Real Estate Investors: Is it Worth Pursuing Judgments against Tenants?
Don’t be a Push-Over One thing is for sure and that is real estate investors shouldn’t appear to be pushovers and easy targets. If you start by telling a tenant it’s OK if they are late or you aren’t tough when you are initially showing the property you are just asking for trouble. Whether you will hunt them down for the rest of their lives for unpaid rent or not landlords at least need to act as if they would and keep on top of legal notices at all times to protect rights and keep on top of late payers or bad tenants. This will save a ton of hassle and be a great deterrent to those looking to take advantage of the system. Judgments Usually Cost More Than they’re Worth While it isn’t that hard to get judgments against bad tenants in court it isn’t always cheap. You may be mad and you might be owed but make sure you do the math as to who is going win in the end. Even if real estate investors obtain a judgment against a tenant for thousands of dollars collecting on it is a whole different story. Either they are broke and can’t pay it or don’t care about having a judgment against them or know how to work the system well enough not to worry about it. At best this means they’ll end up negotiating it down to pennies on the dollar a few years down the road. In the meantime, was the stress worth it? What about your ROI on your attorney, court costs and collection company and the time it takes to deal with it all? Compare that to putting those resources into finding a better tenant or finding another real estate investing deal. In Search of Better Alternatives On the bright side there are alternatives. Perhaps one of the most profitable and least stressful is just to buy out bad tenants and send them on their way amicably as soon as they become a problem. Sure it might cost you a couple bucks but it may be the most affordable option. Of course better tenant screening can go a long way to avoiding these issues in the first place too.
As a real estate investor with rental properties at some point you are going to run into tenants who don’t pay or damage homes, so does it pay to try and make them pay?