It happens all the time.
Your sweet 24 year-old renter (let’s call her Wanda) is the perfect tenant. She pays her rent on time, doesn’t treat the property badly, and she doesn’t even have any pets!
Then Wanda meets Tony (cue the horror soundtrack). Tony’s a classic good-fer-nuthin’ bum—he never saw a bill he wanted to pay on time, he limps between dead-end jobs, he drives a ‘70s muscle car and has a pit bull with a spiked collar (unoriginally named Spike).
Tony gets himself evicted from his ratty apartment because that’s the kind of person he is. Wanda, being a sweetheart, can’t let poor Tony sleep on the street! So she lets him crash for a few days while he “gets on his feet.”
We all know how this story ends. Tony’s still there six months later, and your property has suffered accordingly. Spike has made it his personal mission to urinate in every corner of your unit, Tony smokes suspicious substances inside, there’s trash everywhere, and the cockroaches have started sniffing around. In uglier scenarios, maybe he’s even dragged Wanda down to his level. Maybe she’s picked up that crack pipe too and has started taking liberties with her rent payments.
That’s actually not even the most nightmarish scenario. What if Tony is a violent sociopath with a history of assaults? What if Tony’s a pedophile? Maybe Tony cooks meth, and decided your property is the perfect place to set up his cooking lab?
The point is, you don’t know Tony, or Spike for that matter, because they were never screened and they aren’t on the lease. So how can you avoid Tony, Spike, and all the other deadbeat tagalongs who’d love to set up camp in your rental unit?
It Starts With Tenant Screening
Some states prohibit landlords from just coming out and asking applicants directly if they’re in a relationship. So rather than open that can of worms, start by simply setting expectations: “Anyone who spends more than five nights/month in the rental unit must be included on the lease. Is there anyone else who will be staying over sometimes at the property?”
If they waffle, with answers like “Well, sometimes…” or “Uh, I don’t know, maybe some months?” ask them to please have this person fill out a rental application too. Should they object, politely explain that anyone who spends five or more nights/month at the property must be screened and sign a lease like everyone else. Property policy. It’s out of your hands.
Be especially wary if a couple shows up together to view your vacant property, but only one person says they’ll be living there. Dig deeper, and ask plenty of probing questions. It is your business—knowing who is living in your investment properties is the literal definition of your business.
Lastly, if everything checks out when you verify their income, housing history, credit history, criminal history, etc., drop by their current home. If two people live there and you don’t feel 100 percent rock solid about their story, decline the application. (Read up about more advanced tenant screening techniques here.)
It Continues With the Lease
Your lease agreement should be a solid shield, protecting both you and your property from harm. You can’t anticipate every possible way that renters can cause financial damage to you and your property—but you can anticipate the most common 99.9% ways you can be burnt and use lease clauses to protect yourself.
Case in point: squatting boyfriends. Your lease should have an occupancy clause saying (in appropriately dry legalese) that no one but the listed tenants and occupants may spend more than five nights/month at the property. If any non-listed persons do spend more than five nights/month at the property without written permission from you, the renter is in breach of lease and is subject to additional screening fees, higher rents, and/or eviction.
Related: The True Cost of a Bad Tenant: Why You CAN’T Afford Not to Screen [With Pics!]
Five is not a magic number, and no one’s proposing that if your renter’s boyfriend spends a sixth night there one month that you should rally the townsfolk to grab their pitchforks. But you need to draw a line somewhere, and you need make it crystal clear that unauthorized occupants constitute a breach of lease that will be punished. Severely.
One More Reason to Make Inspections
You should be inspecting the rental unit at least every six months. Do you?
If not, then start. Beyond an occupancy clause, your lease should also include an inspections clause, informing the tenant that a manager will be coming by the rental unit at least twice each year to check on the property’s condition and tenant’s compliance with the terms of the lease agreement. Make sure to check your state’s laws on performing inspections and any notice requirements before entry.
How would you know that the renters aren’t cooking meth otherwise? Or running a puppy mill? Or just dirty people, who you don’t want to renew the lease with?
Coming by the property with proper legal notice not only reassures you that the tenants are treating the property well, but it also sends a loud message. You do not tolerate breaches of your lease. You are not an absentee landlord. It also lets them know you care about the property and want to keep it in good condition.
What Happens if Your Renter Is Shacking Up?
Life happens, right? Maybe Wanda only dated Tony briefly before realizing what a bum he was, then met her soulmate William. William’s a sweetheart himself, works a good job, and (yay!) they just got engaged.
The proper protocol for renters who want to move a roommate or boyfriend into the property is to call their landlord and discuss it with them (you) first. Yes, it’s that simple.
For landlords, the proper protocol is to thank the renter for being forthright about it and emailing them a blank rental application for the proposed new tenant to fill out. Or if you caught them being sneaky, sending a breach of lease notice. You’ll have to use your own judgment about whether it’s worth letting the new occupant apply—or whether you want to evict them both over it.
Regardless, you can then screen the new addition like any other tenant. If they look good, require both tenants to sign a new lease agreement (for a full new lease term). Consider charging higher rent, especially if the new tenant is bringing a pet with them or they were sneaky about moving in the boyfriend.
If they don’t pass muster, reject them. That may mean your renter moves out, but it’s better to lose one good tenant to avoid a walking liability. The world is full of great renters; lease to honest, responsible people, and you’ll find that being a landlord is the easiest job in the world.
Lease to deadbeats like Tony, and you’ll discover that being a landlord is not only the most aggravating job in the world, but also the most expensive.
We’re republishing this article to help out our newer readers.
Ever had a tenant pull a fast one on you? Maybe you’ve dealt with a “Tony” of your own? How did you handle it?
Don’t leave us in the dark!
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.