How to Dodge the Bad Tenant Bullet

How to Dodge the Bad Tenant Bullet

3 min read
Kevin Perk

Kevin Perk is a full-time buy and hold and fix and flip real estate investor with over 15 years of experience. He and his wife Terron operate Kevron Properties, LLC, a boutique real estate investing company in Memphis, Tenn.

Experience
Kevin was a past president and is a current board member of the Memphis Investors Group. He’s also a blogger and writer who has authored hundreds of real estate investing articles on BiggerPockets and his own blog, SmarterLandlording.com, some of which have been featured on The Motley Fool and MONEY: Personal Finance News & Advice.

Kevin is also host of the SmarterLandlording podcast.

Originally from the Washington D.C. area, Kevin moved to Memphis to attend graduate school at The University of Memphis. After receiving his master’s degree in City and Regional Planning, Kevin climbed the planning career ladder to eventually become planning director of a county in the Memphis metro area. He “retired” from planning in 2003 to pursue real estate investing full-time.

Since “retiring,” Kevin’s main real estate investment strategy has been to buy and hold, otherwise known as landlording. Generally working in historic Midtown Memphis, Kevin is also known to fix and flip grand, historic homes when the right opportunity presents itself. He and his wife Terron (who is the principal broker at Perk Realty) have participated in dozens of real estate transactions in the Memphis metro area.

Kevin has the heart of a teacher and believes in helping others through education. An instructor of college-level geography for over 25 years, Kevin also regularly participates in seminars and panel discussions at such forums as the Memphis Investor’s Group and the Single-Family Rental Summit.

In addition, Kevin has been interviewed in publications such as the Memphis Commercial Appeal, the Memphis Daily News, and the Foreclosure News Report.

Education
Kevin earned a master’s in City and Regional Planning from The University of Memphis.

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When you are a landlord, figurative bullets can fly at you from many directions. Taxes, insurance, code enforcement, and repairs are all things we landlords have to deal with. One of the most painful bullets if it finds its target, however, is the bad tenant.

Dodging bad tenants begins with your tenant screening process, but it continues right up to the point you are about to hand them the keys — and perhaps even after you do. You must continue to have your guard up at all times because unfortunately some bad tenants will not show their true colors until the very last minute.

Related: 6 Tips to Turn Bad Tenants Into Great Tenants

Sometimes Even Bad Tenants Can Pass Screenings

Believe it or not, it is possible for some bad tenants to make it all the way through your screening process. They might have excellent jobs and great credit, and their previous landlord might rave about what wonderful tenants they are. Everything might look great, and then at the last minute you begin to get bad vibes. They might start missing appointments or showing up late. They might become rude or insulting. Perhaps they become demanding, even overly demanding.

Of course, these might be one-time occurrences due to a bad day — or they may not. But you as the landlord need to remember that it is never too late to walk away before the lease is signed and the keys are handed over. Until a lease is signed, you do not have a formal contract and either party can walk away. In fact, I know of one landlord who actually tore up a lease right in front of the tenant just before signing it saying, “Nope, I’m not renting to you” after they became rude.

tenant-recordings

I am not sure I would go that far, but remember that you are trying to dodge bullets, and it is always easier to do that now, even at the last minute, rather than later.

But what if the lease has been signed, you have handed them the keys and then you realize your mistake? Can you not dodge that bullet anymore? Maybe, maybe not. It will depend on how you handle the situation.

Related: How to Find Great Tenants Without Ever Meeting Them

What to Do When a Good Tenant Situation Goes Bad

A couple times in our landlord careers we have tenants move in who suddenly get very demanding. Nothing we do is ever right, and nothing we say can satisfy them. We quickly learn that we will never be in this tenant’s good graces, so it’s time to try and dodge the bullet. It is more difficult now, but it can be done.

What to do at this point? We like to tell these tenants, “Perhaps I am not the landlord for you, and perhaps you should look for another property that better suits your needs. I will be happy to refund your deposit and let you out of your lease as long as the place is left clean and you sign a release.”

I know that may seem odd. After all, we have just spent time and energy finding the tenant and renting the property. But it is just not worth the future time and energy this tenant is going to cost us.

It is best to part ways and dodge the bullet. Interestingly, most of the time the tenant feels the same way we do and will take us up on our offer and move on.

tenant-funnel

Conclusion

So if a bad tenant slips through — and if you are in this business long enough some eventually will — keep doing everything you can to dodge that bad tenant bullet, even if they have already moved in. Be professional, yet sever the relationship if you can.

Then go back and review what went wrong. How did that bullet get through? Adjust your defenses accordingly.

[Editor’s Note: We are republishing this article to help landlords who have found BiggerPockets more recently. Let us know what you think with a comment!]

Have you ever dodged a bad tenant bullet? What’s the most outrageous tenant-related story you have to tell?

We’d love to hear your tales and opinions in the comments section!

As real estate investors we must be wary of bad tenants who can cost us money & stress. Here are ways to dodge that bullet even after a tenant moves in.