Landlording Best Practices: Showing Problem Tenants the Door

Have you ever had difficult tenants who can’t seem to settle in and be happy? You can’t respond quickly enough to requests to satisfy them. They hate their neighbors. They hate the neighborhood. They just seem to need to complain.

When you are dealing with difficult tenants, you actually have lots of options–far more than you may realize. Here I’ll address some of the ways you can manage problem tenants with creativity and advance planning.

It Starts With a Lease Choice

Many of my tenants are month-to-month. When their original lease expires, I have a clause that rolls a lease over to a month-to-month agreement once the original term is over. This is, in some areas, a very effective strategy for longer-term tenancy. By not forcing a tenant to sign another 12- or 18-month long agreement, they don’t have to commit to anything. When I don’t force them into a decision, they tend to stick around longer.

This does not mean I don’t raise rents. I keep a close eye on the market and keep up with rental increases. But my partners and I have found that tenants tend to stay longer, even with market rate rental increases, when they have the freedom of knowing they are staying from month-to-month with the ability to leave with a simple 30-day-notice policy.

Tip: Freedom to leave gives people the internal permission to stay. (I know if seems oxymoronic, but it is true. When people have the option of choice, they tend NOT to use it.)

But this month-to-month option takes care of a lot of my problem tenants, as well.

Here’s how. Once that first year is up, I too only have to offer the tenant 30 days’ notice. No evictions, no attorney calls, no documentation of lease violations are required. My partners and I definitely enjoy the freedom month-to-month agreements give us.

The Invitation

These agreements also give us another ace-in-the-hole. This is what I call, “The Invitation to Leave.”

This policy offers us the ability, when we have a difficult or problem tenant, to simply and kindly write this little note:

Dear [Tenant’s Name],

It seems to us that you are not happy living at [property address]. As a management team, we value our tenants’ happiness and quality of life. So, if you are not happy, we invite you to search for another home which might better meet your needs. Your rental contract is currently month-to-month, so when you find a place that you wish to move to, all we will need is one calendar month notice in writing submitted to our office.

Wishing you only the best,

Name of Management Group or Company

If the problem tenant is still within the terms of their lease, simply point them to the early termination clause in their lease, which I discussed in a previous article.

Does This Work? You ‘Betcha!

This strategy works brilliantly for us. Here why:

1. It sets clear boundaries

This method lets your tenant know that you don’t need them to stay. This is important because often problem tenants believe you need their rent so much that they can be difficult and you will simply tolerate it. This strategy lets tenants know you have other options, too.

2. It’s easy

No evictions, no lawyers, no arguing, no documentation.

3. It sends a message

You are informing them that they are telegraphing to you, with their own words and actions, that they are not happy. So, if that is not their intention or they don’t like the idea of moving, then it puts them on notice that they need to telegraph something different with their words and actions.

4. Behaviors change

My partners and I have run the numbers and found that in more than 70 percent of the situations where we have used this method, the difficult tenant STOPS being a difficult tenant.

5. It shifts the dynamic

If the same tenant, months down the line, starts being a “difficult tenant” again, you just once again invite them to leave. And you continue to do this anytime their obstinance returns. It shifts the dynamic every time, essentially reminding them that it is their choice to stay because you are fine with them leaving.

What If They Accept the Invitation?

Now, there are still the 30 percent who actually accept the invitation to leave. But that’s okay. You won’t miss them. You will fill your property with a new tenant—one who will hopefully be happier with their rental experience.

In the end, whether the original difficult tenant chooses to reevaluate their relationship with you and your property and stays or chooses to take you up on your invitation and leaves, your life as a landlord will be less problematic because you took control of the situation in a hassle-free way for you.

Have you had troublesome tenants in the past? How did you manage to deal with them?

Let us know in the comments below!

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.