Problematic tenants come in all forms and are not limited to bad neighborhoods. It can be that very detailed-oriented tenant renting a class-A home who doesn’t stop calling you about every little item or it can be the tenant in a class-D rental who has a son with gang affiliation causing trouble on the block.
The challenge in being a landlord or a property manager is that sometimes no matter how hard you screen a tenant or a family, you can still find yourself dealing with a tenant who continues to be an issue. I think as a property manager or owner, you find better ways to deal with tenants and the stress and agony they can cause early on in your investment career.
Download Your FREE copy of ‘How to Rent Your House!
Renting your house is a great way to enter the world of real estate investing, but most first-timers (understandably) have a lot of questions. Fortunately, the experts at BiggerPockets have put together a complimentary guide on ‘How to Rent Your House’. All the skills, tools, and confidence you need to successfully rent your house are just a mouse-click away.
Analyzing the Situation
Below are the three main steps that we take to analyze problem tenants when there’s an issue:.
- Verify if it can be solved without moving out. We never want turnover, so allowing a tenant out of their lease or negotiating an exit from the term is our last option. We first try to find a solution with the help of our property management team, so it doesn’t result in a tenant moving out.
- Internal or external? Next we try to figure out if the issue is an external problem or an internal problem. An external issue can be something going on in the neighborhood with a neighbor or individual who isn’t on the lease. An internal issue can be something about the property, such as damage to the property caused by the tenant or the property causing any issues to the tenant.
- List all options. There are many ways to skin a cat, and at this point, we are looking for the solution that can be a balance of making sure that the problem is solved, doesn’t damage our relationship with the tenant, and makes sense economically.
Once the above steps are laid out, we then have to execute our plan. As property managers, we try to find a win/win first, but at the end of the day, we need to protect the interest of the property and the owners.
Guidelines to Handle Problematic Situations
Many tenant issues are not solved with a black and white handbook of answers, but we follow some guidelines that help our team make decisions on how to handle a problematic tenant. Some of them are:
- Remove emotion. It is easy to get emotional when issues arise, and most of the time, it doesn’t benefit anyone. Continue to make fact-based decisions that are in the best interest of your investment today and going forward.
- “Right is right” is not always the answer. You must consider that “what is right?” isn’t always the solution, and many times “it’s the principle” is irrelevant.
- Refer to the lease. Remember that 6-25 page document you signed in the beginning? More often than not, many issues are laid out in the form of expectations in the lease. Refer to the lease to enforce items such as tenant damage, occupants not on the lease, and loitering.
- It won’t go away. Issues that go unaddressed hardly go away and often reappear down the road in other forms or more serious issues. Address issues as they come and never expect issues to go away.
- Communicate. Whenever there are issues, make sure to communicate or discuss them with tenants. Many times, tenants become problematic simply because they might need a little more hand holding than the others.
- Hold up your end. I have seen many landlords who stop doing what they are supposed to do because a tenant has created an issue. This is a good way to start a downward slope in your relationship with your tenant. As a landlord, hold up your end of the bargain by completing what you are responsible for as part of the lease obligation for the landlord. This can only help you to be the bigger person.
- Learn from it. Like any problem in life, you want to analyze it and see how you can prevent that issue from happening again. Was there something you could have had in your lease to prevent this? Was there something on the application that in hindsight makes sense now or was a red flag?
Problematic tenants are part of the business, and understanding how to deal with them is the smarter way to address issues versus always kicking out tenants you think may not be perfect!
Do you follow any specific guidelines to deal with problematic tenants?
Share your thoughts below.