One of the questions we are asked most frequently is – what happens if my tenant doesn’t pay rent? This is an understandable concern for landlords, and today we’re sharing some ideas about how a property manager will handle a nonpaying tenant.
Treat Your Property as a Business
When you are a landlord or you own investment property, you need to treat it as a business. So, make sure you have two or three months of reserves in the bank in case your tenant doesn’t pay on time. You’ll still have the resources available to meet your financial obligations.
Property Management Chicagoland: Communication
The rent is due on the first and considered late after the fifth. So, on the sixth we take a look at which tenants have not paid, and we begin communicating with the tenant. A good property manager will call, email, or text to find out if this lack of payment is a simple oversight or if there’s something more serious going on. Maintain an open line of communication. If the tenant has a one-time occurrence and needs an extension, make sure you follow up. When your tenant promises to pay on the tenth, you want to make sure the money comes in on the tenth.
Filing a Five Day Notice
If the tenant doesn’t respond or says a payment will be made, but it never shows up, you want to issue a Five Day Notice. This starts the eviction process. It states they have five days to pay their rent or vacate the property. If the tenant has not made their payment after the five day period, we suggest turning the file over to an eviction attorney. Some property managers have their own onsite counsel, and others use specialized attorneys in their own area.
Eviction in our area takes 45 to 60 days depending on jurisdiction and the court system. That’s where the reserve account helps. If the tenant ultimately needs to be evicted, you won’t have rental income, and you’ll still need to cover your expenses.