Collecting past due

I realize I may be valuing being a pain in the butt over good business sense, but I am going after some tenants for past due rent, $600. The lawyer and court costs will add $467 which they would be responsible for, if they end up paying anything. Honestly it is a toss up between using a lawyer and locating some thugs to break legs, but I thought, heck, let’s try the legal route first.My thought for in between a lawyer and a thug would be using a collection agency. I recently read an article about “unscrupulous” collection agencies and thought they would be the ones to use. Kidding… sort of. Does anyone have any more experience in using a collection agency? This park is in a the most gossipy small town area and they will certainly complain about their mean landlady which would be good for business. I would be happy to never waste my time with a rental application from any of their peers. I only have this 1 account to pursue and don’t plan on any others so I’m not certain I could even get an agency to take it on. Any thoughts? Guess I am trying to say it is worth losing or spending $1000-1500 to me to be a PITA. 

We do file small claims against tenants that steal from us.  We figure it is the right thing to do for two reasons:1. We are warn future landlords about what sort of person they are, and 2. We do actually collect about 10% of the judgementsYou’ll need to get a judgement through the court system first.  With that, you can then present it to a collections agency for them to go after the deadbeat.  You should do this quickly.  Your odds of collecting from someone who is a small-time criminal like this decline dramatically with every passing month.  We’ve collected best when tenants are getting a mortgage on a site-built home, and the small claims case blocks that.  The ex-tenant then call us the next day with a cashier’s check and we get paid.  But that is rare.  Most of the tenants who will steal from us are not creditworthy and will just be moving down the road or out of state and you’ll never be able to get them to pay what the courts say they owe.Good luck,-jl-

I know this sounds radical, but you might also contemplate paying the tenant $200 to be out by this weekend. Here’s how the numbers work out with the two options:Current amount owed $600. Attorney’s fees and court costs $467. Home is vacant another month $500.  TOTAL $1,567.Current amount owed $600. Payment to tenant $200 to get out right now. Home vacant one more week $125.  TOTAL $925You save around $642 by paying them to leave.Just something to throw out there. Many operators have started “paying” people to leave as opposed to the court route in certain cases.

Frank,Do you ever take a more expensive route in order to stand on principal or do you evaluate every situation by the numbers?  Also, does adopting a “payoff policy” encourage future residents to take a swing at you to see if any money drops out or has this not been your experience?I like the idea crunching the numbers to develop the best course of action, but not if it would turn me into the park’s pinata. 

Most of the time, like Jefferson alludes to, you don’t get your money, it’s the same with SFR’s. However, paying someone to ‘just go away’ is a common practice in business. If my park were full, there would be no question about it, pay the rascal then call the next person on the list. Shoot, I’d even hire a day laborer to help them move if it added to the expediency of getting him out. Meanwhile, I’d have lots of thoughts about hiring a thug to convince him to leave within the hour. But, I suppose the right thing to do would be to consider the tenant’s circumstances and attitude and make a decision largely based on that. Pay them if circumstances are beyond their control or sue them if they are belligerent mismanagers of money. Loricooper, please update us as to the final resolution so that we can learn. I apologize if that sounds like I want to benefit from your misfortune. Thanks!

Jim Allen

Paying someone to leave is not exactly a profitable concept for them. They pay you a deposit and first and last month’s rent (or some other sum) and they are not making money by being evicted under this scenario (the amount you’re paying them is probably more than offset by the deposit). So people are not exactly going to line up to get paid $200 to lose all their up-front money and go homeless. What’s really at issue here is the failure of the U.S. court system. Because of the time it takes to go to court (up to a year in CA) and the cost of an attorney, and the unpredictability of the court’s decision, many people are turning to arbitration. No different here. Basically you’re “self-arbitrating” a solution for both parties without having the courts involved. It’s not a lack of principal, just a new attack plan in light of a flawed legal system.If you file the eviction and the tenant runs off, that’s great. Most of them do. But if they don’t, it’s often a whole lot cheaper to pay them to leave and be done with it.On the matter of principal on evictions, I will never forget the story of the park owner who was so mad at the tenant that he felt compelled to stop his car (when he saw the tenant) and yell at him for letting him down as a landlord, and letting his family down as a failure to provide a roof over their heads. He drove home feeling like he’d exacted his pound of flesh, only to get arrested hours later when the tenant lied and called 911 and said the owner had tried to hit him. Although it was later dropped, the owner had to put up with a mug-shot, bail, and having that hang over his head for over a year. So much for principal in light of the U.S. legal system and the quality of some tenants.

well said

I’ve tried a couple of times to pay someone to leave without much luck. In North Carolina it takes almost 30 days to get someone out (add two weeks if they are savvy enough to force us to file for a Writ of Possession because they wouldn’t leave after the courts ordered them out). Has anyone actually had decent luck offering to pay tenants to leave, and if so, how much do you pay? Frank mentioned $200, but at least in my area, I don’t think that’s enough (might be close, though).Regarding collections, we file with a collections agency if they owe money to us, not so much because we ever get anything, but because it posts notice to future landlords as to their likelihood of getting stiffed at some point by the tenant. The only time we don’t file is if the amount owed was not significant and it was clear that they fell into a bad situation (e.g., job loss) and wanted to pay, but couldn’t.

Oh no–actually I have the tenants out already. They owed me money, they inherited a house, and their trailer had a small trash fire on the last day of school. Figure that one out.They gave me their trailer for part of their past due rent. That’s why on one hand, they aren’t costing me anymore at this point and a small part of me would just let it go. But on the other hand, why do they get to walk off scott free? They DEFINITELY fall under belligerent mis-managers of money. They are locals here and know a lot of people in the theoretical demographic for my park. I’m saying the money spent on the lawyer is an investment in advertising for my park and a warning to other landlords. They own a house now but I know how they manage their money, it won’t be long before they are renting again. I wrote earlier this summer I had 4 iffy tenants. Two are out, 1 is paying, and the 4th has made some bad decisions in his life for sure, but he hustles and tries. The other night, I offered him cash + forgive past due in exchange for the title to his home. I need to put a deadline on that and apply pressure. 

Thank you for the update and sharing. Great thread!

Thanks for the update, loricooper. An english teacher friend once told me that at the beginning of every school year she is real tough on all the kids, holding them to the letter of the law, as it were, for a period of 3 weeks. After that, she eases up. So, it seems to me the same would be true for taking over or buying a park except that the time period would want to be a lot longer.
Frank makes a good point above, which I’ll restate here, if you let your emotions and thoughts get control what you do you will likely pay a price for it. So, if you’re in business to make money then focus on that and forget about the BS, the bad stuff, that goes along with it. As for the pound of flesh, you can only have it and not the blood (as I recall from the Merchant of Venice).
Jim Allen

OK, now that I know the facts I would advise you to back off and not push them anymore. When you are dealing with desperate and non-intelligent people, you have to always worry about what the odds are of that one person being truly nuts. When somebody approaches me on the street begging for a dollar, I always give them one to distract them so I can physically get away as fast as possible – because you never know if that person might stab you, shoot you, bite you, punch you (fill in the blank). So I’m basically spending $1 to not have to worry about how crazy they are. That’s a really good business transaction – really cheap insurance in my opinion. This situation is no different, You might be dealing with someone so nuts that your pressing on them gets $1,000 of tires slashed, or worse. So just let them go – don’t poke the sleeping dog.

LoriCooper:  I think Frank has it right.  In my lifetime I have only had one negative landlord/tenent relationship.  I felt I was ill used and without recourse to recoup my losses.  I was angry and my thoughts would often wander a dark path.
Exactly two things stayed my wrath:

  1. I watch Star Trek… a lot.  One episode focuses entirely on revenge and the lesson of the show is that there is no profit in it.  Once I acceeded to myself that any negative action taken on my part would net me exactly 0 profit I turned to simply moving on and putting the whole deal behind me.
  2. So long as I did not initiate anything, I would be done with this person forever.
    I think you would do well to not underestimate the value of this second point.  You mentioned that your sour-apple is already belligerant.  If you did not part on good terms no doubt this person’s mind is already wandering dark paths of its own… and not everybody watches as much Star Trek as I do.
    While the story is not directly analogous since, in my case I feel anyone acquanted with the facts of the case would agree that I was legitamately wronged while the chances are that in your case you are the one to suffer the loss, it is important to note that the facts of the case do not matter.  If they FEEL wronged then that’s enough to cause you considerable trouble.  Ask yourself:  “What have they got to lose?” Then ask, "What have I got to lose?"
    Probably not worth it.
    Frank:  Be careful when you take out your dollar.  My dad has lived an interesting life and one of his stories is the pan-handler who asked him for some spare change.  When Dad put his hands in his pockets the bum was on him like stink on a monkey.  Dad is ex-military and made a good account of himself, but did not escape without injury.  People with nothing to lose are scary!

In Oklahoma had a tenant 45 days late filled for eviction and did not leave as per court timing of 4 days. We called the sheriff and he knocked on the home owner door and since he did not come to the door walked in and announced to the owner in the bathtub he had 15 minutes to take what he needed and the sheriff waited till he left his home and the sheriff said if he returned to the property he would be arrested and spending time in jail. One more reasons to love Ok. There are some states that owning a park the judicial system will be for the tenant and when you lose rent that is a cost of doing business that is always in your mind if you need to go to court. Yes the homeowner LOST HIS HOME!.

Actually I was using belligerent mismanager of money as a quote from someone else earlier… it’s not quite the traditional use of the word belligerent but using it to modify how they mismanage money… Aggressively waste it. Smoking/drinking/groceries from the gas station. But they aren’t mean people and aggressive action toward me or my property would require them to get off their duffs. Not going to happen.

Anyway September 1 they were supposed to pay. On the 19th I got a text begging me to let them pay on the 26th when they would be loaned $ from a relative. On the 25th, it needed to wait until Tuesday the 30th when relative’s $ hit the bank account… Last night… I got my money and she was as sweet as pie about it.

I have one more tenant who is expects to get past due rent sent to me from a community program. Then I will be at 100% collections for my entire (2 year) career as a trailer park landlord. I think that’s a pretty decent record especially given that everyone thinks I’m such a softie. :smiley:

Lori Cooper, a big ‘Congratulations’ to you on your 100% Collections for your Entire Career as a Mobile Home Landlord!  Way to go!We wish you the very best!