If you spend any amount of time owning and renting out investment properties, eventually, you’ll experience the dreaded problem tenant, and figuring out how to deal with problem tenants can be a sticky situation.
Problem tenants pay their rent late, nitpick and complain, do damage to the property, disturb the neighbors, or conduct in illegal activity at the property. These useful tips will help you know how to deal with problem tenants.
Late Payment? Be Sure to Follow Through
One of the most common problems you’ll face when learning how to deal with problem tenants is the resident who is always late on their rent. It’s important for you to have specific and clear policies in place regarding late rent or nonpayment. The very first time it happens, be sure to follow through with your policies. Assess any late fines that are applicable immediately. If they fail to pay the rent, you’ll need to present them with a Nonpayment of Rent notice. This lets them know that the balance must be paid in full (within 14 days, typically) or they must vacate the property. A tenant that’s a payment problem right out of the gate isn’t likely to improve, so don’t hesitate to move them out and find someone better.
Step Away from the Story
Owning a rental property is like running a business. At the end of the day, your goal is to make money. As a Landlord, you’ll run into many tough situations and sad stories and you want to be sensitive to your tenants extenuating circumstances as much as possible. Unfortunately, if you modify your terms and policies for every single one of your tenants situations it could and most likely will result in late (or lost) rent payments, property damage, or complaints from neighbors. Remember that business isn’t personal and let your policies remain ironclad as much as humanly (or humanely) possible.
How to Deal With Problem Tenants? Document Everything
An incredibly important and effective strategy in knowing how to deal with problem tenants is to document everything on paper and by everything, we mean e v e r y t h i n g. Have tenants sign a rental contract and keep it on file. When your tenants are moving in do a walk through of the property with them and document how the property looked at the time of move in. Then, when your tenants move-out you can do a move-out walk through and determain whether the changes in the walk throughs are considared tenant damages or normal wear and tear. If problems arise such as late payments or complaints from neighbors make a record of every incident and keep track of them. From photos to audio recordings of excessive noise, any evidence you can provide of incidents when a tenant has been problematic or disruptive will be helpful should the situation escalate further.
When Eviction is the Only Choice
Everyone wants to be a wonderful landlord who can successfully work through any problems with their tenants and see things through to a happy ending. Sometimes, though, the roads lead to eviction. Whether your tenant refuses to pay the rent, has done major damage to the property, or was caught engaging in illegal activity there, some things simply can’t be negotiated and made OK. In these cases, eviction is a must.
Many property owners aren’t aware that there is a specific process they must go through in order to evict a tenant. You’re not allowed to simply change the locks or have the electricity turned off – this is called a “self-help eviction” and is against the law. Rather, you’ll need to go to court and obtain an eviction order. This will lay out a way for you to work with the tenant, if possible, or it will give them a specific amount of time to pack their belongings and leave.
Work With a Property Management Company
One of the easiest ways to deal with problem tenants is to not have to deal with them at all in the first place. Finding an experienced property management company helps take you out of the loop. They’ll thoroughly screen potential renters in an attempt to prevent problems from developing from the get-go. They’ll handle rent payments and communicate with the tenant if payments are late. A property management company will also take care of repairs and maintenance, as well as respond to tenant complaints and problems. With property management taking care of your rental property, there’s no need for you to be involved at all, unless you want to be.
Smartland is Northeast Ohio's largest turnkey real estate investment and property management firm. Our team combines financial savvy with expertise in property management to help clients identify and invest in alternative investment vehicles that have strong long-term growth potential.