Best Advice/Practices for Tenant Management

5 Replies

One area that I fear I struggle in is tenant management, or lack thereof. I was burned by my last tenant (and really, my own decisions) because I think I allowed some things to spiral out of control.

Rent-wise, no exceptions -- due on the 1st, 3-day grace period, eviction path starts immediately following the grace period.

But what do folks do about property visits, inside and outside? What do you do if you have a tenant who is just messy, versus a tenant who might be causing damage to the property due to negligence (e.g. letting food rot, attracting pests)?

Ultimately, I'm seeking perhaps a guide or set of best practices that I may be able to instill in my own rentals. I'm starting to ramp up and one of my biggest fears is exactly what I just went through -- a negligent tenant that caused damage to my property. I also want to balance being an insensitive/neurotic landlord/property owner and sort of "setting the tone" with my tenants.

So, curious as to everyone's thoughts/guides/best practices on this.

@Joe P.   Site visit your prospective tenant at their current home so see how they take care of the place that they live in now.  I always ask for a glass of water, and to use their bathroom.  If they have to wash a cup to give you water, or the bathroom is gross then we don't rent to them.  Also have a good lawyer on hand to be ready for these situations.  I think what scares people is that lawyers are expensive, but if you know exactly how the process works and what it costs then you won't be afraid to evict the tenant.  Lastly, do not ever say anything you don't plan on doing.  For example, if your tenants is responsible for exterior maintenance and they don't pull the weeds, don't say you are going to evict them if you don't if you are not 100% confident you would.  In this same situation once a year we send the tenant a bill telling them we have a quote for this much, if not concluded by this date you will be sent a bill.  We also specifically notate the part of their agreement where is it their responsibility.  It's probably not as nice as them doing it every month but it is a compromise on our end and yet still reasonable to the tenant.  Lastly, we only use a 5% vacancy calculation because we will price our properties just below market rent.  If you are self managing you really could pass on 18% of rents to the renter and still be ahead so we strive for long term renters.  The last thing we do to get high quality renters is we offer our tenants an escape clause where if they are prospective home buyers we allow them to break their lease at anytime with 30 days notice if they purchase a home with us.  It allows us to get higher quality renters that are qualified to purchase a home and also generate another stream of income.  If you are not a realtor, then I would try to find a realtor that will work with you for example, not charge you a listing fee because of the referrals you send them or simply become one.

@Casity Kao interesting thought -- I never would have thought to physically visit the tenant in their current residence. Do you require this for every potential tenant and do you outright say why you are visiting? I'd like to know more about your process there. I ask because I'm attached to the idea, but also want to walk that tightrope of not being a helicopter landlord, but actually being a helicopter landlord :)

I like some of your other suggestions as well, including the home buyer clause. Getting the right mix of tenants is important.

Back to my central point, do you physically go into the homes as a "site visit" on a regular basis? I was thinking of putting this in my leases and making it a focal point -- I want the property to maintain as best as possible and will conduct interior visits once per month to ensure it, or something along those lines. That's what I'd like to understand from other landlords, if they do this and how they do it.

@Joe P. It is not always me that is physically visiting the home but we let the tenant know we will stop by to review the contract with them.  Up front we give them a good idea of our underwriting for renters, so it appears we are offering a service to the to answer any questions that they may have.  Many PM companies may say they do not have the time to do this but of course they have the time to charge you to look for a new tenant.  We strive for long term renters to obliterate vacancy so we'd rather spend more time up front than every year.  What we have found is credit quality and background has no correlation to how well they take care of their home.  Although the cleanliness of their vehicle does to some degree.  In the end when we review the contract with the tenant before taking their application fee they normally appreciate it.  If the home is cleaned spotless to the point we can smell chemicals right before we get there that is a red flag as well.  We prioritize this over reviews from past landlords because past landlords are typically not truthful because they may want to get rid of tenant.

@Casity Kao thanks for the info -- but if you are reviewing the lease with them, isn't it already too late? Or is this a precursor to both sides signing off?

To me it sounds like you have evaluated them financially/criminally as a tenant and they meet the criteria. Do you then visit with them to review lease guidelines to answer any questions? Wouldn't they be expecting to sign on the dotted line at this meeting?

@Joe P. If nothing is signed or in writing it is never too late. The appointment is not to confirm their application has been accepted but simply to review the lease so they can think it over.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here