How To Avoid And Handle Difficult Tenants

[Joseph Velez]

Rental real estate is traditionally an excellent medium-to-long-term investment from a financial standpoint. But the idea of dealing with difficult tenants is at or near the top of the list of why many investors do not want to be landlords. The vast majority of the time, vetting protocols such as background and credit checks work for procuring reliable tenants. But there’s no such thing as a sure thing, and that’s why there are some basic steps landlords should take before agreeing to lease their property, as well as proven practices that help prevent problems after a tenant has moved in.

Screen Prospective Tenants
Unless you are renting to a family member or friend (which can bring its own set of difficulties), you likely will be entering into a legally binding financial contract with and entrusting a major investment of yours to a stranger. That’s why it’s of the highest importance that you properly screen your applicants before they become your tenants.

A background check will verify a person’s identity and provide any eviction history. Similarly, a credit check will allow you to assess the prospective tenant’s likelihood to pay rent reliably.

No reasonable tenant-to-be should resist providing relevant information, giving signed consent and paying the application costs associated with renting a home. If they do, that is an early sign that that person may not be the right tenant to occupy your property.

Collect Deposits
The standard security deposit is usually equal to one month’s rent, but some states law allows property owners to collect up to two months’ rent for a security deposit. Property owners should familiarize themselves with security deposit laws.

Often a tenant may ask for a lesser deposit based upon their credit and rental histories or their personal financial situation, but the standard one month’s rent is a great benchmark for a deposit. It provides owners with, at minimum, a 30-day buffer in case something goes wrong with your tenant, as well as a reasonable sum to properly make repairs without having to get into potentially unpleasant or drawn-out exchanges with recently departed tenants.

Conduct Regular Property Visits
Even when you have a phenomenal tenant occupying your rental property, it is a good idea to conduct regular property inspections. Property inspections help track the condition of a property and can prevent small issues from becoming larger ones.

Inspections at move-in and move-out are typical, as is having the tenant complete their own move-in checklist to address concerns that are not and should not be their responsibility. Routine inspections while a tenant occupies the property can be conducted every three to six months and will allow you to stay on top of maintenance and address any issues with the upkeep of the property. These inspections typically take place with the occupying tenant present and may allow them to address concerns that you, as a property owner, may not have known about otherwise.

You can also perform drive-by inspections without needing to coordinate with the tenant to address any concerns with the exterior upkeep of the property.

Document
It is always a good idea to document every interaction with a tenant and any and all work done during their occupancy of the property. Keeping most exchanges with tenants to email is a great way to document matters of concern and will help immensely if things need legal action to resolve. When you do speak with tenants by phone, keep notes of when the call took place and follow each call with an email to keep a trail of your communications. It is not the norm for matters to go to court, but in case the worst happens, you will want to have as much documentation as possible to make sure things go smoothly.

Keep and Provide Receipts
Along with documentation of exchanges, keeping receipts and providing receipts to your tenant is a good practice. For instance, if a plumbing problem requires an emergency visit that costs you $300, maintain that receipt and provide a copy of it to your tenant so that, if necessary, it can be shown that you addressed the matter professionally and promptly. This also helps the tenant know that you are invested in making sure the property they are occupying is well maintained and hopefully makes them take good care of the property themselves.

Have a Collection Company at the Ready
Let’s face it. Sometimes the worst happens. After trying to resolve matters one-to-one or even via small claims court, it may be necessary to employ a collection agency to recover lost rent or costs of repairs. Using a collection agency likely will only cover part of your losses, but sometimes it is the only means to protect yourself and your investment from a difficult former tenant who isn’t owning up to their end of things.

Getting the right tenant in your property, as well as handling difficult tenants, is at or near the top of the list of reasons why property owners should consider working with a trusted and experienced property management company. From proper vetting of prospective tenants to providing the property lease documents, working with an established property management company will protect property owners in disputes with tenants. Property managers have specific training on how to handle these matters and can reduce the stress and strain of a difficult tenant, allowing you to relax as your property generates the income and the equity you deserve.

CONTENT PROVIDED BY DAVE SWEYER