The High Cost Of Evictions

Anyone who has rental property will most likely know all about this… eviction.

It’s the unpleasant side of being a landlord and having a rental portfolio. It’s ideal when you have a full house (literally and figuratively) and all your tenants are paying on time, but that’s not always going to happen. Eventually you’re going to have to kick someone out of a building you own (if you never have to do this, you’re lucky).

While evictions are a seemingly easy way to get rid of a bad egg, they come with a cost to both you and the tenant.

The costs for a tenant are obvious – losing a roof over their head (their own doing, BTW) and having it show up on their credit report. But for the landlord and property owner, costs can go beyond the loss of the monthly rental income.

According to TransUnion, the leader in credit information and information management services, the average cost of an eviction is nearly $2,000 – specifically $1,917. What makes up that amount? Lost rent, repairs (a bad tenant will let the property fall into disrepair and worse yet, intentionally damage the property like the rotten hot dog incident of 2002 – don’t ask), operational and court costs. On top of that, the whole process can take weeks to resolve, only adding to your headache.

While that nearly $2,000 is a lot, it’s actually gone down over the past few years. Why? The quality of tenants is going up across the board and the rental market is strong. Rental rates are increasing, but so is the economy, so people are more able to afford their rental payments. Credit ratings for tenants are improving.

So what does this mean for you as a landlord? It means carefully screening your prospective tenants and running a credit check. It means making sure you have a high quality of tenants overall in your rental portfolio. If you own a multi-family property or have a large rental portfolio, it means having a property manager that can carefully monitor what’s happening on your properties.

There is one more thing that TransUnion recommends that all landlords do for their tenants – take advantage of their ResidentCredit service, which reports tenant payment performance for inclusion in credit reports. They have found that just one month’s payment can help improve someone’s credit report, so for those tenants looking to repair their credit, offering this valuable service can help them get to homeownership faster. And being the savvy investor that you are, you can maybe sell them their dream home. See how that works?

Read more at theinvestorinsights.com

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