Earlier this year Norada Real Estate added a One-Year Rent Guarantee as part of every investment property purchased through their network. The response by investors has been very positive and overwhelming.
A few people made the comment that it sounded, “too good to be true”. In response to those comments, I present the following excerpt from an interview conducted with Robert T. – a landlord with several properties. Rob's properties are protected by the same policy we provide all our investors. Shortly after his policy was placed, he experienced a vacancy and filed a claim. The following is an excerpt of an interview conducted with Rob in February, 2013.
What triggered your claim?
Rob: My claim was a result of a bad tenant. They stopped paying their rent. I guess they ran into financial difficulties. Some of my properties are in low-income areas. This happens; it’s not shocking. I submitted the claim and it was pretty painfree.
Did you need to have them evicted?
Rob: The tenant went from paying, then missed a month, so we sent a letter saying; what’s going on? We weren’t getting any feedback, so we had to move to an eviction.
How did the eviction go?
Rob: It was pretty simple. It’s not the first time or the last time I’ll go through it. You send in the paperwork saying you’ve sent a notice to the tenant, stating that they haven’t paid the rent. A court date gets scheduled rather quickly. If the tenant does show up, it depends on what the issues are. Sometimes they try to work out a deal and stay in the place and pay off their balance. Other times they’ll say, I got behind, I don’t have the money and I need to move out. Then you receive a judgment in your favor.
Did you hire an attorney?
Rob: I always hire an attorney. He has a package deal and charges $445 to handle the eviction from start to finish.
How did you file your claim with the Rent Guarantee?
Rob: There is a phone number for filing a claim, but I used the email option. I did everything online. You download a form, fill it out, sign it, scan it, then email it back with the required attachments.
How did the claim process go?
Rob: It all went very smoothly. I filled out a claim form, which is a one-pager. Then gave them a copy of all the pertinent documents, such as the tenant screening which showed I ran a check on their credit and that they had no evictions or criminal issues. Then I attached the court paperwork scheduling the eviction. That also outlines all the costs that I’ve incurred as far as missed rent and legal fees. I scanned all that and sent it along with the claim form. It’s pretty smooth after that. The process is fairly quick. There’s not a long delay in getting checks cut. It’s cut and dry as long as you prove you’ve followed their underwriting procedures.
How long did your claim last?
Rob: The claim lasted around three months. By the time the eviction process went through and I got the place repaired and re-rented, it took about 3-4 months.
How was the communication with you regarding your ongoing claim?
Rob: They automatically prompt you each month, which is pretty nice. You get an email saying, if the claim is still continuing please complete the attached form and send back to us.
How was your claim paid?
Rob: There’s a one month ‘deductible', which is actually the month of lost rent, but in the grand scheme of things, without it I would have lost three months of rent, which in my case was $650 a month. That’s a total of $1,950, plus I recouped the legal fees of $445.
How do you feel about the Rent Guarantee?
Rob: It has got the too good to be true syndrome. Especially in my market where there’s a lot of defaults.
Any final comments?
Rob: It’s the absolute ‘too good to be true' mentality that you have to get people over. People are skeptical to begin with. They figure I’m going to have a claim and you’re going to come up with 65 excuses why you’re not going to pay me. I was willing to take a leap of faith to try it.
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Norada Real Estate is pleased to offer a free one-year rent guarantee with every property. It's another value-added service we provide our members. Learn about our Rent Guarantee