Eviction is a time-consuming and expensive process – best avoided if you and the tenant can manage it. You don’t want the legal expenses and court hassles involved with the legal eviction process, which can take weeks or months. That’s not good for your Real Estate IRA, and it’s not good for you.
Moreoever, your Real Estate IRA tenant doesn’t want an eviction on his or her record, either, which can impact their credit and make it even more difficult for them to find a new place to live.
In some cases it’s unavoidable. The tenant either isn’t listening or is actively destructive to the property and is trying to abuse the process, at your expense. But there are alternative paths to resolution that work out much better for both you and the renter, short of eviction, that you can explore.
Here are some things you can do.
- Identify temporary problems. Sometimes an inability to pay rent or comply with some other critical part of the lease agreement is temporary. For example, say you have a rental property in your Real Estate IRA and the tenant is late on the rent. If you’re able to speak to them, though, you may find that the tenant lost her job last month. But she’s actually working again, and making even more money, but won’t receive a paycheck again for another week and a half or two weeks. After that she’ll be even more financially qualified to rent the property. This is a classic case where it’s much better to work with a tenant who is otherwise good, but is going through a temporary cash crunch. It’s much easier to wait two weeks ad collect in full, rather than play hardball with a slow-payer.
- Don’t paint your tenant into a corner. Remember: The second you evict, the tenant loses all incentive to pay you, and instead must focus on coming up with money for first and last or a security deposit at the new place.
You can get a judgment for the outstanding rent, minus the deposit – but good look collecting on it. If collecting it were that easy, you’d have the rent already.
- Consider a referral to a charity or outside agency. There are a number of charities that provide short-term housing loans or grants to individuals facing eviction or foreclosure. Catholic Charities and the Red Cross both do so, as do the military relief societies for members of the Armed Forces. These organizations could provide a bridge loan or some other assistance to help a struggling tenant stay current, and buy both you and them some time to work out a more lasting solution.
Sometimes you may have elderly individuals renting from you who just need some social services support to help them remember to pay bills, clean, take their medications, etc. You may help them contact family or other sources of support to help keep them current on the rent. With a little support, these individuals can be very successful tenants for many years. They are worth keeping.
- Offer an incentive to move. It’s a fact of life that evicted renters don’t clean up very well – and occasionally vandalize their units outright. Evicting causes a lot of hard feelings. But what if you provided an incentive for a successful move-out within a certain amount of time? Getting the place re-rented that much sooner can put more money back in your Real Estate IRA, and you save hundreds of dollars or more in court fees/eviction costs. You also reduce the risk of vandalism. Provide a cash incentive or a forgiveness of part of a months’ rent in exchange for the tenant’s moving out by a certain date.
Note: Remember to pay all legal expenses using funds from your Real Estate IRA. You cannot pay attorney’s or court filing fees for evicting a tenant from your Real Estate IRA owned property.
American IRA, LLC is experienced at working with Real Estate IRA investors, as well as investors who hold real estate within other retirement accounts. With offices in Asheville and Charlotte, North Carolina, we work with Real Estate IRA owners in all 50 states.
For more information, or to schedule a free consultation, call us at 866-7500-IRA(472), or visit our extensive online library of information at www.americanira.com.