Tenants can make your real estate investment breezy, or they can make your life pretty difficult. No landlord plans on having bad tenants, but it happens. It is, after all, part of being a landlord. “So, what do I do if I have a bad tenant?” Read through to find your answer.
Disclaimer: What’s a Bad Tenant?
We feel it’s important to note that just because someone’s a bad tenant, doesn’t mean they’re inherently a bad person. Bad tenants are simply tenants who:
- Pay rent late, or a tenant not paying rent at all
- Inflict damage on the rental property
- Annoy other neighbors in the building or area
- Violate a clause or more in the lease agreement, such as owning pets in a non-pet-friendly rental property
- Partake in illegal activity in the property
These are just a few things bad tenants may do. And because you can’t always evict an unpleasant tenant, we’ve put together a list of ways to deal with problematic tenants that don’t require eviction.
How to Deal with Bad Tenants
Be calm, and never over-react
Essentially, dealing with a problematic tenant is about communication. It’s important for them to understand where you’re coming from. So be rational, and try to maintain a good landlord-tenant relationship. Even if you’re angry at the couch they ruined after they held that noisy party, don’t lash out. Instead, level with them, and be objective.
What if your tenant is late on their payment?
This is one of the most common “bad tenant” traits.
At first, you could let the first late payment slide, and give the tenant the benefit of the doubt. However, if your tenant is constantly late on paying rent, you need to take action. You can begin by sending a friendly reminder or a late rent notice that rent is due. If your reminders are being ignored and the problem persists, you could contact the tenant directly, or even pop by the property and request the rent. After all, a late rent check means you cannot cash in your rental income and make your own mortgage payment in time.
Another way to deal with late rent is to change the payment structure. If you initially charged the tenant monthly, try a bi-monthly or a weekly payment structure. Also, consider having a late rent fee from the start. This is likely to discourage renters from being late with their payments.
If multiple problems accumulate…
If your tenants are violating several agreed-upon terms, sending continuous letters may prove futile. In this situation, we advise you to request a meeting with the tenant. During the meeting, explain why you’re frustrated, and remind them of the terms you agreed upon in the lease. Explain your expectations and let the tenant know that should current actions continue, you will resort to legal action.
You don’t always have to be “the bad guy”
If a problem can be resolved without your intervention, don’t directly step in. Say you get a complaint from the neighbors, ask them to confront your bad tenants directly. This could help resolve the situation internally. Additionally, it could be important for the tenants to hear the issue from people directly affected by their actions, in this case – the next-door neighbors. If that doesn’t work, you can then step in.
Make sure to document everything
This is especially important in the case of property damage. Make sure to have the tenant sign an itemized list of appliances and furniture in the rental property, and document their status in writing or using photos. Legally speaking, you’re responsible for fixing any appliances that come with the rental property, especially if it’s accidental damage or wear and tear. However, any damage that is caused by the tenant’s negligence should be added as a cost to their monthly rent, or deducted from their security deposit. The way you address this should be guided by the tenancy agreement you signed at the beginning of the lease term. If the tenant refuses to pay, consider taking matters to court.
What about illegal activity?
This can be one of two main things:
Your tenant could be illegally subletting a room or renting the house as a short term rental property. In this case, simply meet with the tenant, and inform them that they are breaking the lease agreement. If they do not cooperate, you can take legal action.
The other risk is that tenants could partake in illegal activities. This includes things like running an illegal business, involvement in drugs, etc. Generally speaking, when it comes to these types of activities, you’re to report them to the proper authorities. Otherwise, hiding or overlooking illegal activities could make you an accomplice.
Consider hiring a property manager for bad tenants
Sometimes the best way to deal with bad tenants is to simply not. There are companies out there who’ll do the work for you. Property managers will deal with the A to Z of your investment property. This can prove especially helpful if you own multiple rental properties, and have more than one tenant to deal with. Property managers can help ensure that you’re running cash flow properties by dealing with late rent, property damage, etc.
Owning a rental property can be challenging. The day to day problems can add up and become strenuous for landlords, but you can always hire someone to support your work.
If All Else Fails…
You may need to evict bad tenants. It can be simple if you’re doing “cash for keys” in which you agree to pay your tenant to move out. This can ease the process if you and the tenant are both on the same page about terminating the tenancy.
The alternative is eviction. In this case, you would need to go to court to file eviction papers. You would also need to give the tenant an eviction notice, and attend hearings and court dates. The way you get rid of bad tenants can vary from one place to the other, depending on landlord-tenant laws. While there are states which are considered landlord-friendly states, others are tenant-friendly states. The eviction process, in general, is a complicated, costly, and often tiring process, so we suggest you only follow through with it if all else fails.
Learn More: How to Deal with Bad Income Property Tenants