have no choice but to begin immediate eviction proceedings.

 

Please know that it is not our wish to evict. Eviction is a lose-lose proposition for both of us.  You will have an eviction on your permanent record, and we will have to deal with an unexpected vacancy. This is why we hope you take immediate steps to remedy this problem. 

 

You need to get this letter to the tenant directly. Most people either hand-deliver the letter or send by certify mail. We also email and text the letter to our tenants.

 

Georgia law states you must notify them to pay or quit, but it doesn’t tell you how to do it. By texting and emailing the letter, we get a faster response. Plus, our communications are time-stamped and dated. (This is valuable if you ever go to court.)

 

The letter should let the tenant know how much they need to pay in order to bring their account current. It should also let them know how long they have to do so. Georgia has no law that states how long a tenant has to bring their account current, but the general practice is three days.

 

We also like to pump them up a little to let them know that we do not want to evict them. The average vacancy costs us $3,000. That is a BUNCH of money! Look at this way: If the house goes vacant and your cash flow is $300 a month, your next 10 months of income have already been spent.

 

This is why we try hard to work through things with our tenants.

 

I have heard it said, “Be easy on people, but hard on the problem.”

 

So, the whole time you’re working on the money problem, make sure you have started the eviction process in case it doesn’t work out.

 

We had to send out two pay-or-quit letters this month. We were in contact with both tenants before the sixth; but, we let them know we would have to notify them with this letter when the time came.

 

Results: as of the ninth, one person paid with no problems, and we are still negotiating with the other. However, the clock is ticking. On day 10, we file. Remember, every moment that passes can cost you big-time.

 

Joe and Ashley English invest in real estate in Northwest Georgia. For more information or to ask a question, go to www.cashflowwithjoe.com

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2 comments

  1. Thank you for the article. My son and daughter in law are both landlords. They were able to keep their first home which are a small cluster home in a prime location in Kennesaw. My question to you is my daughter in law’s last tenant left her for $900 in back rent and also violated the lease by smoking and having pets in the property. Is the only recourse to go to small claims court or pursue a collection agency?
    Another question, have you ever visited a future tenant’s current residence to see the condition of their living habits, or make that a condition on the lease to visit their current residents? Thank you very much,
    David Dye

    1. Great Questions David,
      We schedule an in home interview with everyone that makes it to our final stage of the application process. This allows us to see the condition of their house as well as how they interact in their element. This is huge! Whatever their house looks like today is what your house will look like in about 2 months after you rent to them. Check out this other post on that subject: http://cashflowwithjoe.com/choosing-a-tenant

      As far as recourse, I need to ask a few questions. Did your daughter file a dispossessory? Next, did she have it personally served? By having the dispossessory personally served, by either the sheriffs office or a process server, you have the the ability to garnish wages once you win your judgement.

      Give me a call if you would like to talk about it further.

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