What percentage of your tenants cause problems???

Question

Just curious, on the percentage of tenants cause problems. Could be property damage, breaking leases, evictions etc.

Lee Allen · Answer

One landlord that had over 100 units told me that he had seen about everything in his 30 years of being a landlord.

His best advice was to screen your tenants properly. When he shows the property to a potential tenant if they start bad mouthing the property in any way he tells them that he enjoys having happy tenants but he can tell that this guy wouldn't be happy here and since he only rents to happy tenants then he must decline them.

He also said that the first few months are very critical and that you must train your tenants properly. You let them know upfront that there is never an excuse for late rent. If you allow them to pay late then they will call you whenever they have money issues to let you know they will be late. Then they start paying a month behind and it just goes downhill from there. You have to be strict and tell them that the rent is due 5 days before the first of the month. After the first of the month it is considered late and there will be a $20 penalty added. He also lets the tenants know that on the 10th of the month the owner has an attorney file the eviction paperwork and if they pay after that date they will owe for attorney fees which are about $300.

Another way to do this is by offering a discounted rent for on-time payment. If you want to collect $1000 in rent just price your property rent at $1100 but as long as they pay by the first of the month then you will discount it to $1000. If they go past the 1st they then owe $1100 plus a $20 late fee and every 10 days after that they will be charged an additional $20.

So if they pay on the 1st it cost them $1000. If they pay on the 3rd of the month it will cost them $1120 and if they pay on the 15 of the month it will cost them $1140. Almost everyone pays on the 1st because they want to $100 discount.

Never let the renter know you are the owner of the property because they think that if they are friendly with you then they can pay late. Own your properties in an LLC or Trust and you are not the actual owner of the property. Always tell them you are the property manager and the owner doesn't allow late rent. You can then be their friends but at the same time not be the "bad landlord" that wants to be paid on time.

RIchard Roop · Answer

I find the Pareto principle, also known as the 80/20 rule to be a pretty good baseline.  80% of them are dream tenants - pay on time, keep their word, take care of the house, etc.  The other 20% pay late, need constant reminders to send payment, etc.

I do lease options as my exit strategy and get them to agree that I will give a discount on their rent if they don't call me for repairs and take care of the home like it's their own.  After all, they are buying it.

John Santero · Answer

We manage about 250 doors. Screening is the key. CALL not the previous landlord but the one before them. If they move to often, N/G. if they are at their moms house or some other relative- I want to see where the mail is sent- PO BOX- N/G. If they do not qualify for your rental assurance program N/G.

We offer several ways for them to pay rent. online, auto, walk in etc. We are TIGHT with our 5 day grace. they get emails and text notifications. If we do not get correspondence back- that month it is set to go to eviction. That's it.

We have a 2-4% problem rate.

Dan Perrott · Answer

@David  H. - welcome to BP.  In my experience with what we own, it has been 1 property out of 6.  Let me explain...

We own 6 doors (2 SFH, 2 duplexes) in the Indianapolis area.  We don't have problem tenants but we have a single property that continuously had tenants that we had problems with.  It did not matter who we put in, issues always arose - mostly with tenants losing their jobs.  The other 5 doors have tenants that pay on time and maintain the properties great.

The one "trouble" property had evictions of the last 3 tenants.  Thanks to help from the BP community we tightened up our rental policies and screening processes.  This has broken our issue and as of today we have rid ourselves of tenant issues (knock on wood...).

For property maintenance issues, we maintain them at a high level to prevent the calls.  We conduct annual inspections, furnace cleanings, etc.  Preventative maintenance has reduced the repairs.

We also have a clause in the lease that the tenant is responsible for all appliance repairs (not furnace or air) which includes stoves, fridge, dishwasher, and microwaves.  Tenants are required to deliver them back to us in working order less normal wear and tear.  They effectively "borrow" the appliances from us.

In lease breaking - we allow it IF they pay for the time of the turnover until the new tenant has moved in.  We have done this multiple times and it allows us to repair/rehab each unit without losing the rental income.  It's a win-win scenario.

In the 8 years we have been leasing rental units, we have had about 60 days (between all units) of vacancy time that we did not receive rent.  Even on evictions, we have had the units rented within a week.  This is done as we are conducting the normal turnover maintenance.

Finally, location of the property makes all of the difference in the quality of tenants.  We research and are very picky with the property purchase.  Better areas (A, B C+) usually will produce better tenants that take care of your investment.

Not trying to give legal device in any way but just supplying my opinion from my experience.

Dennis M. · Answer

It all comes down to good screening . I like using Facebook . You can Weed out the losers before you even respond to them

Jonathan W. · Answer

@David H. A 100 percent.

Yet again every job I’ve had, 100 percent of the customers cause a problem.

Capitalism is a system where you get paid to solve problems.

Zero percent have created the problems you are worried about

Knock on wood

And filling up the Rainy day fund

Evan Brookman · Answer

Good screening can prevent issues. Do a comprehensive and thorough screening before renting out the house.

Billy Smith · Answer

I would think it is directly related to the class of the area A, B, C.

A would have least C the most.

I only deal in A because of that issue and  a few more.

Karen O. · Answer

I've heard it's about 1 in 12 or 8.3%.

Nathan Gesner · Answer

Over 300 rentals and fewer than 5% ever cause problems. It comes down to screening and proper policies and procedures when a problem does arise.

What percentage of your tenants cause problems???

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