opinion
Todd Hunter

USA’s no pay, no stay strategy is a great way to invest

By Todd Hunter

We’ve all seen A Current Affair horror stories of tenants in Australia trashing investment properties. It’s a vendor’s worst nightmare. Heres the difference between laws for unco-operative tenants in Australia and the US.

I can honestly say that I have never had an investment property of mine trashed. I have, however, had to boot out a tenant for not paying their rent. When you own a large portfolio over many years, it’s a part of investing that you need to budget for. And it’s exactly why we have insurance.

Unfortunately, the most in-depth checks do not always ensure a tenant will pay their rent on time. Understandably, people’s circumstances can change.

The ridiculous part surrounding this is the pathetic tenancy laws that govern Australia. But it’s a very different story in the US. They use a ‘no pay, no stay’ strategy!

Earlier this year, I had to evict a tenant in one of my investment properties in the US. And boy, wasn’t I impressed, as the tenant was only into the second month of their lease.

Firstly, I offered the tenant a chance to explain why they were late in rent, with the hope they may have had a valid explanation and make up the lost rent very quickly. You never know – they may have had a medical or family emergency, so you must give them the benefit of the doubt initially.

Well, that wasn’t the case in this instance. Rent is due the 1st of every month. So after calling for two weeks with no answer I applied to the county courts for a tenant tribunal hearing, which we got three days later. It wasn’t four to six weeks later, like in Australia. The hearing took a massive three whole minutes and the judge gave the tenant, who was a no-show, until the 28th of the month to make up the current month’s rent arrears PLUS pay the next month’s rent in advance.

True to form, the tenant didn’t pay. They didn’t even return any emails or phone calls from the property manager. So this is where it gets interesting….

At 5pm on the 28th of that month, the sheriff was called to find the outcome. Within one hour, both the property manager and sheriff were at the house along with a locksmith. The sheriff and their assistant emptied the house of all the tenant’s belongings and dumped them on the front lawn, near the gutter. The items were not neatly stacked, they were literally thrown. And unfortunately for the tenant, it was winter and there were two feet of snow. The locks were changed once the house was empty and by 5pm the next day, the garbage collector picked up whatever the tenant hadn’t retrieved.

One week later, we had a great new tenant and the previous tenants bond covered four out of the five weeks lost rent. A great property manager and fair property laws make investing in the US even more attractive.

About the Blogger

Todd Hunter

Todd Hunter

Director and location researcher for the wHeregroup, Todd Hunter had accumulated a personal property portfolio consisting of 50 properties by the age of 31.

He is a regular commentator for Smart Property Investment.

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USA’s no pay, no stay strategy is a great way to invest
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