Seeking "Biggest Mistake/Lesson Learned" Tenant Stories

39 Replies

Hey everyone!

I am writing a regular column for BiggerPockets Wealth Magazine on “Biggest Mistakes/Lessons Learned” in real estate.

I am currently looking for TENANT "mistake" stories, in particular inherited tenants and/or tenant challenges due to Covid.

If you have stories you would like to share, please post them here, DM me, or email me at melanie @ biggerpockets.com.

I'm looking forward to reading your stories! Thank you!


Hi Melanie,

I work as a property manager and the lesson I learned from this job and for my future investment plans is ALWAYS INTERVIEW APPLICANTS.

I say this because there are a few residents here who are trouble makers and when you talk to them you can tell they are full of sh*t. What I mean by that is they regularly contradict themselves and they try to worm their way out of responsibility for anything they do or redirect the conversation to what their neighbors are doing. I'm sure you can't catch every trouble maker but you can usually get a pretty good first impression from talking to people for a few minutes.

These tenants I'm speaking of don't pay their rent late. The main problem is that they don't follow the rules and they bother their neighbors. This leads to complaints, which means more work for me. (The owners aren't really affected though as long as they pay their rent.)

One has roommates who are not allowed and aren't on the lease and he admitted that he has no income while I was explaining that he has to get them to move out. The first time I met him, I knew he was full of it in the first 2 minutes of speaking to him.

The process for choosing tenants is that I forward their applications to the administrator of the company I work for and they process the applications without ever having met the applicants. I don't know if it's feasible to interview every applicant if you have very many units but I feel like this should be a crucial step in the application process. I would rather automate other parts of my job to free up time for interviews to save myself the headache of dealing with idiots.

Hope that helps!
Ramsey

I don't think you are going to get the real stories of people truly losing their *** or going bankrupt on these forums. This is just not the place where people want to admit those realities. 

Failed to run credit rpt on government employees whom you think have good job able to pay rent. Got one just evicted from last residence. Skillfully dodged crucial question. 

You cannot rely only on the background and credit check offered by some of these real estate management websites, you also need to check the local county clerks office to see what evictions were filed against an applicant. Some services might show you what convictions are on a record, but not filings. Lesson learned for me.

I agree 100% with Ramsey. You got to talk to the tenants and not just go off cold numbers. I haven't had any tenant issues and neither have any of my clients. You get a vibe off people and can quickly tell if they are going to be a headache. It's similar to dating haha a lot of the red flags are the same things. 

I used to own a management company with roughly 3000 units at one point.  I have stories on my social media of some of the craziness that popped up.  Swat team situation, murder, potentially being kidnapped, check fraud, cop impersonation and a few others. 

I'm always in the process of failing forward, so I'll gladly add to this convo:

  • - I second, third, and fourth the above sentiments about screening and interviews.  My failure rate is about 5% if I have interviewed a tenant (even on the phone) and 50% if I have shortcut that.
  • - There is NO good reason someone needs to be in a house next-day.  ZILCH.  It's always always always going to turn out poorly.  (okay, to be intellectually honest that's not true, but it is disproportionately likely that someone who "absolutely has to be in the place tomorrow" or even the following week" is a hot mess.  I don't like messes in general, and definitely not on the other end of a lease I'm associated with.)
  • - Tenants know so so so little about tenanting, and if we don't educate them then a desperate attorney, a puffed-up coworker, or someone else equally as unreliable WILL.   We MUST understand that tenanting (and homeownership for that matter) are taught in roughly NO schools, no colleges, and few families.  So, they don't know how to be good tenants, BUT this is Murica and every.single.person is an absolute bona-fide top tier "lets' sit at their feet and learn" master of EVERYTHING, so of course the tenant is not going to SEEK out understanding . . .they'll just assume that what they think/feel/want IS the way it is.  We have to insert training.

TLDR?  Here's the highlight:

  1. Screen the tenants well.
  2. There is (almost) never a good reason to need a place within a few days.
  3. Train tenants well.

One of my tenants called me in the middle of the night from a closet. 2 men forced their way into her apartment and moved in. I called the police and met them at the apartment. I gave them the keys and they found a man sleeping on the couch. They handcuffed him and put him in the back of the police car. Just as they put him in, she walked up screaming that he was the one who helped her get rid of the other two men. 

@Melanie Stephens I have so many stories, but here recently I took a tenant in on subsidy and she somehow associates me with her father. Every Sunday morning I get a phone call at 7:15 where she wants to tell me a bible verse. Always different, but it makes her feel better if I listen. With hundreds of tenants I’m lucky this is the one lol

As a young investor, I did the math wrong calculating cash-flow on the 3 properties I bought and could not cover maintenance expenses. Further, I had no cash reserves. Obviously, this was an unsustainable situation and I had to dump all 3 properties. 

2 Lessons: 

  1. As you assess a potential rental acquisition, make sure you run the numbers correctly and thoroughly. 
  2. Always have cash reserves for each property. 

1. DIdn't find BP sooner

2. Didn't use built up equity to expand portfolio sooner.

3. Rented to friends and/or family

4. Didn't screen thoroughly or made exceptions to my criteria or let someone rush me into renting to them.


Just a few of the mistakes, I will never make again! 

Hey @Melanie Stephens , One of the biggest mistakes we have made a number of times, is taking cash from tenants and renting to them too soon. When doing viewings, there are some tenants that are very eager to take the unit and give you first and last month's rent in cash on the spot. We had to learn the hard way that sometimes this is for a reason...not a positive one. Now we ensure to do our due diligence before accepting cash payments from anyone.

my worst nightmares were trusting property managers. I agree when you do the sniff test personally you have very little problems. But being a long distant landlord I had to hire property managers twice and got burned both times.

When picking tenants:

1. Cash is NOT king. 

2. Stick to your criteria

3. A good salesperson at application will try JUST AS HARD...to convince you why they cannot make rent

4.  Tenants you store cash in their mattress may be hiding from collectors/debts...or just not have enough money/reserves to justify a formal account!!

Beware of a boyfriend/girlfriend not on the lease.  I bought a property with 1 legal tenant. She said her boy friend came over 'occasionally'.  Turns out, he was staying there full-time.  Tenant gets in argument with boyfriend, tenant moves out of a month-to-month, and deadbeat boyfriend refuses to vacate the premises or pay any rent.  He knows I can't legally cut off landlord paid utilities and he faithfully pays tenant-named utilities.  3 months of eviction notices and a court date later, he moves out the morning of eviction day. He trashed the place.  Be sure you know who is physically living in the property, not just the paperwork. Lesson learned.

@Ramsey Rimkeit, Thank you for sharing your experience. 

I don't take tenant screening lightly because they are the main determinant of how successful my investment will be. 

I use smart move and visit their current resident, I also call 2 of their references just to see how good of a tenant they are.

I've made tons of mistakes but the one I want to share is not a mistake I personally made. The biggest mistake I see new property making is telling tenants/others that they are the owners.  I understand the excitement and zeal of being a property owner for the first time but introducing yourself as the owner is a HUGE mistake IMO.  For example- as the owner of head honcho you are the decision maker, meaning people come to you expecting you to understand why the rent is late, damage is done (not their fault) and on and on.

As the PM and just an employee, you basically are able to employee the straw man approach.  I just work here and have a job to do.  If the money isn't here by tomorrow, you've got to go. Hey not hard feelings.  I bought a block of 70 rental homes in one purchase and from the day of my initial walk through to the day I sold the last property,not a single soul knew I was the owner.  

Just food for thought!   

@Melanie Stephens ,

One lesson I've learned, is your maintenance/handyman is worth their weight in gold as they are your eyes and ears.   When a new tenant calls, and you send your guy to fix something, the tenant's guard is down, they'll see how the people actually live and treat the place.  Do they secretly have a dog/cat?   Are there like actually 10 people living there? One time we did a maintenance call, and our guy told us "they are cutting large holes in the drywall" --- they were-- literately, and also removed like a 3x3ft ft drywall behind the dryer!   I'm guessing they planned to grow pot in the attic, or were just being creative in creating a hiding spot for their drugs-- Crazy!   

 Another time  our maintenance guy let us know that the tenants had their dogs/cats going to be bathroom inside the house, and it smelled disgusting, literately sent us pictures of poop on the stairs.    With both those cases, the tenants were paying rent on time, but we immediately ended both leases and got the people out.   If it hadn't been for our maintenance guy, who knows how bad either of those would have gotten?! 

   Whenever we do our annual inspection, 99% of the houses are cleaned and it looks amazing, as the tenants know we're coming.       So the lesson learned, establish a relationship with your maintenance technician, treat them  well and they will help you long term!  Our guy literately calls us when he finds free appliances to help us out!

Whether you tell the tenants or not you are the owner is a discussion that has been brought up many time. I believe that being 100% honest about everything you do in life is the best policy. Then, everyone knows exactly where they stand. I rented apartment when I was young and the managers tried to hide the identity of the owners. I hated that game with a passion. Landlords can benefit dearly when tenants can report the things that managers do wrong. I have a 25-unit apartment building next door to me and the manager is higher than a kite 24/7. He rents apartments to friends and keeps the cash. He parties until 6 a.m. and blasts thumping music that can be heard a block away.

As a landlord, I have no problem with being the decision-maker. I have no problem with knocking on a tenant's door and tell a tenant to remove their trash bags from the balcony. I prefer to get firs-hand information from everyone vs. taking a chance that my manager is not telling the truth, or is mis-managing the property.

But...for every apartment building I purchased the first task on my list is to evict the property manager. We manage our own properties and we tell the tenants we are the owners. We give the tenants all our phone numbers. We want our tenants to call and complain when they have a problem. Tenants rent apartments because they don't want to have to worry about repairing the plumbing. They don't want to worry about all the things a property owner has to deal with and as a landlord we don't want our tenants to worry about being blames because a drain clogs. We want our tenants to call us in the middle of the night when there is even a tiny leak because this show us that our tenants care about their landlord's best interest in regards to preserving the property.

My worst mistake was deviating from our plan. We tried to price our rents to get the best bang for the buck, so to speak, balancing maximum rent but  keeping it at such a level to have several people apply.

This was several years ago, but the tenant had high debt and several accounts with bad credit, but cash flow was solid.  We took a chance and let emotions get involved to help them out a bit. The calm demeanor evident in the application process soon vanished.  I soon got text essays complaining about all sorts of things. And when questioned on treatment of the property or complaints of other tenants, the accusations and text essays flew.  They always paid their rent, but it was an ordeal.  I was happy to grant their request to terminate the lease early.

Unless you're running a charity, stick to the plan and don't let emotions cloud your decisions.  

That was a long, slow ordeal, unlike the time a tenant flashed a butcher knife at me...but that's another story.

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