Why I’d prefer a non-paying tenant over an empty property.

I know. I sound insane. But we all have to make business choices, and this one is mine to make. Keep reading and I’ll explain more.

I’ve been reading more and more about landlords who are scared to rent their properties right now. They’re worried the tenant won’t pay and they will have a nightmare to evict them.

All of these things are true.

There is nothing I can say to make that situation any better.

Maybe rent protection insurance? I have no idea if it works or what the small-print says because I’ve never taken a policy.

Not even now.

Not even now in these uncertain times.

The reason why I don’t?

I believe in active and close management. That means no matter what, you always, always ensure lines of communication are kept open.

Trust me, I know it’s hard when emotions get in the way and you think/ know you’re being fleeced. But communication is really the only way to solve any issues.

So, I’ve had a property come empty lately and we’re about to tenant it again. Unsurprisingly, it’s going to somebody on benefits (lost their job through Covid) and to be honest I feel happier with that.

Now, I know a lot of landlords don’t like taking tenants on benefits, but I gotta say, right now that is a pretty secure option. Even if you do take a tenant on who’s got a job, you have to be mindful they are only one pay check away from being made redundant.

I know that sounds harsh, but this is the reality of the situation.

To be frank, this was always the reality, but I don’t think a lot of people realised it.

So, why am I still willing to rent a property even if the tenant stops paying?

Because empty properties are expensive properties.

When you have an empty property it is you who’s footing all of the bills: council tax, water, electricity, gas. They’re all yours to pay. And then you have the mortgage and the insurance – which by the way for an empty property – will increase in premiums and lower in the risk coverage.

Empty properties are also a target for thieves and squatters. Scrap metal is still a booming business and opportunists will take any opportunity they can to strip your place of copper, lead and anything they think they can get any value from.

In March this year I had a property empty for one day.

One day.

Later that night, thieves broke in and stripped the wall lights, the plastic cover of the electric shower and the bathroom door. I have no idea what was so special about this list of items – but what I can tell you is the resulting bill to put these things right was thousands. I ended up having to rewire, install a new shower (frustrating given the one that was in there was just a few month’s old) and supplying and fixing a bathroom door.

It sounds bad and maybe you’re thinking the property is in a high crime area – it’s not.

I got unlucky.

The agent (now fired) had left the lean-to door on the yale lock and not locked the kitchen door with the mortice lock (invalidating my insurance policy). That evening a freak wind storm brought down the back fence panel leaving the property exposed and on view.

All it took was a random passer-by with bad intentions to apply a little pressure to the yale lock and bingo – full access was theirs.

Unfortunately, unbeknownst to me at the time, I wasn’t aware the previous tenants had taken all the curtains and so to anyone passing by, it was quite clearly an empty property.

And so, as I say: empty properties are expensive properties.

Which brings me back to my earlier point and why I’d prefer a non-paying tenant over an empty property.

And it’s to do with risk assessment.

An empty property will always be a risk. There is always a risk something may happen. Somebody may break in, somebody may illegally move in, the roof may leak and you may not know about it, the boiler may blow up and you don’t know about it.

Every which way I cut this cake: an empty property is a risk – and it’s one that costs me money rather than making me money

A non-paying tenant?

The risk, I believe, is smaller.

Firstly, most tenants are paying their rents. That means you already start out with more chances of getting your rent than not.

Secondly, landlords should thoroughly reference check and get a guarantor where you can.

Thirdly, welcome people on benefits and feel secure in the knowledge the state is paying.

I know these are scary times and the world is shifting, but it’s critical to assess the risks. Not doing anything, can also be a risk.

The Landlord Nightmare I Never Prepared For.

landlord tenant rent mortgage holiday

As a portfolio landlord, I thought I’d planned for contingencies; I had a rainy day pot for when a couple of boilers broke, a roof needed replacing and an electrical rewire. I had surplus tucked away for a few voids and when some tenants decided they didn’t want to/ couldn’t be bothered to/ had better things to spend their money on, than pay their contracted rent.

I thought I was set for most eventualities.

But, I’ve since realised with a deep, deep sickening realisation, that I’m not: I didn’t plan for most eventualities to happen all at once.

In my many long years of being a landlord, shitty days, shitty weeks and really shitty, shitty months have happened. So much shit has happened sometimes I’ve just opened my eyes and seen a pile of shit.

But before, there always seemed to be an end – no matter how far away – to the pile of shit. Whatever it was, you knew, given enough time, money, stress and grey hairs you would get there. The shit would come and then it would go. The sunshine would show his welcome face again, the shit would dry, you’d brush yourself off and you’d get on.

Until next time.

As I write this, I have the biggest lump in my throat. My heart is beating way too fast and I can feel the panic in my chest. Having just checked the bank and my emails I already have several tenants who’re not going to pay, or who have requested to pay less rent on account of Coronavirus.

I know I need to be understanding. I know we’re all in this shit together. But, I don’t know who’s picking my shit up? And if the shit really hits the fan – what then?

I’ve got a dozen contractors bills on my desk to pay.

Storm Dennis and Storm Ciara showed no mercy.

Covid-19 didn’t give two-fucks I hadn’t quite picked myself up before it hit.

The world has collapsed and I have realised, I am sat atop, a very flimsy and precarious pack of cards.

The interdependencies of this world have been stripped bare. The connections between us all have been revealed. The domino effect of this downfall is frightening.

I know the only way through this it to keep my shit together. I need to get a brush and sweep it up into one big pile and then sort through it faeces by faeces.

This next episode of being a landlord is going to be shit – even more shit than I ever thought it was possible to be before in my most shittest of nightmares.

But right now there’s no escape. There’s no selling up, there’s no getting out, there’s no panic room button to press and leap out.

This time it’s for real. This is the real shit storm I never prepared for, never ever even thought about, and am unsurprisingly, nowhere near ready for.

All I can do is conjure up in my mind the biggest shit shovel I can imagine and start digging.