Good vs. bad tenants--what is your percentage?

Question

Hi All:

I am fairly new to Bigger Pockets, though I have been lurking here for a while soaking in all the information. My husband and I currently have four rental properties and are hoping to purchase more in the future--though to be honest a lot of what I have read here is pretty frightening. To read a lot of the posts here, you would think that most tenants are terrible, and that they are out to destroy your property while remaining as long as they can rent free.

Just wondering what the experience is of the members here. What percentage of the tenants you have had would you classify as "bad?" What percentage left your property with more damage than the security deposit would pay for?

For myself, I would say it has been 50/50. However, when I started being more stringent with screening I have had all very good tenants.

Looking forward to your responses.

Chris Clothier · Answer

Tamara - You really answered your own question. We manage 978 properties as of today here in Memphis and I can promise you that the difference between managing good and bad tenants is completely in the process you use to find, screen and train them. On the rest of your post, it is amusing how horror stories make up most of the stories that investors tell and all of us have them. Usually they are being shared because there is a lesson to be learned. You just taught everyone a great lesson to being a landlord - you control how good your tenants are going to be!

Bienes Raices · Answer

Thanks Mitch. With BP's help I've dodged a few bullets over the last couple of years.

Mitch Kronowit · Answer

Keep up the good work, Bienes. I think over time you'll find that 75% go up, not down.

Bienes Raices · Answer

So far, out of four groups of tenants, I'm at 75% good, 25% bad (although I wouldn't characterize them as "bad" people--they are just having issues with the rent).

Mitch Kronowit · Answer

10 to 1 (good to bad). I'd quit this business if I were 50/50.

James H. · Answer

I've only had my tenants for one month, but when I went to pick up second month's rent (early) they had Christmas lights up, some paver-stone walkways installed and the house was cleaner than my own house! Better believe I am going to keep very good maintenance to retain this older couple! I hear the first 3 months are the best indicator of how tenants will perform. So far, so good. Nathan, I saw you recently got your duplex. Congrats! I don't know that I would be too concerned with credit at your rent prices, but rather, be more concerned with rental and work history. One thing I loved to see was when applicants wiped their feet when coming in (I provide floor mats for my unit to help maintain the new flooring during the touch-up phase, and then I leave them for the tenants). We have our criteria which is very similar to Mike-0h's criteria. Plus, we made sure we felt warm and fuzzy about the applicants (as warm and fuzzy as you can be about complete strangers). I really enjoyed the whole process and learned a lot. I'm glad I started with something that I could afford to let sit vacant forever if I had to, because that took a lot (not all) of the stress away so I could concentrate on learning and not worry about big mortgage payments. Now I will feel 1000X more confident to use more leverage next time around if I decide to go that route. Despite not needing to quick lease it, we still had it leased the day it was ready for move-in. Just keep your eyes open and evaluate everything about them from the first word on the phone. One thing that helped me screen troublemakers was to verify they were not walking on an existing lease. It's easy enough to find this out when you verify the current landlord/apartment. Be very skeptical of people living with family or claiming to live with family for any period of their rental history. Ask questions, but don't lead. Pay close attention and ask more questions. Get them talking for a while and you can learn a lot about them. The more they talk, the more likely they will make little inconsistencies if they are being dishonest about or hiding something. This is a real luxury when you don't have so many units you can't be bothered with spending the time.

Nathan Emmert · Answer

No tenants yet, not sure if that makes me 0% or 100% :) Not to threadjack though things have gone a bit off course... just curious if you (or others) might offer what those "more stringent" requirements were that improved the quality of the tenants. Was it income, better reference checks, better gut feel, running credit, raising credit score requirements, etc etc etc??

Steve Babiak · Answer

Call them 3 days before the actual due date, and you might see your rent on time!

Tamara R. · Answer

Michelle: In my book, I would consider that a good tenant. I also have a tenant that pays 3-5 days late every time, but she always pays the $50 late fee, so I am OK with that. Just FYI--your military tenant can set up direct debit to you right from his paycheck. We have a military tenant and get paid directly to our account on the 30th before rent is due. That way the "I forgot" excuse is not longer an issue.

Michelle Marty · Answer

I'm not sure what you would consider to be a bad tenant. We have tenants that rent out one of our 3 bedroom houses and they are always late paying their rent. It's usually about 3 days late. We've asked if it's because the due date doesn't match up with pay day and they said no they just forget and then always send it after we call. They never complain about anything but we do have to call them every month to remind them rent is due. That is the only problem we've had though. We consider ourselves pretty lucky. We do stick to renting in military towns. If a solider doesn't pay up all you have to do is call his commanding officer and the problem is fixed ASAP.