How to Dodge the Bad Tenant Bullet

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When you are a landlord, figurative bullets can fly at you from many directions. Taxes, insurance, code enforcement, and repairs are all things we landlords have to deal with. One of the most painful bullets if it finds its target, however, is the bad tenant.

Dodging bad tenants begins with your tenant screening process, but it continues right up to the point you are about to hand them the keys — and perhaps even after you do. You must continue to have your guard up at all times because unfortunately some bad tenants will not show their true colors until the very last minute.

Related: 6 Tips to Turn Bad Tenants Into Great Tenants

Sometimes Even Bad Tenants Can Pass Screenings

Believe it or not, it is possible for some bad tenants to make it all the way through your screening process. They might have excellent jobs and great credit, and their previous landlord might rave about what wonderful tenants they are. Everything might look great, and then at the last minute you begin to get bad vibes. They might start missing appointments or showing up late. They might become rude or insulting. Perhaps they become demanding, even overly demanding.

Of course, these might be one-time occurrences due to a bad day — or they may not. But you as the landlord need to remember that it is never too late to walk away before the lease is signed and the keys are handed over. Until a lease is signed, you do not have a formal contract and either party can walk away. In fact, I know of one landlord who actually tore up a lease right in front of the tenant just before signing it saying, “Nope, I’m not renting to you” after they became rude.

tenant-recordings

I am not sure I would go that far, but remember that you are trying to dodge bullets, and it is always easier to do that now, even at the last minute, rather than later.

But what if the lease has been signed, you have handed them the keys and then you realize your mistake? Can you not dodge that bullet anymore? Maybe, maybe not. It will depend on how you handle the situation.

Related: How to Find Great Tenants Without Ever Meeting Them

What to Do When a Good Tenant Situation Goes Bad

A couple times in our landlord careers we have tenants move in who suddenly get very demanding. Nothing we do is ever right, and nothing we say can satisfy them. We quickly learn that we will never be in this tenant’s good graces, so it’s time to try and dodge the bullet. It is more difficult now, but it can be done.

What to do at this point? We like to tell these tenants, “Perhaps I am not the landlord for you, and perhaps you should look for another property that better suits your needs. I will be happy to refund your deposit and let you out of your lease as long as the place is left clean and you sign a release.”

I know that may seem odd. After all, we have just spent time and energy finding the tenant and renting the property. But it is just not worth the future time and energy this tenant is going to cost us.

It is best to part ways and dodge the bullet. Interestingly, most of the time the tenant feels the same way we do and will take us up on our offer and move on.

tenant-funnel

Conclusion

So if a bad tenant slips through — and if you are in this business long enough some eventually will — keep doing everything you can to dodge that bad tenant bullet, even if they have already moved in. Be professional, yet sever the relationship if you can.

Then go back and review what went wrong. How did that bullet get through? Adjust your defenses accordingly.

[Editor’s Note: We are republishing this article to help landlords who have found BiggerPockets more recently. Let us know what you think with a comment!]

Have you ever dodged a bad tenant bullet? What’s the most outrageous tenant-related story you have to tell?

We’d love to hear your tales and opinions in the comments section!

About Author

Kevin Perk

Kevin Perk is co-founder of Kevron Properties, LLC with his wife Terron and has been involved in real estate investing for 10 years. Kevin invests in and manages rental properties in Memphis, TN and is a past president and vice-president of the local REIA group, the Memphis Investors Group.

15 Comments

  1. Kevin,

    I think we all have bullet holes. My issues come not from tenants, but tenant “guests” who are less than desirable. I do not self manage any of my properties, so I have had to place minimum requirements on my PM’s. Sadly, I don’t get a chance to get those vibes

    Jason

    • Kevin Perk

      Jason,

      “Guests” can be a real pain to define and then police. I hear you on that one.

      With you management company it is best to figure out how you got another chink in your armor and adjust accordingly.

      Thanks for reading and commenting,

      Kevin

  2. I drive my rental neighborhood each week. I saw one of my tenants walking a huge boxer/pit dog. There was a No Pet clause in his lease. He called me , saying he was willing to pay for the dog etc. My partner advised against a pet addendum with this guy. But I went ahead and made an agreement with him. ……and so the story goes, he lost his job…..no rent , many months of false promises. My attorney advised go easy, and out. ….When I finally got the key back, the damage from the dog was evident, every single outlet and door stop had been chewed off , and drywall clawed off the window frames, Windows and screens damaged. The carpet was in tiny shreds. The master toilet was broken in half. The house showed signs of a drunk gone wild. It took months and lots of $ to get the rental back in shape. My partner walked out.
    So that is one of my hardest learning experiences. I did learn.

  3. My most outrageous tenant was one who suffered from Huntington’s disease. I felt sorry for her, but failed to recognize the cognitive decline that accompanies the disease would cause her to show symptoms of mental illness. She became convinced that we were “out to get her” and turned us in to the housing inspector and threatened to sue him if we were not forced to rewire the house to modern code. (There was nothing really wrong, but the house was over 50 years old and did not meet the requirements of new construction.) He then gave us notice that we would have to completely rewire the house to satisfy him because he did not want the lawsuit. When we informed the tenant that the house would be uninhabitable during the month that it would take the electrician to complete the extensive work, she called the Human Rights Commission and told them that we were discriminating on her based on her disability. In the end, we called the director of the Human Rights Commission and asked how much money it would cost to make her go away. We eventually agreed on 3 months rent and wrote her a check that day if she would agree to move out. Best money I ever spent. Never, ever rent to someone with mental problems. (Now I really do discriminate)

    • Kevin Perk

      Michelle,

      So the effect of all of these governmental commissions was to effectively reduce the amount of housing available to the mentally ill. I doubt though that they will ever make that connection.

      Thanks for reading and sharing your experience,

      Kevin

  4. I had an almost, I listed a property in section 8. Got a lady that applied, she had a criminal rap sheet. Aggravated menacing, Shop lifting, Assault. Plus, dated the guy whose son dated the lady who lived in the house next door. He came with her to every showing before I ran the check and tried to speak for her every time I asked questions.

  5. Kevin, I agree with every word. I’ve told a tenant I’m not renting to “you” when I suspected he lied on the application. I’ve also told a tenant who became difficult to deal with (right after receiving the keys) that perhaps he’d be happier living somewhere else. Best to let them out of the lease (if they’ll go) and wish them the well.

  6. Jerry W.

    I had one gal who as we were walking up to the house turned to me and said, well I hope you keep the inside up better than the outside. I told her no we don’t so there is no point looking, sorry I wasted your time and I walked away with the keys.

  7. Chad Hale

    Agreed tenant selection is one of the if not the most important aspect of residential real estate.

    I like to use month to month leases from the start. If a “bad” tenant does slip through my screening process I can issue a termination notice right away without having to wait for a lease to expire.
    In my market (greater San Jose area), currently reletting a unit is typically 5-12 days. I’ll take that hit to get rid of a bad tenant.

    As an aside, tenants can break leases all day long in CA. The landlord must show due diligence to quickly relet the unit and then they are off the hook. A judge would likely not be favorable in having a landlord collecting much more than 2-3 months rent from a tenant breaking a lease. Yet, a landlord breaking a lease. Good luck.

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