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	<title>REAL PEOPLE INVESTING &#187; Property Management</title>
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		<title>Turnover is Expensive &#8211; Try Tenant &#8220;Rehab&#8221;</title>
		<link>http://realpeopleinvesting.com/real-estate-investing/property-management/turnover-is-expensive-try-tenant-rehab/</link>
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		<pubDate>Mon, 04 May 2009 12:55:21 +0000</pubDate>
		<dc:creator>Robb Terranova</dc:creator>
				<category><![CDATA[Property Management]]></category>
		<category><![CDATA[Landlord]]></category>
		<category><![CDATA[Real Estate Investing]]></category>
		<category><![CDATA[Tenant]]></category>

		<guid isPermaLink="false">http://realpeopleinvesting.com/?p=258</guid>
		<description><![CDATA[
Your tenant is late with the rent. Call him on the phone and you’re suddenly immersed in a soap opera script.
His sister is critically ill and he’s somehow responsible for her medical bills, he just got in a car accident and missed a lot of work, but he’ll get caught up as soon as he [...]]]></description>
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<div id="attachment_270" class="wp-caption alignleft" style="width: 282px"><img class="size-medium wp-image-270" title="caduceus2" src="http://realpeopleinvesting.com/wp-content/uploads/2009/05/caduceus2-272x300.jpg" alt="Often, your tenant is a good guy who actually feels bad about not paying you. You might try putting the tenant into &quot;rehab.&quot;" width="272" height="300" /><p class="wp-caption-text">Often, your tenant is a good guy who actually feels bad about not paying you. You might try putting the tenant into &quot;rehab.&quot;</p></div>
<p>Your tenant is late with the rent. Call him on the phone and you’re suddenly immersed in a soap opera script.</p></div>
<p>His sister is critically ill and he’s somehow responsible for her medical bills, he just got in a car accident and missed a lot of work, but he’ll get caught up as soon as he gets better.</p>
<p>The economy is bad and unemployment is through the roof, so your tenant lost his job again, but it was really because he didn&#8217;t like his boss who made him do ugly things, like…uh… work, and besides he just plain got sick of it so he quit.</p>
<p>He’s going to pay you though – the end of next week.</p>
<p>Don’t worry you’re in good company – the tenant owes the electric company, the gas company, the water department, he hasn&#8217;t made his car payment, and owes on his cell phone bill.</p>
<p>The tenant is at the bottom of his financial cycle, the part where he’s losing ground. He hates his life lately, life should be more fun, so those bills are not his priorities. More important than those, he needs beer and cigarettes, and ultimately he has to buy that new TV, then go to Vegas so he can solve all his problems by winning a bunch of cash.</p>
<p>You can kick him out, or maybe he can be salvaged. Remember, turnover is expensive too. You might try putting the tenant into “rehab.”</p>
<p>Once a tenant gets behind in the rent, you can become his &#8220;rehab doctor&#8221; helping him through this period of bad “habit.” He’s “using” (his creditors), actually working harder at dodging his bills than just getting a new job and paying them. You need to do him and yourself a favor and help him kick the “stuff.”</p>
<p>Most often, beneath it all your tenant is a good guy who actually feels bad about not paying you, especially if you’ve been really fair with him throughout your relationship.</p>
<p>He knows he’s being a jerk, and he doesn’t like that feeling. That’s the real reason why he doesn’t want to talk to you, and won’t return your calls. Believe it or not, this is your point of leverage.</p>
<p>To get him “on the wagon” you have to first get communication restarted. Make sure he knows you just want to talk to him and find out what&#8217;s going on. Be sure not to sound angry or threatening. Call him, e-mail him, and finally go to his house. Once you&#8217;ve contacted him, you have some smooth talking to do.</p>
<p>Assure your tenant you can develop a payment plan for him to get caught up on past rent. When a tenant is behind, he&#8217;ll start to worry he&#8217;ll never get caught up and begin to feel hopeless. Make sure he knows it’s OK with you if, for example, he adds a small amount to monthly rent until it is repaid, propose it and get agreement.</p>
<p>Now he feels a little better – this is the start of getting “clean.”</p>
<p>Next, it’s critical that he get no further behind because then he’ll feel so bad he has to run away from home entirely (i.e. go get another apartment). Get him to acknowledge that he has to make his next regular payment, and make him promise to do it on the due date.</p>
<p>You should then give him a chance to follow through on his promise so he feels empowered and in control of his life again, on the good path. A word of caution &#8211; if you get tempted to call him beforehand, you’ll run the risk of developing a pattern of becoming his &#8220;mother,&#8221; nagging him into paying his rent each month.</p>
<p>If he does NOT make his payment on time as promised, call him within the next business day or two and ask him if he DID (you know he didn’t, but you don’t want to corner him). You need to hear something like, “I’m doing it today.”</p>
<p>If necessary, call daily until he does, and with all this daily contact he usually will. He doesn’t want personal attention from you, believe me.</p>
<p>Congratulations, your tenant is “sober.” Now he just has to stay that way.</p>
<p>Next month, if he doesn’t make his payment on time, repeat the follow-up procedure above. If you manage all of this with patience and finesse, at some point he’ll get back in the habit of paying you rather than in the habit of not paying you.</p>

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