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Archive for February, 2018

The End of Year Rental Bonus

February 2nd, 2018 at 05:58 pm

Sooo...for years as a landlord I have maintained a very strict rule of on time rental payments. Allowing very little leeway, if you do not pay your rent on time, the eviction process begins. It's business. It's not personal.

For about five years running, I have made an exception for a particular tenant. Via an annual written addendum to the rental agreement, I agree to defer the December, January and February rent until March 1. This has allowed them to afford a nice Christmas and New Year celebration with their family, pay off any end of year debt and not have the rent hanging over their heads. In turn, upon receipt of their tax refund (usually mid-February but not later than March 1), they agree to pay the December, January and February rent with a $100.00 per month penalty plus the late charge on my Town/County taxes (~$70.00), which are normally due by 1/31 but can be paid by 3/1 without any relevy.

Finally, as security, they contractually list personal property equal to or greater than the value of the rents owed, late fees and tax penalty (each year it's the same diamond ring with the certified appraised value and insurance binder). I take possession of said security, hold it in my safe and return it, as per the contract, within 48 hours of the monies paid.

We laugh during the annual execution of this addendum and joke that we are our own private mobsters. However, they have always appreciated that cushion and I earn $300.00 more per year for deferring three months rent.

This is certainly not for all landlords or tenants for that matter. The risk is low but takes capital to cover any mortgage, taxes, insurance and maintenance without the support of rental income.

I guess my rationale is this. If I can afford to protect my rentals via personal income and get creative in my landlord/tenant agreements to increase my ROI, why not?!?

Thought this might inspire a variety of replies...