The concept of sunk cost

𝗧𝗡𝗲 π—°π—Όπ—»π—°π—²π—½π˜ 𝗼𝗳 π˜€π˜‚π—»π—Έ π—°π—Όπ˜€π˜
In economics and business decision-making, a sunk cost (also known as retrospective cost) is a cost that has already been incurred and cannot be recovered regardless of any actions taken in the future.
A fairly decent example of this is one of my tenants that had not paid her rent in over a year.
From everything I know about property management, this past due rent has to be considered a sunk cost. Even if we eventually get a civil judgment against for this amount, in reality, we’ll be able to collect a smal portion of it and not without jumping through many hoops.

We filed an eviction a long time ago, but the great state of New Jersey has
once again extended the eviction moratorium until at least January 31st, 2022. Once the courts do open again, it will be a long time before they hear our case.
After that long-winded background, here is the magical part. A few days ago, we received a rent payment from our tenant! 🀟🀟🀟
How were we able to convince them to send it? If we had done nothing, they would have no incentive to send anything. They realize that they can continue to live in the place rent free until the case is heard which may not happen for another year.
Instead of accepting that any past rent is a sunk cost, we decided to offer them the following deal: If you start making your monthly payment 𝗒𝗑-π—§π—œπ— π—˜ from now until we get an eviction hearing, we will drop the eviction.
And guess what? It worked! At least for now… I am rooting for them. πŸ‘πŸ‘πŸ‘
Fortunately, this tenant is the exception rather than the rule. Much of the credit goes to our stringent tenant screening process.