Preparing for Error

There are times when I make dumb mistakes in the real estate game. I'll rent to idiots, I'll forget to have them sign something, whatever. While I continue to learn how to be a better landlord and do better business, it's always good to cover my bets.

Property Chi's downstairs tenant decided to pay the rent-- just $600 of the $800. She knew she owed $800, but decided to be a douche and send a part of what was owed, in hopes that paying a majority of the money would appease me. In the past, it would have. I'd call and ask what happened to the rent, as if I didn't know. Then I'd try to "work things out" with them. But times have changed.

I don't know whether it was my distrust for tenants with no job or what, but I completely forgot that I made her sign a 3 month lease. Usually, I have a tenant sign a month to month lease, so that they can leave whenever they want or I can ask them to leave whenever they want. The problem with the latter is that, in court, judges like to see an expiring lease because the tenant can't say that there is any other reason that I want them to leave. It IS my legal right, but I've learned fairly quickly that it's sometimes not about rights, but rather about how something looks when it comes to judges.

Anyway, I had her sign the 3-month lease in February. That means her lease expires in April. All I have to do is send a letter stating that the lease has expired and we are not renewing the lease. Simple. This means that, should she not leave by the end of April, I can take her to court and there will be no talk of money. It's the same concept as the 30 day notice, except that there doesn't need to be a reason.

The only problem is that I'll lose money. I know she won't pay for the month of April because she seems to be a grimy bitch. I can't imagine saying "Hey, I'm throwing you out but you still have to pay rent for the month that you're leaving" and she goes "SURE! I'll pay you despite the fact that I'm being thrown out like a piece of trash!" The worst thing is that, even if I took her to court for the money, I wouldn't get it anyway! What am I gonna do, sue the state for rent?! So that's $800 down the drain, but much better than suing for rent and getting code enforcement involved and all that shit. No matter what, I'm going to pay for moving in the wrong kind of tenant.

My only chance of recouping some of the losses is by trying and get the remaining $200 for the rest of this month. If I can get that money by the end of this week, then I won't feel April's $800 hit too much. But, after this, NO MORE ASSISTANCE TENANTS!!! And I think I'm adding the 3-month lease terms to all my future tenants, as an extension of the Matt Philly System (MPS). I know I'm going to make mistakes in this business. It happens. The key is to understand that and try to minimize the damage from the mistake. I have to make sure that, no matter what mistake I make, I have a fail safe that makes the mistake not big enough to sink me.