How to Deal with Bad Income Property Tenants

Bad income property tenants are a real estate investor’s worst nightmare! Whether a tenant is not paying rent or is disturbing neighbors, you must do something before the problem gets worse. If you try to let the problem solve itself, you will be on the losing side. To prevent losing money and destroying the peace, here are some ways to deal with some bad income property tenant problems.

Related: 8 Things that Make a Good Tenant

• What To Do if Tenant Pays Rent Late

The most common issue with bad income property tenants is receiving late rent. If this nuisance is left unabated, you will be losing a lot of rental income. If this is the first time a tenant has not paid on time, then simply remind them. Contact them, preferably in person, and be firm and polite about the manner. When dealing with any sort of bad tenant problems, it’s important to keep an objective, firm, and calm approach.

If the tenant does pay after this one-time tardiness, great! If this becomes a recurring theme every month, then you’ll have to take things a few steps further. Again, remind them before the deadline. But this time remind them with a late rent notice. In an assertive manner, notify them of the late rent and its consequences as mentioned in the lease (strongly recommended this is included in the lease).

Hopefully a late rent notice is enough to thwart late payments. If the problem persists to the extreme, again, try to contact them. The tenant may purposefully avoid you. In this case, notify them with a pay or quit notice. A pay or quit notice is exactly as it sounds like. It gives tenants 3 to 14 days to pay the rent or leave the property. If the tenant does neither, an eviction process will begin. Typically, you’d want to avoid evicting tenants. The process is very tedious and costly. But if the situation is becoming extreme, then it is legally required to do so.

Related: 6 Landlord Laws and Concerns You Should Be Aware Of 

These situations may not occur often. A number of times a tenant is paying late is simply because the he/she is going through rough financial times. The tenant may have recently been unemployed, or is in a different difficult economic struggle. In these cases, keeping cooperative relations with the tenant is key. Have the tenant pay in weekly partial payments to ease their financial strain. You could also consider using a small portion of the security deposit to cover the unpaid rent. Sometimes, the tenant is just going through a rough time and eventually pays back the rent as soon as they have the money to do so.

• What To Do if Tenant is Unable to Pay Rent Indefinitely

Sometimes, a tenant’s financial difficulty exceeds for a period of time. They may become unemployed for a considerable period of time or are just unable to pay. In these cases, try to have them rent with roommates. This lowers their load on the rent, since it becomes shared. You could also move them to properties with lower rent. These two strategies will require positive cooperation between you and a tenant. Always try to have good relations with a tenant. You will end up saving money and having less headaches.

Related: 4 Different Ways of Renting Out Your Property

If you cannot employ any of the previous strategies, try convincing the tenant to leave the property on their own. Do this if the tenant has reached the legal limit and the eviction clock is ticking. Explain to them the negative effects of eviction on their rental history and credit. This will normally deter them from being evicted from the income property, they will leave on their own.

• What To Do if Tenant Refuses to Pay Rent

This situation is somewhat similar to the previous two, except that it takes a sharp turn. The tenant just flat out does not want to pay rent, and continues to reside in your income property. Notify the delinquent tenant with a pay or quit. Eviction is probably the best option here. This is the most extreme case of a tenant not paying, do not worry about it happening often or at all.

• What To Do if Tenant Bugs the Neighbors

Maintaining peace between tenants in different unit is key to a successful income property. Unfortunately, though, things do not always play out that way. If a tenant constantly blasts loud music late at night or has noisy parties consistently, you need to address the issue. Remember, failing to deal with these bad tenants will make your good tenants leave. Contact the pesky tenants and address them firmly, assertively, and politely. Inform them that what they are doing is not acceptable and is in violation of the lease agreement.

• What To Do if Tenant Violates the Property

On rare occasions, you may encounter a tenant who simply violates the income property in different ways. If a tenant is in the process of being evicted, they make that their frustration of the income property, damaging it in any way. If this were to ever happen make sure you have pictures of your property. Have before pictures of the property before the tenant had settled in. Take after pictures as proof that damage has been done. Take the matter to court. It’s difficult to anticipate extremely rare moments like these. Do consider having insurance for your income property.

And while this is the rarest of them all, the tenant may conduct criminal activity in your income property. Call the police, no brainer there. If you or a different tenant suspect of criminal activity, attempt to document evidence.

This blog contained some scenarios that are definitely not common when dealing with bad tenants, but they still could happen. The most basic preventative measure for having bad tenants is to SCREEN them effectively.

Related: 7 Savvy Real Estate Investing Resources

Screening tenants will definitely reduce the extremely bad tenants you could deal with. For the not as bad tenants (those who pay late, make loud noise), there are additional preventative measure you can take. Include late payment fees as a clause in the lease. Build positive relations with tenants, so that in the case of any compliant, the issue can be solved quickly. Whenever you deal with any type of issue, try to be as cool-headed and rational as possible. At the same time, be assertive and polite.

To find your ideal income property with great tenants, start your search on Mashvisor.