How To Deal With Bad Tenants

Feb
15
2019

Other than damage to the property, or to a tenant, the biggest area of concern for rental property owners is dealing with bad tenants. It is not a stretch to say that just one bad tenant can instantly change your business for the worse. You will constantly worry about collecting rent, arguing over miscellaneous damage or struggling through an eviction. The entire focus of your portfolio will be on how you can eliminate the bad tenant. As cliché as it sounds, the best way to avoid bad tenants is by not having them in the first place. By taking some basic precautions before the lease is signed you give yourself the best chance of a successful lease. Here are five ways of ensuring you never run into a bad tenant again.

  1. Screen every tenant. It is amazing how the most basic thing you can do to protect your property is often overlooked. In the hustle of trying to keep your property vacant you rush a new tenant in without fully vetting them. It is not until they are a few months in do you realize your mistake. Every new tenant that shows interest in your property must be properly screened. This starts with a simple application. Before you show your rental, they should fill out an application provided by you online. Only when you have all their employment, income and prior housing info should you move forward with the showing. If you have questions, or doubts, to the information you should hold off until you are fully comfortable. Waiting an extra few days, even weeks, to commit to a tenant is a bargain compared to the damage of dealing with a bad one. If you don’t screen your tenants, you are basically gambling and hoping for the best.
  2. Call and verify. It is not enough to look at the information provided and assume the best. You need to treat your application like a mortgage. This means calling and verifying as much info as you can. Start by asking for a recent paystub. Serious renters should have no trouble giving you their two most recent paystubs. If they balk, it is probably a sign their income isn’t what they claim. Your next call should be to their most recent landlord. In addition to their payment history ask about issues with maintenance, parking and noise. Be careful to take anything negative they say as an absolute truth. There are often two sides to every story and not every landlord is the same. As many landlords that are listed on the application should get a call or email from you. By the time you show the property you should be ready to offer it to them pending lease review and security deposit. Never show your property before verifying all the items on the application.
  3. Bulletproof lease. If you own a rental property you need to have a bulletproof lease. There are a handful of areas you can save money on with a rental, but your lease should not be one of them. In the event that there is a disagreement or issue in the property your lease will settle the argument. This means asking a real estate attorney to draft a template for you to use. They will know of any loopholes that tenants use and eliminate them from the lease. If you have a lease you have used for a while you should have them give it a look and offer their thoughts. There are many items on the average lease that can leave you exposed and vulnerable. Spending a few hundred dollars to have an expert offer an extra set of eyes is worth every penny. Unexpected things happen with even the best tenants. Your property is too valuable to use a generic lease template you can download online for free.
  4. Document everything. The best landlords run their property like a business. This means having systems, practices and procedures firmly in place. Once you have committed to a tenant you should keep a separate folder or file for the lease. All communication should be done via email or text, so you can document everything. On move in day you should have your phone in hand and video the condition of all the rooms. Send the video to your tenant and have them confirm the contents. Give them ten days to find any damage or issue with the property and make it clear than anything after that is one them. The more documentation you have the easier it is to fend off any allegations or problems pertaining to the lease or the property.
  5. Keep good tenants. If you have a good tenant, you should do everything in your power to keep them. Most landlords just assume that a tenant wants to leave once their lease is over. At a minimum, you should ask them a few months out what their plans are. Even if you wanted to increase the rent you should wait if you have a good tenant in place. Someone that pays on time, takes care of your property and communicates with you is worth their weight in gold. There is something to be said the for peace of mind that a good tenant provides.

Bad tenants are no fun to deal with. Fortunately, there are ways to avoid them that require nothing more than a little due diligence.

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