If you are involved in real estate investing and closely manage your sites, you’re bound to run into a bad tenant or two. Hopefully with your interviewing and screening process you chose the best people you could to live at your property. Once they’re moved in, though, sometimes it can seem like you’re dealing with entirely new people than you first met.
As long as they aren’t trashing the place or an otherwise completely lost cause, you may be able to rehabilitate your bad tenant into a good one. Some people’s reaction to bad tenants is to be really nice in the hopes the renter will feel sorry for you and come around, but that’s the wrong approach. If you do that, you’re really setting yourself up to be a doormat of a landlord. It’s better to be strict, but firm, and to be clear to tenants exactly what is expected of them and what to expect from you, preferably in writing.
Download Your FREE Tenant Screening Guide!
Hey there! Screening tenants can be a tricky business, and this critical step can be the difference between profits and disaster. To help you with your real estate investing journey, feel free to download BiggerPockets’ complimentary Tenant Screening Guide and get the information you need to find great tenants.
Here Are 6 Tips to Help You Turn a Bad Tenant Into a Great One:
1. Communication is the key:
If you’re not communicating with your tenant often and with consistency, you have only yourself to blame. Many landlords are distant with tenants and that’s okay if they are awesome renters, but for bad tenants, you need to be present and forthcoming. Be clear about what you’d like to see improve, how it can be improved, and the consequences of failure to follow-through.
2. Emphasize the most important lease clauses:
Review the lease agreement with new tenant and thoroughly explain that which is most vital for them to know: The cost of rent, what day it is due, damage issues, repair request processes, how eviction proceedings are set in action and for what reasons, etc. To reinforce what the tenant learned, follow up with a letter welcoming them to their new home and reminding them of their key responsibilities. For problem tenants who have lived in the building for a while, make a copy of the lease with certain clauses highlighted.
3. Enforce your lease with notices:
Now that the tenant has been made aware, it’s time to make sure they know you’re paying attention to when they aren’t living up to their end of the bargain. Send a notice when the rent is late, for parking violations, following noise complaints, etc. Get to the problem now before they become your tenant’s habit. If you are inconsistent with sending notices when your renters act up, they’ll continue to act up. Though a face to face verbal warning can sometimes be effective, when you put it in writing, they’re more likely to shape up.
4. Apply penalties such as late fees:
Once you’ve used the form on a tenant who is late with rent, you have to follow-through. Charge the tenant late fees and enforce the deadline by which the fees must be paid. Create a form notice that you can fill out and keep on hand. Titles like “Late Charge Due Notice” or an “Urgent Late Notice” can grab their attention. And be sure to try to collect rent and late fees before too much time passes by.
5. Forget the grace period:
I’m not saying to not give them a little leeway, I’m actually suggesting to just reverse how you see rent due dates. Instead of having a grace period after your due date, offer an Early Payment Discount for people who pay early. Everyone wants to save money, it’s much more likely to motivate people to pay quicker. That money can adds up over the year, so keep track of it and every once in a while, let them know how much they’ve saved by being an early-paying tenant.
6. Make routine inspections a priority:
It’s easier for bad tenants to get away with destroying your property if you never step foot in their unit. When the tenant expects regular inspections by the landlord or manager, they are more likely to keep it in tip-top condition. Many landlords will inspect on regular intervals after prearranging a time with the tenant. Others will do surprise inspections. Some say that they will be do inspections, but never get around to it. Even if you don’t plan to inspect, it may be worth a try to send the tenant a note informing them of an upcoming inspection. It may be enough for them to keep the place clean without you having to enter the unit.
These tips can go a long way to helping you turn a bad tenant into a great one. It’s important to note, though, that not all tenants can be saved. A few of them just cannot help but violate their lease, leaving you holding the bag. In these cases, you must carry through with your law-abiding eviction process, clearly stating the reasons why they are being evicted and filing the papers with the proper authorities. Don’t let bad tenants try to sway you into rescinding the order for any reason, either: There are a lot of great tenants out there and you can’t get them if a bad tenant is living in the unit.
Have you ever had a bad tenant? Have you ever turned a bad tenant into a great one? Share your experiences and tips in the comment section below.