I get a lot of questions about tenant evictions.  I suppose it is like any job, it is the one thing that landlords have in common across all investment properties.  Here is a recent note I received:

I have a renter who’s lease expired in September so she is on a month-to-month lease currently. She has not paid November and Decembers rent. I spoke with her in November [2 weeks after she was late on her rent] and she told me she would pay and I said apparently you cannot afford to live there and maybe you should move out. Then I gave her [on November 27] an ‘unofficial” eviction letter telling her she needed to be out by today Dec 28th. Do I have the right to lock the doors tomorrow if she has all or her stuff or most of her stuff moved out??? I was in the property yesterday and there is damage to the property so I really don’t want anymore damage at this point. Just want to know what my options are.

This is a very common scenario.  Here are some thoughts about what she did right and wrong:

• This landlord did a good job of proactively getting in to speak to the tenant and assessing the situation.  Many times landlords want to quarterback from their cell phone and just leave messages.  She also succeeded by not waiting another 30 days to ask the tenant to move out.  She dealt with it in the same month.
• Despite that, I would have recommended that she proceed with an eviction instead of a letter to move out.  This landlord runs the risk of that tenant not being out by December 28.  Ultimately the tenant did move by December 28, but if she did not, the landlord would have then been forced to start the eviction process, which would have taken until mid-January before this tenant was out.  Starting the eviction on November 27, would have had this tenant gone by December 15th or so.
• In response to her question “Do I have the right to lock the doors tomorrow if she has all or her stuff or most of her stuff moved out??” That is a judgement call.  If you truly believe that the tenant has vacated the property by either giving you verbal confirmation or by removing all their stuff and leaving the keys, then yes, change the locks.  Alternatively, if there is a lot of stuff in the apartment, you may want to change the locks, post a notice on the door, and wait a week to see if the tenant returns looking for their stuff, just to be safe.

There is no right answer when dealing with evictions and non-paying tenants.  My best recommendation is to move quickly and decisively as every day they stay  is one more day without income.

Home sales in the Twin Cities for November are down almost 40% from last year.  This brings the level back to 207 and 2008 numbers when sales where around 2600 for November.  Additionally, home prices dipped by 2.5% in November. There were off by over 10% in Saint Paul from a year ago.  See the rest of the  SPAAR press release.

Everyone knows the drill, you take a rental application and you call the previous landlords to see what this person was like as a renter.  Surprisingly, despite the number of tenants I go through in a year, I rarely get those calls.  When I do, I am happy to tell the caller what I think of that tenant, good or bad.  I will answer their questions.  Do I have any concerns about being sued if I give a bad reference?

****Disclaimer:  I am not an attorney and this is not legal advice, just my opinion*******

Yes and No.

• I have recently had a couple people send me emails (and I had one guy send me something on FaceBook) asking for a referral on a tenant.  I won’t answer those questions in any written format.  I will only discuss tenants verbally.  One less risk point that an email or fax could fall into the wrong hands and it could be used as proof at a trial.
• No, I don’t expect a tenant to sue me for liable.  I am mostly just stating the facts when asked questions.  Facts are facts.  If I evicted them, then that is public info.  No hiding that fact.  If the paid late, they paid late, while not public info, it is a fact.
• I can’t imagine any tenant having the energy, money, or guts to sue.  And for what?  Are they going to sue for $1 million cause I said they always paid late?  If yes, then get in line.
• While I do recommend you give factual information, I would refrain from hearsay and your opinion as much as possible.  I would expect that those opinions are what get you in trouble.
• There was a website going around that was asking for landlords to rate tenants to help each other.  While it sounds like an awesome idea, it will be plagued with issues if it gets widely used.

Using some common sense and taking the conservative road should keep you out of the courtroom.

Maybe I am a creature of habit or maybe it is just that I stay with something unless it is broken.  I have been using QuickBooks to manage my business (both rental properties and real estate) for many years now.  I was recently asked if I had tried some of the other “rental property” software packages that are custom built for rentals.

I have looked at the other options, but a couple thoughts:

• Most of these apps were overkill for what I needed.  They track the tenant application info, repair history, and long term history of which units of yours this person lived in.  None of that is important to me as I have it in my brain or on paper.
• I just need accounts receivable for each tenant.  All other info (move-in date, phone numbers, tenant names, etc) is on lease or tenant app.  I move contact info to my phone.
• My accountant can take the QuickBooks file and upload it and then pull all the reports he needs to do my taxes.  Doubt he could use the others.
• The Quicken Property manager software (last I checked) is not compatible with regular quicken or QuickBooks.
• QuickBooks is an industry standard small business accounting software that is widely recognized and the IRS would be hard to argue with you about how it does the work.
• Lastly, many of these other software packages are as or more expensive than QuickBooks.

Alternatively, I know several investors that have 5-10 properties and still use spreadsheets.  While this may work well for someone that is highly versed in Excel, there are a few draw backs:

• I don’t know about you, but a couple times in my past when using Excel, I have copied the wrong formula and ended up with a result that was close, but not perfect.  I didn’t realize to much later that it was wrong.  Quickbooks can’t have that issue.
• While you can create reports using Excel, I can simply open Quickbooks and call up a couple dozen financial reports to show me or my mortgage guy how things are looking.
• At the first of each month, my QuickBooks automatically enters all the rents as well as any continuous bills.  Not easily done with Excel.
• It is much harder to show an auditable trail in Excel than in Quickbooks.  See this post for why you need to be set up for auditing.

It is almost the first of the year.  While the learning curve on QuickBooks is pretty steep, think about buying it and making a New Years resolution to get on board.