Many investors associate apartment investing with having to file evictions on troubled tenants. While it is true that apartment owners do have to use evictions as a method to remove those who won’t pay their rent or act as a good neighbor, many people do not understand the actual process. Here’s the A to Z of how evictions really work on apartment investment.
How the process works
Webster’s Dictionary defines eviction as “the action of expelling someone from a property”. While that’s a pretty accurate statement, there is a methodology to the process that culminates in removal (although sometimes the process of eviction simply scares the customer into compliance and the tenant does not actually leave). Here is how the process works:
- The rent is due on the first of the month, and typically there is a grace period until the fifth.
- On the first day after the grace period ends, the landlord sends the tenant a “demand letter” which notifies them that the rent was not received and that if they do not pay in a set number of days an eviction will be filed. You need to make sure that you use the correct demand letter form as provided by the local court.
- Once the demand letter date is not met, the landlord then files for eviction at the local court. This typically means filling out a short form and attaching a fee.
- The court sends a constable to the tenant’s apartment door, and they are served with the notice of eviction, with a date to appear in court.
- There is a court date, and the landlord and tenant both appear to give their side of the story, and the court then awards the landlord with the eviction.
- There is a short period (typically a few days) in which the tenants can appeal the eviction (although this rarely happens because you have to post a cash bond of the amount of the rent to do so, and if they had that money they would have already paid the rent).
- The landlord files for a Writ of Execution or Writ of Possession (based on what the court calls it) and this is the action that allows the resident to be effectively tossed out.
- The constable serves the tenant with the notice that they will return in 24 hours to remove them.
- The next day the constable arrives and removes the tenant and their belongings (the landlord has to provide the manpower to move the belongings to the curb).
- At that point, the landlord now has complete control over the property again and can start the process to renovate it and rent it.
The good news in all of this is that the court system does all the heavy lifting and the landlord simply has to pay a small fee (filing cost) to get the process in motion.
Evictions for un-paid rent vs. possession only
There are basically two types of evictions with an apartment property: 1) eviction for un-paid rent and 2) eviction for possession only. The first type of eviction is the most common – the resident did not pay the rent and they can’t stay without the rent paid. The second type lends itself to situations in which you have non-renewed the lease due to some issue other than money and you simply want them out of the unit in accordance with the terms of the non-renewal. The end result of the un-paid rent eviction is that you will get a money judgement for the amount of rent owed, while the possession eviction simply ends with you taking the property back over.
Sometimes the eviction is just a learning exercise
Some residents don’t pay the rent – not because they don’t have the money – but simply because they don’t want to. They are testing the system to see what really happens if they skip a month. By filing the eviction, you let them know that the rent is due as described in the lease, and that non-payment will not be tolerated. In turn, they have learned their lesson and will never be late again. The same is true with the possession eviction. The resident never thought you’d non-renew their lease for making loud noise at night, but now that you have their attention they’ll never do it again. In this way, sometimes the very act of the eviction is simply a training exercise to let the resident know what is and what is not tolerated. Just because you file an eviction, that in no way means that the tenant has to ultimately leave, as you may work out your differences after the filing.
Additional tips on eviction
Once you understand the methodology of the eviction process, it’s basically nothing more than a routine. However, there are some additional things you need to be aware about evictions, just in case any of these should occur.
- You cannot evict a tenant due to them reporting the apartment property to the authorities for supposed wrongful activities such as non-working plumbing or a broken elevator. This is called a “retaliation eviction” and this is illegal in most states.
- Most residents do not show up at the eviction trial. That’s simply because most people don’t like the public shame of being told they did not pay the rent in front of a group of strangers. If nobody shows up at your evictions it’s perfectly normal.
- The landlord wins 99% of all evictions.
- The court does the hard part (or actually the constable does). Evictions are not hard for the landlord to file.
- If you accept partial payment at any point in the cycle, it will typically negate your eviction filing and you will have to start all over again. Make sure you understand the rules of the court.
Conclusion
While it is true that apartment property owners typically file evictions as a regular part of their duties, it’s not a difficult process, and should not be a turn-off to this investment class.