Evictions are a necessary part of being a landlord. Depending where your investment property is located, you may do them once every 5 years or once every 5 months. Ultimately, though, I see an eviction as the last resort. At the same time, I can’t allow my tenants to push me around and simply never pay me. But unfortunately, 95% of my evictions result in me collecting ZERO dollars from the tenants. I am left with a big bad debt right off.

Two weeks ago while I was down at Hennepin County, filing another eviction (5th one for 2008-not a good year), I read about doing Pre-Filing Mediation. This is a procedure in which a neutral third party, at the request of the parties to a dispute, assists them in reaching a mutually satisfactory settlement. In mediation, both parties need to agree to meet with each other and the mediator. The mediator is not a judge and will not decide the solution, he is more like a facilitator to help the parties find a agreeable solution.

3 possible outcomes to pre eviction mediation:

1. An agreement is reached and signed by both parties, no court case is filed, no fees are paid, and no record of this action exists. Good for everyone.
2. The parties can not agree during the mediation session, they are served right then to appear in court in 7 days. This case will be one of the first ones heard by the judge in Hennepin County eviction court.
3. If one of the parties is not willing to use mediation, the case is referred back to housing court and the eviction will proceed as normal. This case will be one of the first ones heard by the judge as a reward for attempting mediation.

Benefits to Mediation for the Landlord:

• No filing fees if the case is settled
• Priority status on the Hennepin County Eviction Court Calendar if the case does not settle

Benefits to the Tenants:

• If the case is settled, there is no court record of an eviction action being filed against the tenant.

In my case, I decided that the tenants just needed an authority to wake them up to the fact that they are not living in Mom & Dad’s house any longer. They have signed a lease and they have obligations to pay. Although we did not go to mediation, the letter from the mediator quickly motivated them to work out a payment plan with me. As of now, they are on their way to paying off their back rent!

Although I may not use this in every situation, I think mediation can be a softer approach that may get you your past due rent paid, instead of just clearing out your apartment.

Have you always wanted to own investment properties, but never knew where to start?

John asked a great question to my post, “Give me your investment property questions“:

“I recently had my tenant go to the county for a one time crisis assistant payment to keep from getting evicted. If you wanted to give whatever you know about that or the process it might be interesting. Seemed like a one time thing Anoka County does and there was another group that was a non profit that would do the same for adults.”

Owning investment property in certain areas, I do run across this from time to time. Essentially, there are multiple sources that a tenant can go to and get assistance to pay damage deposits, past due rent, and such. These sources are both governmental and from non-profits.

For past due rent, the tenant will simply need a statement from you showing the past due amount. They will take that into the agency and within a couple days, they will mail you (the landlord) a check.

When I have a prospective tenant say they are getting assistance for the damage deposit or first month’s rent, I require a confirmation call or letter from the assisting agency. This is similar to confirming rental or employment history that you should be doing during your tenant screening process.

Sadly, many tenants have figured out how to work the system and they literally have the yearly anniversary marked on their calendar. I have a few tenants that will short pay their rent and their utilities bills starting about 3 months prior to their anniversary of receive help last year. Then just before I file a MN eviction on them and their lights are turned off by the utility company, they run in to the agency begging for money. Since it has been at least 12 months since their last assistance, the agency pays the bills. I have seen the assistance be a entire month’s rent and $300-400 in utility bills.

Have you always wanted to buy investment property, but never knew where to start? Don’t Wait! Get Started now.

Real Estate Investing 201 Seminar – Wednesday, June 25, 6:30-8:00 pm

For a real estate investor, finding good tenants is almost as important as finding good properties. Having good tenants makes the property management part of real estate investing easy. Having bad tenants can make you frustrated and leave you with a hole in your bank account. We will be discussing how to screen tenants. What to look for on their credit report, how to confirm they don’t have evictions or criminal records from other states, all while staying within the credit information laws.

Unfortunately, every real estate investor will need to do an eviction some time in their career. The hardest part of an eviction is simply making a decision to do it. We will discuss when it is time to file the eviction and how the legal process works. Also, we will show you how you can streamline the work, minimize your time involvement, and insure it is done properly so that you can take your property back as soon as possible.

This seminar is geared for both the newer investor or the investor that feels like they need some help in these areas. And much more! Future seminar dates are: Aug 26, Oct 28

Send an email to scott@Ficekinvestments.com or call at 612-281-5419 to register.

I have been beating myself up lately over my bad tenants. In the last 30 days, I have had to evict one tenant for non-payment of rent after only 6 months, ask another to leave at the end of the month after repeated police calls (and probably not collect their past due rent), and threaten another with eviction because of non-payment. Plus I have another one or two that are on the edge of eviction for non-payment.

If you remember back to January, I had made an Investment Property New Year’s Resolution to reduce my bad debt expenses. Unfortunately, like my personal goal to lose 10 pounds, I am failing. I decided to do some research and pulled all of my past and present tenant files and tried to find some common theme amongst all the “bad tenants”. I realized that while many of the problems are with the tenants, it appears I am the one enabling their bad behavior. Here is what I found.

If it walks like a duck and sounds like a duck, it is probably a duck.
While I rarely see a tenant that has a great credit report, the tenants that have problems paying their rent on-time (or ever) have typically shown a history of financial and/or rental problems on their background checks. The ones that have several items in collections especially seem to have issues with rent. I guess paying late and/or not paying a bill is in some ways like criminal activity or drugs, once you get past your first time, it just gets easier each subsequent time to not think about the consequences.

Bad tenants apply here
Over the last 30 days, I have been in full leasing mode as many of my leases expire either May 31 or June 30. Just like someone that leaves one abusive relationship and falls into another abusive relationship (often because they don’t feel like they can demand better), I found that I keep wanting to make exceptions for prospective tenants that have bad traits (I am in no way minimizing the plight of someone in an abusive relationship, I am just making a point). Although it is easy to deny the applicant that lies to you about the recent eviction, it is tough to say no to a single mom who is working 2 jobs but only takes home about $980 per month and wants to rent your $750 per month apartment. Can she and her child live on only $230 per month, even if she claims it is not a problem?

Lose a month of rent or have bad debt because of an eviction-which is worse?
Although I am not a fan of having a vacant rental unit and losing a month’s worth of rent, I believe that is an easier one time event than having to constantly call and hunt down your tenant for your rent. Plus, when you have a tenant that is bad at paying, each month you are also wondering if you are going to see the rent or if this will be the month you need to evict.

Realizing and admitting you have a problem is the first step in solving it. I am committed to demanding better tenants. Here are a couple things I am going to do differently:

• Never book an apartment showing without spending a couple extra minutes on the phone and asking them about their income, rental background, and other details. I think I have been quick to just set up an appointment because I am in a hurry when they catch me on my phone or because I just want to get bodies through the unit.
• If they have a history of bills in collection, run the other way.
• Ask for additional damage deposit if I feel like taking a risk on the person.
• Sticking to the rule that the prospective tenant must make at least 3 times the rent in documented gross income per month.
• Commit to doing a more thorough background check via phone calls to previous landlords and employers.
• Not accepting incomplete tenant applications or missing data.

I have been successful up until this point, but I want to improve my business and strengthen my cash flow by reducing my non-paying tenants. I also want to reduce my work and stress load by having tenants that always pay on time.

I have not been advertising for an open apartment for about 30 days. Despite this, I have received 3 calls in the last 2 days from people looking for apartments. These prospective tenants are calling me because one of my current (and even former) tenants recommended me. They say that I am a “good” landlord.

Do not mistake “good” for easy! I would consider myself to be firm and direct, but also courteous, respectful, responsive, and friendly. I treat most of my tenants like customers. Consequently, my tenants are happy and most often they are also respectful, responsive, and respectful back.

Additionally, keeping my investment properties in good condition and well maintained has also given me the reputation as a good landlord. But, all of those nice apartments don’t do it alone, I would say the top keys to having happy tenants is that I answer the phone, treat them with respect, and follow through on what I say I am going to do.

These are simple things, but not many landlords do them. I guess it just comes naturally for me (maybe it is that old saying: “treat others like you would want to be treated”). It sure makes investment real estate easier when your tenants are out there selling you as a landlord!

Have you always wanted to buy investment properties, but never knew where to start? Don’t Wait! Get Started now.

In my posts Tenant Applications-Red Flags and Tenant Applications-Part 2, I write several times about the different items that I am looking for when I meet and then process a tenant application. I have heard of more than one seasoned real estate investor actually developing a points based system for tenant screening, but I have not seen one until now.

Connie Brzowski guest writes an excellent post, on BiggerPockets Blog, outlining a tenant screening checklist/scoring system. It is simple, but effective as it screens each tenant by the same standards. There is very little room for someone to claim discrimination. I would argue that it also keeps you and I from bending or breaking our own rules because the prospective tenant was nice, had a great sob story, or appears to be well intentioned.

Check out tenant screening criteria.

Don’t Wait! Get Started now.