12
Mar

Arizona Landlords: Plan for Tenant Payment Problems

phoenix investment rental property

With an economic downturn that has been described as the worst dip since the 1930s, small business owners are in a panic. In such a landscape, where many are un- or under-employed, or helping friends and family who are, many are finding themselves scaling back, reducing extravagances, and, in some unfortunate circumstances, unable to pay all of their bills on time. Small business owners are extremely vulnerable during times like these, as many of them do not have a safety net in place if numbers fall. Landlords, especially, nowadays, whose rental properties are still under mortgage, have to be extra cautious in safeguarding themselves against potential payment issues. Without a plan, tenant payment problems can cost them their business. Here are some ideas for Phoenix landlords who want protection from tenant payment problems to implement in order to attain that goal.

Get a savings account specifically for emergencies. Making the monthly payments on a property is the unfortunate responsibility of the landlord, and the bank does not care whether or not they have a paying tenant on the premises. Stashing away some extra money in a savings account is wise for so many reasons. In this case, it is recommended to Arizona landlords so they have a Plan B in place when tenant payment problems strike. After all, late mortgage payments can lead to foreclosure.

Write a lease with tenant payment problem prevention in mind. Giving an outline in the lease of what is expected of the tenant in regards to rental rate and the day it is due is basic. Many landlords find themselves going the extra mile in the lease agreement in order to prevent misunderstandings in tougher cases. Spelling out when the rent is considered late, when additional fees are accrued, and the entire process of eviction on the landlord’s terms in the lease is one way to show tenants upfront that the landlord means business, and may deter those less able to pay regularly from signing it. (Always make sure these documents are not in violation of Landlord/Tenant laws for the State of Arizona.)

Set stringent standards—and follow them. Make sure to do full-on background checks for tenants before signing on. As the old saying goes, an ounce of prevention is worth a pound of cure. Once a thorough background check has been conducted, the landlord can decide what to do with the information they have uncovered. The landlord does not have to deny tenants for credit problems, but a landlord should be aware of them.

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