How to handle difficult tenants?

Question

Good morning fellow investors,I am fairly new in the landlording business and I am facing sort of a difficult situation with one of my tenants that is making me consider finding a way to terminate their contract. I need advice. I am in Florida.

For context, this is a property that has an attached unit under the same water and electric meters that is being rented separately. As part of the contract for the main property, there is a provision for a fixed credit a month to "cover" the portion of the utilities of the smaller unit. The amount was just guestimated as I don't have a long enough history of the utility bills to form a very good idea of the overall consumption. I understand that and I am perfectly willing to adjust the credit in a few months after learning more about actual usage.

The issue comes as the tenant (who has been there only for 2 months, and some of the billing cycles are 2 months) has started to make demands that, to me, are not only unreasonable but petty that are making me guess if I should find a way to cancel their contract.

Some of the demands are:

- They complained about taking the trash bins out for pickup, as the side unit (a single mom and a baby) use it too - To which I found someone else that does it now for both

- Complained about the cost of mowing the grass, as again, other people live in the property - This side unit is in the side of the house and do not share the front lawn - I will not accommodate for that

- Complained about a portion of the house being too hot due to bad placement of the central AC vents - To wich I just installed an extra mni split to help cool doen

In addition to this, our contract says they should have put the utilities under their names within 3 days of renting, which they have not (breach of contract). I even took the job of calling each utility company and detail step by step the process, documents, phone numbers...etc they shoud follow and still nothing.  I've been having to pay them myself (as I cannot just let the lights go off because of the other unit) and sending them the bills for reimbursement. This month they are witholding the reimbursement as they want to renegociate the credit (we are talking about a combined $283 for a 2/3 house with a pool in Florida after credit). Not to say that rent payments are always done a few mins after the grace period ends after several reminders.

I'm not sure if I am being too hard on them or too soft-skinned as a new landlord but this is frustrating me quite a bit. How would you handle this situation?

Thank you!

Tony Savage · Answer

Hey Allende,

Let them out of their lease, they're a pain in the butt! They're complaining about having to take the trash bins out for pickup knowing that their neighbor is a single mom with a baby! They haven't put the utilities into their names yet, unacceptable!

In my leases, my tenants are responsible for the cost of the trash pick up and making sure the grass is cut. I have a property similar to yours; A SFR in the front with a studio in the back and they are on the same water meter. I give my tenants in the house a slight break on their rent because of the water meter.

Get them out, they're not going to stop complaining!

JD Martin · Answer

You will have nothing but trouble out of these people going forward. However, some of these issues are self-inflicted:

1. If you cannot split utilities then they should remain in your name and sub-bill the tenants. It's unreasonable for one tenant to have the usage and consumption of the other in their name, because electric goes with the person who has it in their name. Same with the water.

2. Lawn care should just be built into the rent, period on a multi-unit.

Beyond that, allowing tenants to get away with unilaterally withholding any part of the rent is big trouble for your authority as the landlord. You should offer to release them from the lease, and if they choose to stay let them know that further lease violations will result in eviction proceedings. And as soon as their lease is up, get them gone and start over.

Randall Alan · Answer

@Allende Hernandez

Hi Allende,

I'm in Lakeland.  Combined utilities can be a pain.  Some of your solutions are 'easy' though... Like the trash cans... Usually you can request a second can for a residence.  Maybe there is a little extra charge, but if it solves the problem, it's probably worth it.

Same thing for mowing the lawn... find a provider and build it into the cost of the rent.  That way it gets done, the vendor gets paid, and you don't get code violation letters from the city

For the AC, you should probably just run one side completely on the mini-split system and let the other tenant have the 'central' AC.

We have combined water on several of our duplexes.  Our solution -  we pay the water and build it into the rent.  That's a little trickier on Electric.  But you are probably in a no-win situation there, as who is to say who is using the electric.   The smarter solution would be to split the utilities into 2 meters.  It would take an electrician, and some expense (2nd circuit breaker box, 2nd meter, etc)... but it's the only 'clean way I would say you could solve the issue, and honestly it's the right way to do this for a long term renters.

Same thing with the tenant not changing the utilities into their name, the solution is to make it where they are the only one using them - then the answer is either put them in your name, or you have no utilities.

I don't think either of you are at fault here... but your tenant has valid concerns.  On your side, you are just stuck with the issue until you solve it in a workable way.  I don't see better solutions on the electric other than splitting them.   The best thing to do is to set your property up the right way to rent.  I suggest thinking of it as a start-up cost.  It's never fun to spend that money, but you have created a bad situation by what is in essence  subletting part of the house without the utilities being optimized for that split.

And while you didn't mention it, I'm sure you aren't too far from hearing about the  pool care expense - include it in rent as well and manage the contractor yourself.

Hope it helps!

Randy

Gregory Schwartz · Answer

The joys of managing RE. These are a few things I've learned from managing 100+ rentals

Tony Savage · Answer

They are in violation of your contract/lease. Give them the choice to leave or you will proceed with the eviction process.  Yes, it will cost a few thousand but in the end you will come out ahead.

You can't keep going back and forth with these tenants.  All tenants need to know that when you tell them eviction is possible that the landlord will follow through.

JD Martin · Answer

I think you have a good plan there. If splitting the utilities is impractical/impossible, then it just becomes a fixed cost that you build into your rental pricing. Done right it can actually make you a little money. And yes, once you have difficult tenants it's generally fruitless to try to bring the relationship back around - better to just start over.

Sandy G. · Answer

Hello.  I agree with everyone above that the utilities should be in your name.  Can't expect a tenant be responsible for utilities of the other units.  You will run into big problems with the other tenants the day the main house tenant stops paying the utilities and they are shut off.  In this situation, keep ALL utilities in your name especially the water.  Miami-Dade County can put a lien your property for unpaid water & sewer bills.

This tenant is in violation of his lease for not putting the utilities in his name AND not paying for them.  I presume he agreed to the terms of your lease with regard to the utilities.  I doubt he plans on putting them in his name.  It appears you are not charging the other 2 units anything for the utilities (other than including in the rent).  The thing is, even if you guesstimate the cost of utilities and include in rent, people will ALWAYS abuse this because they are not paying anything for the utilities.  They will leave the A/C cranked 24/7 and never shut it off.

With your next round of leases, I would suggest updating your leases to split the cost of utilities.  For example, 60% of the total monthly utilities for main unit and 20% each for the other 2 units.  Or, 70% and 15% for the other 2 units -- depending on how large the other 2 units are. In multi-family properties, Landlord should pay for lawn maintenance and find a way to incorporate into the rent.

Stand your ground and stick to the terms of your lease.  No need to engage in back and forth with this tenant. Get him out and start over.  Hopefully, they will take your offer to leave to avoid an eviction on their record.

Henry T. · Answer

You could do this. Raise the rent by an estimated total of what you think the elec will be. With a disclaimer, if electricity goes above xx, tenants pay the difference. Have same disclaimer with any other utils.  This usually eliminates the tenants that like to torture landlords with high utility bills. I strongly suggest you get two elec meters. All duties should be written into your lease. If they fail to follow, kick em out!

Allende Hernandez · Answer

Definitely, a number of lessons learned with these tenants that will help me tight my contracts and strategies for the future.

@JD, no, I never intended to pawn the utilities off to tenants. There is a montly credit towards the utility bills that I always knew there was the possibility of adjusting it mid-term as I build an idea of actual usage, and I was willing to. The issue is that these people started complaining about some every possible non-sense, I tried to accomodate and then decided to default in their payments to force a negotiation. Had they come to me in a different manner, yes I would have reaosnable adjust the credit event though I hadn't time yet to figure it out. Just for context, with the credit, the first month of their stay they paid about $67 for all utilities, and this month about $282. This foor a 3/2 in Miami is more than reasonable.Unfortunatelly this situation onfolding now didn't give me enough time to build a monthly trend but I'll have to work with what I have and figure out how to do the next one.

For starters, I'll update my contract to keep utilities under my name and maybe instead of a monthly credit go off a percentage. This will probably add transparency as the credit will increase along with the bill. Any other ideas are welcome.

JD Martin · Answer

I still don't understand how you can reasonably expect tenants to put electricity (and water) in their name when other unrelated units are consuming that product. The utility bills become the responsibility of whoever has them in their name. If the next door neighbor runs up $1000 in electric costs air conditioning the outdoors, you have no way of proving or apportioning the costs, so the tenant is just expected to eat it. If S/he refuses, the electric can be turned off for everyone, and now they have the huge bill in their name for collections. That's unreasonable and if you went to court I expect the judge would consider it unreasonable as well. Just because you aren't sure how much to charge for utilities doesn't mean you get to just pawn it off on the tenant. That is part of running your business. You could have come pretty close to figuring out what the bills would be, added a little in for fudge factor and just put it in the rent. Now what you are doing is asking a tenant to help run your business.

I wouldn't say anything to your tenant about playing fair. That's just not something business people say to vendors or clients or customers. Terminate them if you like based on the utility issue, but know that you are not usually permitted to benefit from illegal or unreasonable sections of a lease if they fight it in court.

How to handle difficult tenants?

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