Episode 6: How To Not Chase People For Money
After my first podcast as a landlord, the number one question I got was "how exactly do you not chase people for money?" In this podcast, we talk about how to set yourself to NOT chase folks for money! There are two areas where we need to figure this out: one is before you have to get legal and involve a judge, and the other is AFTER you get a judgement. In this episode, we go through how to set yourself up for success, both in screening your tenants and setting up rent payments completely hands-off AND in educating yourself on how collections work in your specific area. Welcome to it!
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Full Episode Transcription
Welcome to my Life as a Landlord, where we untangle all things housing and educate the curious. If
you're looking for some entertainment with some honest, awkward conversations, you've come to the
right show. I'm your host, Dr. Jennifer Salisbury. This is my life as a landlord. Welcome to it. Well,
hello. Hello. Welcome to episode six. This this podcast is all about how not to chase people for money.
After my first few podcasts, this was the number one question I got quite frequently. I was actually
amazed when people said, Jen, I see the rules as a landlord and you don't chase people for money, how
do you do that? I thought, well, the second episode for Landlording has to be, how do you not chase
people for money? Now, before I get into this, I need to give you a bit of context on who I am and my
perspective as a landlord. That will help. I'm a landlord who self manages my properties. We've bought,
renovated, lived in and rented these units, so I know them personally. I do not use a property
management company, but I do have a local administrator. Who does some of the paperwork, move,
ins, trouble calls, but they don't handle money. I do all the money. I do all the rents, I do all the repair
bills, all of that. I also have an oncall handyman who can also be an administrator if I need them to.
Oncall cleaners is also someone else. I have. But again, I do my own books, rents, banking, and I'm
completely remote, completely. I'm hardly ever physically present there, but unless I told you that, you
wouldn't know. I do carry a phone where my local rentals are in British Columbia. And again, if a tenant
calls me or texts me, I'll respond, and if I need to, I'll call them back. Or if it's something administrative,
my folks on the ground can attend to it. But that gives you a little bit of perspective of who I am. I'm not
a property manager. I don't manage other people's properties. I manage my own. And I do it remotely
without a property manager. So that's my context as we get into how I don't chase people for money.
Now, there's a couple. Ways. And I need to frame this properly on how I don't chase people for
money. Once your question goes legal, meaning let's say you've evicted someone and they've done
damage to your unit and you've got a judgment for whatever the repairs are, that's what I call going legal.
You already have a judgment. It's gone legal. You're in the court's system. You're probably getting
bailiffs or the sheriff involved, and you may even be talking about going to small claims court, but you've
already involved the courts. That's what I call. You've already got a judgment. You are after it's gone
legal. I don't chase people for money before it's gone legal. And that's what I'm going to go in today,
actually. I'm going to go into both on how you do it, because I have had tenants cause damages. I've have
had tenants that have not paid rent. Now, many of these topics I'm going to go through today, I will
explore much deeper as we go into the podcasts. So how not to chase people for money. There's going to
be a before it goes legal aspect and then an after it goes legal aspect, meaning you have a judgment.
Okay, so let's do the before it goes legal aspect. Three points. You know, if you if you're a fan of the
podcast, if you subscribe to the podcast, you know that I do three points. That's my big thing. So here's
the first thing before we go legal, how do I not chase people for money? I screen them properly. That's
the biggest thing. And I'm going to do another podcast on that, of course, is how do I do screening? How
do we make sure that we're not discriminating? But to set myself up for success on how not to chase
people for money, I make sure that they have the ability to pay. They've got an income source, they've
got savings. Maybe their company pays for the rent. However it is, they've got the ability to pay. And
there is a multiple there's a couple of different ways you can look at the ability to pay the income,
monthly income versus the rent payment. Also, I look at their credit. One thing that I take very seriously,
a landlord is a lender. A landlord is lending a part of an asset to someone with the promise for money. If
that's not a lender, I don't know what is. 1s So I look very closely at their credit. Now, we're going to talk
more in depth about credit, because life does happen, and I'm betting it's happened to you. It certainly
happened to me. And there are reasons why you have problems with credit, but if you're actively working
on it, does that discount you? It just depends. There's other factors you need to look at as well, but the
first part at the very beginning of a tenancy with someone is you got to screen them properly. That's the
first way. If most people that I've seen that are in a pickle already that say, oh, I just took them on their
word, they seemed like a nice guy, they were driving a nice car, she seemed really nice. Well, you've got
to check references, you've got to dig deeper. You have to it's your business, you have to. So that's the
first thing. You've got to screen your tenants. The second thing I do to not chase people for money is I set
up the rent payments completely hands off from day one. It is not my responsibility to make sure that the
rent gets paid. It's the tenant's responsibility that the rent gets paid completely hands off. There's no rent
collection. No one walks around knocking on doors on the first. It's the tenant's responsibility to pay
honor before midnight on the first 1s when we receive the rents, because you can receive them by
electronic transfer or Venmo or Zell or some people can accept rent rents by credit cards. I don't
particularly do that, but you can in the US. At least there is in Canada. I've got an auto debit option that
allows you to pay rent automatically. But there's many banking institutions all over the world that do that,
that you can go to your bank and say, I want to pay my landlord every month on the first, this amount
from this account. And as long as you have your landlord's banking info, which they will very likely give
to you, you're going to have that. I mean, that's automatic. You don't have to even think about it. And
that's how I set it up as an auto pay for my tenants to pay automatically on the first. 1s The other option I
give my tenants is to walk directly into a branch location and deposit their rent. So if they want to pay in
cash, they can. So I give my tenants three different options. Either the auto pay walk into the bank or
credit union or an e transfer to my email. But there's other options as well. But those are the three. And
say, okay, this is how we expect you to pay rent. You tell us how you want to pay it and make sure you
put a note on your if you're going to deposit it into the local bank account. Say your last name with your
unit number so we know that it's them and away we go. So I set it up from day one that I am completely
out of the rent payments. Now let's say it comes around to noon or 05:00 on the first and I'm still missing
a rent payment from someone. I will simply send a template email, and I have the same template that it
goes out every single month that just says, hi tenant, we haven't received your rent yet today. To avoid a
late fee, just a reminder that you must pay rent on or before midnight tonight. Thanks. And that's it. And
if they don't pay the rent, guess what happens the next day? They get a reminder. Now add $25,
because that's what my late fee is in this particular area. In your area, it may be different, but whatever
your late fee is, you should add it. Day two, do not wait. This is your business. This is not a charity. This
is your business. You set up rents completely. Hands off that's no rent collection. The tenant pays. All
right? Third thing, this is before you get legal. We already started talking about this. If they are late have
a process. Have a process. Now, how on earth are you going to know what the process is or what it
should be? Guess what? If you've listened to the first podcast called The Rules, you look at your local
residential tenancy laws, whatever that is, for your state or province. They will tell you what to do if rent
is late. They will tell you if there are grace period. What do you have to do? Like, for example, in
Hawaii, day five, you have to give them written notice to pay you, or you're going to take further legal
action, which is filing with the courts. It says exactly what to do regarding your late rent payments,
regarding your tenants. So set up that process and say, day one, rent is due on midnight or before. Day
two, late fee, day three or five or whatever it is for your area, have a process, have a template ready to go,
that if it happens. This is what you do, it's your business, you keep going. So before you get legal, that's
how I don't chase people for money, is I screen them properly. I make sure that they have the ability to
pay rent however they can in their choice. And if they are late, I have a process and I sleep pretty good at
night. Knowing that's going to happen, knowing that I've screened people properly, I've set them up for
success. My business has made a good investment in these tenants. And if they are late, I have no
problem even picking up the phone and calling them. 1s You have to have an awkward conversation. Just
say what's going on? Maybe something weird happened, like their family member died unexpectedly or
life happens. So you've got to kind of be able to be prepared for that. 1s But you want to know how I
don't chase people for money? That's it. That's how I don't chase people for money. Now, that's at the
beginning of tenancy. And throughout the tenancy, let's say that as we have gone through a tenancy issue,
let's say they've misbehaved or not paid rent, whatever it is. And now I've got a judgment. I've got a
judgment of some kind, whether I've gone through arbitration or you go through the courts, whatever is
applicable in your area. And you'll know what that is, especially if you've read your rules, then you'll
have a judgment. And so I have three pieces of how do you not chase people for money? And these are
some hard questions, I've got to tell you. I see a lot of questions on Facebook where people say, my
tenant trashed my house. They're gone now. They've caused all this damage. And I have a judgment for
$40,000. My insurance won't pay. How do I get my money? We're going to talk about that. We're going
to talk about that right now. So the first thing you've got to do after you have a legal judgment, educate
yourself in the collection of that judgment in your area. They're all different. And sometimes you've got
to have a local bailiff or a sheriff. And I highly recommend that you call one of them, call a bailiff, just
Google a bailiff in your area and explain what's happened. In fact, I would recommend you do this before
you get the judgment, because that way you're educated on the entire process, the whole process, before
you even start learn about how this is going to work and say, if they don't get out in five days, then we'll
serve them this, and my fee is that. And the bailiff will help you figure out this whole process. And they
will very likely say, I can't help you until you get that judgment from the court. And then when you get
the judgment from the court, I will do this, this, and this, and this is my fee. And they will tell you
exactly what they want you to do, what they don't want you to do. But there is another option. When
you're educating your yourself on how to do a collection of a judgment, there is usually a local legal
society or nonprofit that will help you either as a tenant or as a landlord that will have resources, and you
can explain your situation, and they can help direct you as well. And you will very likely be free or by
donation. 1s The first aspect of not chasing people for money after you have a judgment is educating
yourself on collections. Not fun, but it's a necessary evil in your business. Okay, the second part, once
you have a judgment, you've got to decide how much time, money, effort, and stress you want to put into
this. You've got to decide, because at any point, if you're not wanting to move forward, guess what? You
can turn it off, especially once you have an empty unit. Remember, the goal of an Eviction is an empty
unit not to collect money. That's a separate battle. You are fighting for an empty unit. The second part of
after you have a judgment is to decide how much effort, how much time, how much lost sleep you want
to put into us. Because they may not have any money to give you. Even if you have a judgment, for
$10,000. Let's say they may not have any money to give you. Even if you do what's called a bank sweep,
which is where the courts or the bailiffs can go in one time and sweep bank accounts that these people
may or may not have. You may not even get enough money to pay the bailiff if you do a sweep. 1s So
you just have to be careful because is it worth the chase? It may not be. And you may just prolong the
stress and frustration, because if you think you're going to get a big payday, it depends on what you see.
If you know this person has got $40,000 and they've caused $40,000 worth of issues for you, that's maybe
something that you want to to pursue. However, if it's not something that you don't want to go down that
road, then just stop. You've got a judgment. Great. Michael and I have done that ourselves. We got a
judgment against some tenants for some back pay, storage, a little bit of damage, $10,000. We went to
trial and we got a judgment for $10,000. And I just said, what do you want to do now? Do you want to do
bank sweep? Do you want to hire a bailiff? Do you want to do this? The bailiff was probably going to be
close to $1,000. And Michael looked at me and he says, let's just stop. Let's just completely stop. Let's
say, yeah, we got a judgment and we are choosing. 1s To stop because we want it to be done. And so we
did. We just let it go. And you know what? I'm glad we did because it would have just prolonged the
stress, and we probably wouldn't have gotten any money anyway, and we would have still had to pay the
bailiff. Okay, so after you have a legal judgment, you've got an order for this person to pay. After you've
educated yourself on how collections work in your area and you've decided how much stress you want to
put yourself through, the last thing you need to know is sometimes tough lessons are involved. There
may be no closure in this judgment, and I've already alluded to this. You might have to just let it go, lick
your wounds and move on. Now, you might be saying, but Jen, what if these I don't have $40,000. I can't
renovate my property. I guarantee you somebody out there is willing to help get your solution, to help
you move forward. And guess what? You're going to have a greater appreciation of screening tenants,
setting up rents so that they're completely hands off, making sure you have a process for late rents and
let's face it, maintenance so that you don't have this happen again. You'll you'll get that. So if you've got a
judgment, those are the three things educate yourself, decide how much effort you want to have involved.
And the third thing is, know that there may not be any closure, that you might just have to say, that's it,
and chalk it up as lessons learned and do it better next time and move on. We've had to do that. 1s So
those of you who know my podcast, you know that I have a call to action, and so here it is. So if you're a
current landlord, I want you to review the ways that you collect rent. How can you remove yourself 1s
from that process? If you're knocking on doors on the first of every month, you might evaluate if that's
the best thing for you and for your tenants. Can you make your rent collection ways more hands off? And
if you've got leases in force right now, how would you do that? How would you actually say, look, I'm
not going to collect rents anymore? You need to give them proper notice. You need to give your tenants
proper notice so it'll be in writing, and it will very likely be 30 or 60 or maybe even 90 days. That some
reasonable amount of time to shift the way that you're going to collect the rents that you want your rent
paid. This will help you and will stop you from chasing money off the hop. So if you're a landlord right
now, I encourage you evaluate how you are asking your tenants to pay. Now let's go to the legal stuff. If
you have a judgment pending or you've been given a judgment. 2s And you are chasing somebody for
money, 1s is it worth it? You need to ask yourself, is it worth it? Is it worth it out of spite? Is it worth it
out of stress? Just you need to really ask yourself, how much effort is this worth and how much reward
are you going to get? That's it. So people reached out quite a bit to say, hey, Jen, how do you not chase
people for money? Well, that's it. I don't chase people for money because I set it up that way. And in the
event I do have a judgment for myself, then I've got to really evaluate, is it worth the effort? So that's it.
Next episode, how tenants screen their landlord. Interesting perspective. We'll see you next time. Thank
you for joining us this week. To view the complete show notes and all the links mentioned in today's
episode, visit our website at www.mylifeasalandlord.com. If you're looking for educational resources for
getting into real estate, investing, becoming a landlord, or even a better tenant, then I have a page on my
website to get you started looking for a solution to the pickle that you're in. I've suggestions for that too.
You can throw your situation on my Facebook group, My Life as a Landlord and let our community help
you with solutions. Also, before you go, make sure you subscribe to the podcast so you can receive new
episodes right when they're released. You can either subscribe right now in the app you're listening to this
podcast on or you can sign up at www.MyLifeasalandlord.com. Thank you again for joining me, Dr.
Jennifer Salisbury, in this episode of My Life as a Landlord. I'll see you next time.