Multi Units: More Destructive Tenants? What's To Be Expected

[G W]

I’ve dealt with one bad tenant that did some dumb things like set an iron on new carpet in a bedroom, stained several spots in the living room, broke the lease and left early, etc… ended up keeping her security deposit so the damages were sort of evened out. The current tenant has been great so far and inspections of the property show she is taking care of the place.
I’m looking at a couple of 2-units and wondered what you folks have dealt with; relative to your single family rentals? Most of the 2-units I’ve seen seem to have a “higher risk” type of tenant, but on paper they look like they will cash flow Much better.
I know much of this can be sorted out through screening of tenants, picking up the rent in person (then glancing around to make sure things are OK), etc…
What have been your experiences??

[Sue In Denver]

Hi Startsmall!
I think I'm going to have to post twice here. You have two very broad questions so I'll answer the tenant question first.

First of all, your tenant who broke the lease did you a favor! You can start training your tenants from the day you agree to rent to them, to become the best tenants you'll ever have and tenants that will want to stay with you for a long time.

I always ask how their previous landlord was. If they give you a long laundry list of things s/he did or didn't do, they're telling you what they'll eventually think of you down the road no matter how good of a landlord you are! There are other ways to screen tenants and this is just one example.

You can also structure your leases in such a way as to charge the tenants as you go along for repairs for damages they cause. This will give you a way to weed out the bad apples before they ever decide to rent your place. If they find out they have to get their checkbook out every time you come to make a repair for damages they caused, they'll likely move on.

For example, my leases have a paragraph that states that tenants will be responsible for damages they cause and they will be required to pay for those damages along with a $75 trip charge if the landlord comes to fix the damage and the money will be due and owing at the time repairs are made. No exceptions.

To encourage and draw good tenants, I offer lots of rewards. When someone first signs a lease, we give them a gift card to a store or restaurant of their choice. We also leave a very detailed explanation of how we expect them to take care of the property and how they'll be rewarded for doing so. The good tenants you have will tell their renting friends about how you're taking care of them and the gifts your giving them as rewards.

Every three months we do an inspection. You can make up a list of things you expect to be cared for according to your own comfort level. If the tenant passes inspection with a high score of 90-95 or above (your choice), we give them a $10 gift card to say Starbucks. That score is then added to a running total that's kept through the year.

By their third or 9-month inspection, we let them know that if they continue to maintain the high scores through their anniversary date (lease renewal time) they will get to pick an item from a list of gifts as an anniversary gift. These include things like a new ceiling fan, a one room carpet cleaning, etc. The gifts are pretty inexpensive and are upgrading your property but they make the tenant feel like it's their home to be proud of and continue to take care of.

You can train your tenants from the onset and this is just one way to do it whether you have one or 50. If you expect to get lousy tenants because of the type of property you're looking to buy, you'll get them! On the other hand, if you expect to get great tenants, you'll will certainly get them.

Good luck!