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There's a subject in real estate circles that no one really likes to talk about or hear about. The dreaded "E" word is eviction. It's not pleasant, but it's a fact of life for a landlord. And it doesn't happen often, but if you are a serious investor, there will likely come a time when you will be confronted with this unfortunate situation, no matter how good your tenant screening or management system is.

Jeffrey Taylor, author of The Landlord's Kit (and no relation to Jordan Taylor), says you should never feel guilty about evictions. He points out that you're not making a profit with an eviction; you're simply cutting your losses. Also, he says, nonpaying tenants are taking money that provides for your family needs; they're stealing from you.

Real estate investment expert Russ Whitney agrees. "Owning income-producing real estate and being a landlord is a business, and you should take a business approach to tenants who don't pay or commit serious violations of your rules," says Whitney, author of The Millionaire Real Estate Mindset. "Enforce the terms of your lease and do it consistently and immediately."

The first step in avoiding evictions is careful tenant selection. The process should include credit references, credit reports, employment verifications, talking to your prospective tenants' previous landlords, etc. Russ Whitney recommends that you not rent to someone who has a poor track record with finances and previous housing. If they've been evicted before, chances are it will happen again.

You can never gather too much data on a prospective tenant. But no matter how much checking and verifying you do, and no matter how perfect that tenant seems when the lease is signed, circumstances can change--and often that change occurs quickly.

Certainly it's understandable that people experience hard times, and you want to be understanding. However, as Russ Whitney says, you are in business, and your expenses continue whether your tenants pay their rent or not.

If a tenant is not paying rent and all your efforts to work with him or her fail, start eviction proceedings immediately. You must show that you are in charge and that you will not tolerate non-payment of rent. Also, if you are evicting for another reason--for various lease violations, for example--you should begin the eviction process as soon as you have issued all the appropriate warnings to cease the objectionable conduct.

Follow the terms of your lease. On the day the rent is deemed late, issue a notice to pay rent or quit. If the tenant isn't out within the prescribed period, you can have the sheriff evict them (in accordance with the specific laws of your state). Unless your tenant is a total deadbeat and used to this kind of treatment, this threat will usually have the desired effect of either getting the rent paid or the tenant out.

When the eviction process is underway, remind the tenant that his credit rating will suffer if the late payments and eviction are reported to the credit bureau, and that you will do that. If you belong to your local Apartment Owner's Association, warn the tenant that you will report him to the Association and that will make it more difficult for him to rent in the area. Also, if you must complete the eviction, they will never again be able to honestly answer "no" when a rental application asks if they've ever been evicted.

An effective strategy to avoid eviction is to "buy" the tenant out. In other words, offer to pay him cash to move out. More often than not, this will be less expensive and less time-consuming than going through a nasty court eviction. But do not give him any money until he and his entire family have vacated the premises.

Finally, a word of caution: learn the methods of dealing with non-paying tenants recommended by your local Apartment Owner's Association, and also the laws pertaining to eviction in your area so you don't do something that will come back to haunt you later.

posted by escs  # 8:37 PM