A cushion is essential

If you are thinking about renting property, keep in mind that you need a cushion, at least six months’ worth of rent for an emergency. You may have to buy new appliances, your property may be vacant for a few months or your tenant may not pay the rent.

I know someone with tenants who don’t pay the rent on time.  She has taken these tenants to court at least once (The District of Columbia is a very pro tenant jurisdiction). The tenants have written bad checks in the past. These tenants were taken again to court last week. They “showed” the landlord’s lawyer proof that they had recently deposited the rent check  (admittedly late). The proceeding at court has been continued. The landlord was informed the rent had been paid and verified the deposit with the bank.

Today the landlord learned the check had bounced.

A bad situation. But the landlord’s behavior has made it worse. What behavior is that? Treating the rental property like an ATM.

The landlord has been pulling money out of the rental property to cover medical expenses, to purchase some items unrelated to the rental unit and to cover some other unexpected expenses. If you have $75,000 set aside, you can do this. But if you are living rent check to rent check, keep your hands out of the cookie jar !

As a landlord for over 7 years, with five tenants during that period of time, I never pulled money out of my condo for non-rental related expenses except recently when a relative need $900 asap (I personally was not happy about this).

My friend the landlord now will have several checks bounce. This is unfortunate. This could and should have never happened. This individual has learned a hard lesson. Also I was frank with my landlord friend – someone else should manage the rental funds.

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