Look, as a real estate investor, you have to prepare for the worst.
One of those unexpected things is coming across an absolute nightmare, disaster, shocking tenant. Look, it happens to all of us no matter how much we pre-qualify them. I own a property management company, and I think we do a fantastic job. But before I even had the full operation set up, I had an absolute tenant from hell. They would constantly complain about certain repair items, they called the division of real estate on us, and they called out the fire brigade because an external light, which they installed, exploded. Then they were complaining they got carbon dioxide or monoxide poisoning from the external light of the house. Figure that one out. But the funny thing is, when we sent out a couple contractors to do the repairs, she allegedly revealed herself to our contractors. What I’m saying is, you’re going to come across a variety of people.
1. Hire a property manager.
I encourage all of you to do is hire a property manager because you do not want to be directly exposed to your tenants. I was exposed back in the day to my tenants and this particular individual, and because I got close, they thought they had the power to do whatever they wanted. It probably took us over a year to resolve the situation. That’s how bad it was. So first of all, hire a property manager because they are going to have the experience to know what to do and how to do it just in case a tenant from hell pops up.
Related: 7 Types of Tenants Who Cause MAJOR Landlord Headaches
2. Pre-qualify your tenants.
Another important step is to pre-qualify these individuals. Three things we look for before we place a tenant in a property include:
- Income: This is the first thing we look at, and it should be at least three times the monthly rent. This is very important because you need to make sure the tenants can actually afford that rent.
- Eviction history: This is kind of an automatic fail. If you have any dent or a prior eviction on your history, this means the landlord or property management company had to file for eviction after multiple attempts to collect the rent. So it’s pretty much an automatic disqualification for us.
- Background check: You want to do a thorough background search to see if any criminal activity comes up. A lot of times, we have found specific lawsuits where a tenant was a professional scammer. So you need to conduct your due diligence in that way.
The tenant from hell that we had when I first started in real estate was a professional scammer. Only later did we find out that they had two lawsuits against the city, and one of them was for falling off a footpath. How the hell can you fall off a footpath? A footpath is built for you to walk on and not to fall off. As I said, guys, it’s a funny story. Still, do your best to pre-qualify these individuals.
3. Draft up a bulletproof lease.
Now, these people are going to live in your property and so they going to sign a lease. Over the years, we have developed a lease the size of an encyclopedia. I pretty much want you to sign over the rights to your first born, second born and 17th born. Over the years, you learn from your mistakes and you start adding specific things. Make sure that your property management company understands what some of the pitfalls are when it comes to leasing properties so that they have all the clauses. Maybe even get a real estate attorney to review the lease so it’s as bulletproof as possible.
Related: Breaking a Lease: What Landlords Should Know
4. Stay professional and organized.
Let’s say your tenant from hell is in your property right now. What do you do? You have to stay professional. You also have to stay very detailed with a timeline of events. At the first little glimpse of someone being problematic, disgruntled, or a potential threat, keep a timeline of events. You want when they called, when they emailed, when they texted, what they said, and what your response was. Judges love to see this and that you are organized and professional.
5. Look for loopholes in the lease.
In Ohio, rent is due on the first and it’s late on the third. Now, the standard procedure is to send the tenant a three-day notice to pay or quit. This means they have to move out of the property, and we do not give them an option to pay. Then, of course, we file for an eviction, go to court, and ideally the problematic tenant gets evicted. If all goes as planned, we’re done with the tenant from hell at that point.
Having a detailed lease may help you rid yourself of a horrendous tenant. That’s because the only way that you can find a loophole in the lease is if it’s really detailed and has all the mumbo jumbos in there, including clauses that stipulate that you can’t run a business from your place of residence, you can’t consume any drugs on the premises, you can’t smoke in the property, and you can’t have more than one pet. We have so many of these little things in the lease because they protect us in case we get another tenant from hell. That way, we can show proof that they are breaking that lease and we can file an eviction and a three-day notice to pay or quit.
Of course every state, every company, and every landlord has their own way of doing these things. This is just my way. I’m not an attorney, so be sure to check the legality surrounding Fair Housing laws and eviction processes in your market to stay on the correct side of the law. Ultimately, treat your tenants with respect, be patient, be lenient, fix their repairs, and communicate—but when you get that tenant from hell, you have to evict them at all costs. Just make sure to do it in a legal way with respect to the laws in your state.
What’s your tenant from hell story?
Please comment below.
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.