How to Deal With Bad Tenants – 13 Problems Landlords Face

Tenant problems plague landlords every day. However, reducing rent to maintain good tenants and evicting problem tenants may not be the best courses of action.

While lower rents obviously affect a landlord’s profitability, evictions are also expensive and can cost a landlord time, money, and resource to conduct. In addition to the basic turnover expenses such as marketing, lost rent, new paint, and appliance repairs, attorneys’ fees for evicting a tenant can be outrageous. Also, a tenant may vent his or her anger by purposefully damaging the property.

Whether you’ve been a landlord for much of your life or you’re preparing to rent out your very first property, it is important to understand that you may need to go through the eviction process at some point during your career. Even if you’re a good landlord and do your best to build positive relationships with your tenants, in some cases, relationships simply sour. But rather than immediately issuing an eviction notice, you may want to try any one of a number of time-tested tips to deal with common tenant problems.

Common Problems Faced by Landlords

1. Tenants Refuse to Pay Rent

Tenants can withhold rent from landlords for a number of reasons, from cash flow shortages or temporary unemployment, to repair and maintenance disputes. Communication is critical when confronting this issue, and it’s important to understand the tenant and the nature of the issue and try to negotiate, if possible.

Structure Payment Options
If the tenant has cash flow problems, the most effective rent-collecting method is to structure payment options. As a landlord, you should recognize that people occasionally struggle with bills, so you can try implementing a policy of accepting a partial payment from a resident once per year. Another good way to collect is to prorate the late fees and delinquent rent over the remainder of the tenant’s lease.

You can also negotiate weekly partial payments to aid with the tenant’s cash flow and even apply a portion of the security deposit to ease the strain on the tenant’s wallet. Setting a strict payment plan and following up to ensure that the tenant remains in compliance with the payment plan is your ultimate key to success. In general, the tenants best-suited for flexible payment plans are those with short-term financial problems who tend to pay whenever they have the money rather than per the terms of the lease.

Change the Living Arrangement
If a tenant can no longer afford the rent, landlords can set them up with roommates or move them to smaller, lower-cost units. Landlords who make this effort and offer options to their tenants can be rewarded with tenants for life.

However, if negotiation and communication fail to fix the problem, you can try to convince the tenant to voluntarily leave. If the tenant is unable to pay, then explaining the long-term impact of eviction on their credit and rental history can convince them to turn over possession of the unit. Leaving of their own will can be a much better option than facing legal fees and bad debt.

2. Bad Tenants Slide Through Your Screening Process

An easy credit check and application might not sufficiently reveal prior tenant problems, but it is an excellent place to begin. Here are several ways that landlords can help to ensure their tenant screening process weeds out the problem tenants:

• Conduct a Thorough Background Screening. A thorough background check involves screening to verify employment and rental histories, credit checks, and interviews for all prospective tenants. To run a credit check, obtain the applicant’s Social Security number, address, and name, and ensure you have his or her authorization. Some landlords request payment for the cost to run the credit check, which can cost anywhere between $30 and $50. While you cannot order a report directly from Experian, TransUnion, or Equifax, you can get the assistance of a tenant screening service or credit reporting agency.
• Interview Applicants at Showing. A landlord’s primary goal during a showing is not to sell a potential resident on the unit. Rather, it is to take the opportunity to interview applicants and learn why they are leaving their current residence, and determine what they expect from their new property or rental community.
• Request a Completed Application Upon Showing. Request that prospective tenants complete the application during the first showing. By allowing them to return the form later, you essentially give applicants the chance to create histories and recruit family members or friends to portray previous and current employers and landlords.
• Speak With Previous Landlords. When researching an applicant’s background, speak with his or her previous, not current, landlord. If the tenant is undesirable, the current landlord might give a glowing recommendation, hoping to make the tenant your problem.
• Contact Applicant’s Direct Supervisor. Rather than contacting the human resource departments of the prospective tenants’ employers, reach out to their direct supervisors. A cooperative, honest, reliable employee is likely to exhibit the same personality traits as a tenant.

Room for compromise almost always exists. Someone with bad credit isn’t necessarily a bad tenant, since people tend to pay their rent bills first. Proceed with caution if only one portion of an applicant’s background check is tarnished. Depending on the severity of the issue, you can offer the applicant a trial period with a larger-than-normal security deposit or for a three-month probationary trial.

3. A Building Has a Bad Reputation

From loud parties to unfavorable people lingering in the shadows, there are multiple reasons apartment buildings can routinely develop distasteful reputations that affect a landlord’s ability to attract well-qualified, respectable tenants. Concrete measures, such as changing the building’s name, fixing neglected landscaping, and repainting must be speedy, so residents see immediate changes – even if they are small in the beginning.

Speak to Law Enforcement
If necessary, contact the police to find out if certain units in your building generate an above-average number of calls to law enforcement officials. With active cooperation from the police, you should have no difficulty removing bad tenants from the property.

Another option is to pay for a police substation in one of the leasing offices on your properties. This can be done by renovating an empty unit to make it a smaller office with limited services. You need to contact your local sheriff’s department for details to see whether such an arrangement is possible.

If you and the station do not work out an agreement, offering free apartments or units with reduced rent to probation officers and cops can cause real problem tenants to immediately and voluntarily vacate the premises.

Develop a System
After you weed out bad tenants, implement a system in which the quality tenants receive partial-month rent credits, cash, or gift cards for referrals. Instituting such a system can help repopulate your property with good and decent residents.

Also, it’s important to advertise your efforts. Building rapport and networking with other property managers around your area can help to spread the word about the positivity you’re trying to bring to the community. Try erecting road signs that announce the property’s new management and name to build community awareness.

4. A Tenant Regularly Disrupts the Neighbors

While implementing a thorough screening process can eliminate many problem tenants, it might not prevent future squabbles between neighbors. Tenants’ activities can routinely, negatively, and directly impact their neighbors.

Allow Tenants to Resolve Problems
A solution for such disputes is to suggest that all tenants resolve disputes between themselves. Make a clause in the lease that specifically states that all tenants are to make every able attempt to settle arguments without your intervention. Include a message stating that if you must get involved, one tenant might not be pleased with the resolution, and someone stands a good chance of leaving the property.

If you find out that two tenants are arguing via another resident, politely remind them of the terms of the contract and the possible consequences, such as eviction, that may be in their futures. While tenants are likely to dispute, they can also learn to get along and respect each other.

Step In When Necessary
If tenants simply cannot act decently toward one another, mediation might be the only option. If neither party is cooperative, explain the consequences in a calm manner to aid in resolution. At some point, your residents hopefully understand that the net impact is on them, not you

As added protection – should a tenant attempt to blame the management – be sure that any lease or rental agreement contains property regulations and rules, in addition to tight clauses regarding these disagreements. You can give a “three strikes and you’re out” notice or speak with your property manager regarding his or her experience handling disputes. It is always in your best interest to have some form of documentation that you can refer back to later when you find yourself facing a problem tenant.

5. A Building Has a High Tenant Turnover Rate

One of the most common problems tenants face that cause them to leave an apartment is repair disputes. Therefore, ensuring that all responses to maintenance requests are professional, high-quality, and timely is one of the most effective ways to maintain a positive relationship with your tenants. To make requests easy, send out a monthly notice that tenants can check off and return to the office if they need to report an issue with their units.

Here are several other things you can try to help fill your current vacancies:

• Repair and Upgrade Units. Make sure that all broken or damaged fixtures are addressed before tenants complain. Anticipating complaints and correcting the problem relays your respect for your tenants, as well as your pride in the building. For example, replace threadbare, worn carpeting and install energy-efficient appliances, rather than perform “Band-Aid” fixes.
• Frequently Monitor Competing Properties’ Amenities and Rents. Tenants commonly vacate to save money in a different home. To prevent this, keep an eye on the competition. Watch the market and know how you fit into it – and if you see rent decreases looming on the horizon, lower your rent now. This ensures high occupancy while minimizing your loss to competitors.
• Negotiate Renewals in Advance. It is common practice among good landlords to negotiate renewals with respectful tenants approximately three to four months before their lease is finished. Depending upon the occupancy levels at the time and the current market, you can offer an incentive or discount for renewal. If it’s necessary to increase the rent, send notices to your tenants along with a thank you letter and an explanation. Make sure that you or a staff member personally delivers the letter to each tenant. For long-term tenants, try modest annual rent increases instead. It can take some time to get your entire community up to the current market standards, but you could save money by not having to find new tenants if you force out current tenants.
• Create a Strong Sense of Community. Host holiday or pool parties or decorating and gardening contests, or distribute a monthly newsletter to which tenants can share information and contribute articles.

Other Common Tenant Problems

6. Pest Problems

No one wants to live in a home with rodents or roaches running around. If you routinely avoid hiring an exterminator, you probably experience significantly high turnover rates in your properties.

Duplexes, apartments, and single-family homes can develop bug problems when either the resident or his or her neighbor brings in these critters, and if you find that one unit is contaminated with bedbugs, it won’t be long before all of the units are. Rather than let the situation spiral out of control, contact an exterminator to handle the issue as soon as you hear or receive a complaint.

7. Roofing Issues

If you know that the roof in your building leaks, fix it immediately – and never try to rent the property to an unsuspecting tenant. Tenants have every legal right to a safe home, and the longer you leave the roof leaking, the more damage and retribution you face.

Even the smallest leaks can lead to mildew and mold, cause water damage, or even make the roof cave in. By law, tenants can place their rent money in an escrow account and withhold it from you until the roof is properly fixed, so it’s best to address these issues before you schedule a showing.

8. Broken Appliances

If your lease contract states that the property comes with appliances, you’re legally responsible for the maintenance and repair of those appliances unless you state otherwise. For instance, you can include a clause that affirms the property does come with a used washer and dryer, but replacement is the responsibility of the tenant. Still, if you promise appliances and a renter moves into the unit to discover, for example, that the stove is broken, you need to remedy the situation as soon as possible.

While buying a new appliance is far from cheap, doing so before a renter moves in can save you a lot of hardships and complaints. Keep in mind that tenants can pursue a claim against you or file their rent payments with the court or in a separate savings account until you repair or replace the broken appliances.

9. Security Deposit Issues

If one of your tenants mistakenly believes that he or she can use the security deposit to pay for the last month’s rent, you might have some problems. The confusion happens when a tenant wrongfully believes that he or she isn’t required to pay the last month’s rent and that the landlord can simply use the security deposit instead. While the civil code states that a landlord can withhold the security deposit to cover the last month’s rent or any unpaid rent during the lease, if a tenant fails to pay anything, the security deposit may not be enough to cover the last month plus expenses.

If you have received an intent to vacate notice from a tenant but are still shy one month’s rent, you can start the eviction process if you feel that this is the best resolution. Some landlords make it clear in the lease that the security deposit is not to be used as a replacement for last month’s rent. You can also collect first’s month’s rent, last month’s rent, and a third payment to be used as a security deposit. However, if you choose this route, make absolute certain that it is clear in the lease and that the tenant fully understands before he or she signs the document.

10. Violation of Rules

A written contract sets forth the conditions of your lease, including whether a tenant can sublease part of the space to another renter, or whether a tenant has your permission to keep pets on the property. If the residence is in a homeowner’s association, the tenant might be responsible for the maintenance of the landscape and exterior building.

Whether you have witnessed a violation of the lease yourself or word has come to you through a third party, it’s important to notify the tenant in writing of the violation and request that he or she corrects the problem or otherwise face an eviction. For example, if your lease specifically states that no pets are allowed and you find evidence of a dog, send a letter to the tenant informing that he or she is breaking the terms of the lease and that the animal must be removed from the property by a certain date.

Let the tenant know that if he or she does not re-home the animal, then an eviction is possible. Alternatively, depending on the situation, you can make an amendment to the lease by requesting an additional deposit and increased monthly rent to pay for the possibility of future damages caused by the animal. If the tenant does not comply with your request by the time you conduct an inspection, you can decide whether an eviction is the appropriate course of action.

11. Past-Due Utilities

Many landlords fail to monitor the payment of utilities until after the tenant has moved off the property. Whether the utilities are in your name or the tenant’s name determines who is responsible for past-due bills. Make sure that your rental agreement is clear and specific.

For instance, if you agree that the utilities are in your name and the tenant must pay you each month, those utilities become your responsibility if the tenant leaves without warning. On the other hand, if your lease states that utilities are in the tenant’s name, then the utility company will attempt to trace down the resident in case of past-due payments. The utility company cannot legally force a new tenant to pay the past-due balance of a previous tenant.

12. Purposeful Damage

It is unfortunate that some tenants leave the landlord with significantly high costs by purposefully causing damage prior to leaving. In any case, it is always good to document the state of the apartment: Take pictures of the property before it is rented, and take pictures after the tenant moves out. Make sure that the photos have the time and date stamp on them, as this can help to prove your case in court.

Also, you must always safeguard your investment by taking out a property insurance policy that is designed specifically for landlords. Keep in mind that a traditional homeowners insurance policy may not cover a rental apartment or building, so you need a policy that will cover your liability when the building is rented, as well as any damage to the structure caused by your tenants.

There have been many cases of floods or fires caused by problem tenants or other occupants that have ultimately destroyed properties because the landlord failed to insure the unit. This is why it is utterly important to protect yourself with a landlord-specific insurance policy. Fortunately, liability coverage is almost always included with landlord policies, and liability coverage protects you against a lawsuit should your tenant decide to take legal action.

However, if your policy does not include liability coverage, or if you want to increase your coverage, check with your insurance provider to see if adding this coverage is available via an umbrella policy. To further protect yourself, require the tenant to have a minimum amount of renters insurance.

13. Illegal Use of the Home

If you are informed of any changes to your unit, it is critical to take action to protect yourself by seeking legal counsel from an experienced attorney and by reporting the incident to the appropriate authorities. However, tread with caution to avoid any backlash from the tenant.

On the other hand, you might have a tenant who engages in offense behaviors that negatively affect their neighbors, only to find that these activities are completely legal. In this situation, it’s best to draft a letter to formally request that the tenant immediately cease the action or face eviction. For example, a tenant may practice with his rock band from 10am until 3pm every Monday and Wednesday. However, the noise ordinance in the municipality is 11pm, so while his neighbor finds this obnoxious and disrespectful, the tenant legally has the right to play during these hours.

Eviction: The Final Solution

Unfortunately, in some extreme cases, eviction may be the only option. Sometimes, a landlord finds that giving a tenant one chance turns into two chances, which then results in a third chance, and so on. This wastes time, causes aggravation, and can result in the loss of rent income.

If you believe that you are going to find yourself in court in the near future – or even if you simply want to protect yourself, just in case – it’s always a good idea to keep detailed logs of tenant problems, as you are required to prove cause for eviction in court. Many landlords underestimate the need for paper trails when dealing with problem tenants, erroneously believing that verbal agreements hold up in court. However, this process can be a lot easier if you document every interaction you have with your problem tenants.

Source: moneycrashers