From the last decade of collecting monthly payments from my tenant-buyers I have come to a great generalization; once a tenant or tenant-buyer asks for a repayment plan, more times than not there is a finite-time before the tenant-buyer will stop paying completely and be forced to move away. I will say this another way, “Oftentimes a precursor to a tenant-buyer having financial problems and therefore leaving (due to non-payment) is the tenant-buyer asking to delay a payment “this month” and request they pay the defaulted amount over the next “X” number of months.”
Obviously, the ratio of tenant-buyers leaving versus remaining in a home after a repayment plan will vary from investor to investor. Factors that will most likely affect your ratio are: your tenant screening process, the types of homes being invested in (low income vs. higher income homes), and the tenant-buyers’ current ability to repay the defaulted amount. Below are some ways to get paid back if you find yourself with tenants that wish to stay, but cannot pay.
28-Day Re-Payment Plan: Either over the phone or in-person set an executable and REALISTIC action plan for the next 4 weeks. Over these next weeks the tenant-buyers must pay you, a partial amount of the balance owed until the debt is paid in full. This method only works if the tenants have the financial means to repay what is behind.
Trade: In the recent and distant past I have accepted cars, jet-skis, and services (keep your thoughts clean) in exchange for past due monies owed and partial future payments. When trading for the car and jet-skis not only was I paid my normally scheduled monthly fee but also once I resold the car and skis I made an additional $2,000 profit.
State/Government/Private Charities: On more than a few occasions, some of my tenant-buyers have sought the assistance of local county, state and/or government charities. These agencies usually act on a “first come, first serve” basis and offer help to almost everyone in financial need. Be aware if a tenant-buyer has abused these services in the past they will not likely be of help for them.
Family and Friends: This tip may seem common sense but it is always advisable to remind a tenant-buyer to seek financial assistance from family members or friends. Be tactful when recommending this option. This technique typically works when you have established a friendly report with your tenant-buyer(s). I have gone as far as to collect the names and phone numbers of each parent when I know a tenant-buyer(s) is below 25 years old; typically mom and dad will always financially help with a default payment to keep the kids from being evicted and/or moving back in with them.
Eviction and Garnish wages: If a tenant will not repay you what you are owed, get him or her out of your mobile home and begin re-marketing the property. However, do not stop there; any monies a tenant-buyer still owes you may still be collected. Once a judgment is made in your favor, a garnishment can be made directly from the prior tenant-buyer’s current place of employment. Consult your local eviction specialist for more information.