Your Property Type Will Dictate Your Tenant Issues

After managing properties in Metro Detroit for 20+ years, we've seen all the tenant issues you could possibly imagine. And arising from these issues, we've also heard all the tenant excuses you could imagine.

Metro Detroit comes with its own unique set of common tenant issues. The thing that most new rental investors here struggle with is the fact that specific demographics in Metro Detroit vary significantly from street to street, along with the class of the neighborhood and properties located there. That, in turn, directly correlates to the kind of tenant that a property will attract. In other words:

Property Type = Tenant Type = Tenant Issue Type

So let’s approach each of these steps one by one:

Property Type: Know Your Area

The Metro Detroit area has different classes within each city and neighborhood. You can go a quick search and see the average rating of each city. For example, the City of Detroit could be rated as C+ overall, while the Ring Cities surrounding it range from B to A+. However, this doesn’t mean there aren’t differences from street to street. You can be situated in a B+ city, but with a C- neighborhood just a couple of streets away.

You can also end up with a C- house in a B+ area, so make sure you identify first what kind of class property you’re dealing with before you buy, and what class of neighborhood it’s located in. The lower the property class, the lower the tenant demographics, and the more certain issues will affect you as a landlord (more on that below).

Tenant Type: Know Who You Attract

Though not all of the tenants in Metro Detroit are difficult to manage, they tend to fall on the lower spectrum, especially the closer you get to the City of Detroit. So after identifying the neighborhood and property class, be prepared for the corresponding tenant type that goes along with it:

Class A Tenants

These are generally the top-tier tenants that are well-educated, financially stable enough to pay on time, have a squeaky-clean background, take care of your property well, and give you few additional headaches. They are basically the type of renters you’d want to keep forever.

As quality tenants, they look for quality rentals. So they have high expectations for their home, the location, and the management of the property - meaning they may be more demanding, but will also require fewer big fixes or trips to the courthouse to deal with evictions.

Class B Tenants

Just a step below the highest, class B tenants mostly pay on time and take decent care of the property, but may cause some additional stress with issues and requests.

In terms of rental type, they still look for functional places that are well maintained and come with good management, although their standards won’t be quite as high as those of class A tenants. A good portion of Metro Detroit tenants fall into this category, especially in the more white-collar areas of Macomb, Oakland and Wayne Counties.

Class C Tenants

Class C tenants are more likely to cause problems for landlords. They might have late rent payments, complain about issues which aren’t the landlord’s responsibility, have spottier history (bankruptcies, evictions, etc.), cause more damage to your property, and could be more challenging to contact when needed. They also might have a mentality whereby they seek to avoid issues when they can--often leading to neglect of the property.

For these types of tenants, affordability is often more important than having a high-quality property, but they still expect decent housing. Alongside class B tenants, class Cs make up the majority of the demographics in Metro Detroit, so landlords need to be aware of how this will affect their property management strategy.

Class D Tenants

All of the issues that can sometimes crop up with class C tenants are more common with class Ds, so managing this class of tenants presents a whole different breed of challenge for landlords. They have sporadic work histories, terrible credit and often have a mentality that the world owes them something, even everything, for free.

For this reason, we prefer to avoid managing class D properties or rentals in class D areas, as they’re often not financially worth the time and effort that you’ll spend on dealing with tenant issues. If you’re a newcomer to the Metro Detroit rental scene, you should definitely steer clear of these, too.

These are subjective definitions, as there isn’t a industry standard for delineating tenant classes. However, this can be used as a guideline when preparing for the kinds of tenants issues you’ll have to deal with in your property class.

Issue Types: Know What to Expect

Knowing and being familiar with these common issues is key to solving them expertly. Most of them can be avoided just by being transparent and detailed in the lease agreements, and by screening tenants thoroughly. But if you think you’ll have class B tenants and end up with class D, that’s when management issues can become an unpleasant surprise for unsuspecting landlords.

Keep in mind all the possible issues that could arise when dealing with your tenants, and the frequency with which these things will happen, depending on your property type. Some examples include:

• 1. Disputes over the Move-In Condition of the Home
• 2. Unnecessary Repair Requests
• 3. Pest Infestations
• 4. Property Damages
• 5. Poor Property Maintenance
• 6. Conflicts with Neighbors
• 7. Theft (of utilities, appliances, etc.)
• 8. Evictions
• 9. Liability Claims
• 10. Security Deposit Refund Disputes

Most of these can be relatively common with class C and D tenants, but will be much rarer for class A and B tenants.

The solution is to have identified the property and tenant type on the get-go to know what kinds of issues to expect. And of course, the key is always to screen tenants thoroughly.

And that’s it--you’re ready to manage and solve any tenant issues professionally! Investing in some Metro Detroit areas may be high risk, but it’s also potentially high reward, especially when you’re prepared for any tenant issues that might arise.

Any other approaches on how to solve common tenant issues? Share them below!

Image Courtesy of: Daniel Frank