Bad tenants don’t pay their rents on time or in many cases miss their rents or refuse to pay the rent but mostly can damage your rental property, that’s your most valuable financial investment. Therefore, it is essential that you only find good qualified tenants but also manage your tenants professionally to comply with terms of your rental agreement same way as an experienced property management company does or savvy landlords do to identify and manage their tenants. As much as you would hope that it will never happen, your property is bound to be leased to one or more abusive tenant. The real problem is that the damage they leave might very well be a lasting damage that can take a lot of time, effort and money that you cannot afford to fix it. If you have a large property management company dealing with your re Dealing with such a hassle is certainly not an easy or a desired activity; however, there are some tips and advise that will help you know how to deal with bad tenants.
The top warning signs that you have bad tenants
They haggle a lot
Have incomplete rental application
Avoid or object to credit checks
They don’t have professional references
They want to pay deposit and rent in cash
Refuse access to apartment
They constantly complain
They are frequently behind on rent
Cause unhappy neighbors
This article provides you vital precautions and tips to help you know how to deal with bad tenants effectively and to ensure that your investment will survive such encounters with the most minimal damage possible or no damages at all beforehand:
1. Damage deposit
This would seem like we are bringing out the obvious but acquiring a security deposit from the tenant is necessary as a protection and a backup plan for the landlord in case the tenant abused any of the laws or rules enlisted in the contract. A rental property landlord or property management companies in Calgary and other cities in Alberta can charge up to one month’s rent from tenants as refundable damage deposit. In most cases damage deposit may not be enough to compensate you for a major property damage done by bad tenants however it is better to have this to work as a deterrent in your rental agreement.
2. Renter’s Insurance
What is Renters insurance? Just in case you need to know, the renter’s insurance provides financial reimbursement to cover a tenant’s lost or damaged possessions as a result of fire, theft or property damage or vandalism. It is also handy in case the rental is occupied by bad tenants who’s negligent or fault causes the property damage. Renter’s insurance also covers a tenant’s liability if a visitor is injured on the premises and can also provide compensation for alternative living arrangements in case your rental unit or rented home becomes uninhabitable due to storm damage or an apartment fire. Technically, you are not required to carry renter’s insurance by law, but a landlord can require renters’ insurance in your rental agreement in your lease. Carrying renter’s insurance protects you and the landlord by ensuring that no matter what happens on the premises, either your renter’s insurance or the landlord’s insurance will provide compensation. Discuss the terms and what they mean with your insurance provider to ensure you are sufficiently covered for necessary coverage in your renter’s insurance based on your rental and lease provisions.
3. Make your leasing contract comprehensive
Having a very detailed and comprehensive lease agreement might make you seem obsessed with details, but it is always much better to be safe than sorry. If you are not experienced with the matter, hire a professional specialist if needed to assist you with the format of the lease agreement to ensure that it includes all the terms and conditions that need to be listed in your lease agreement with tenants. You need to have all the possible breaches enlisted in the contract along with their consequences. Do not assume that some terms and conditions should be a given. If a rule is not incorporated in the contracted, then its value in reality is null and you cannot enforce a term in the lease agreement should the tenant break it you must have a way to deal with.
4. Keep written records of everything
This advice can be applied to any transaction of any sorts you would take a place in, but its importance increases tenfold when it comes to real estate and properties. The most recurring issue some landlords would face is how some tenants would delay or avoid paying the monthly rent of the property on its due date. Thus, we cannot stress enough how crucial it is to keep a written record of all of your transactions you become involved in along with the tenant.
5. Check your property on consistent basis
Another important advice is to stop every now and then to check the status of your property to ensure that the tenant is not breaking any laws or causing any damage. This way, even if something happened, you will be able to deal with it in time. Live far from your property or in a different city? Some companies can help you with this on per visit basis. Bonus tip: Check your landlord insurance, it may even be required in some cases that you check the condition of your rental home and would help maintain your cover! Contact us if you need help with this!
6. Screen potential tenants
There will always be potential bad tenants; and while screening them might not be perfectly effective, it certainly is a necessity you cannot afford to ignore. Have a brief informal interview with the tenant to try to dig deeper into what kind of tenant he would be, this will help you filter out a lot of tenants who would do your property and investment more harm than good. Just be aware that tenant screening is not just about pulling a credit score of a potential candidate, it much more than that. A high credit score in itself doesn’t mean anything unless you consider a number of factors in the potential renter. To ensure that bad tenants don’t creep through your screening, you should do the followings;
Did You Do A Thorough Background Check?
Did You Ask Questions at The Showing ?
Did You Request Application At Showing?
Did You Talk To Previous Landlords?
Did You Contact Applicant’s Employer?
We LeaseWell for instance helps landlords adopt a 360 degree screen process that goes above and beyond to validate income, employment, past tenancies and even bankruptcies or criminal record of a potential applicant to protect you and your rental property.
7. Seek professional help for managing your rental
There is no shame in seeking the help of the professionals when you are not experienced in what you are dealing with, especially when it comes to a property you have probably invested all your savings in. By definition, a property manager’s experience usually includes knowing how to deal with bad tenants in an effective way. If you can afford hiring one, do not hesitate to find a property management company in Calgary or seek help from a rental property professionals such as LeaseWell. It can assist you with your specific rental needs without the expensive costs of hiring a property management company to avoid many of the hassles that go with being a landlord.
Two types of bad tenants:
Now that you have taken your precautions, this should minimize the possible troubles you might run into. However, you can never be careful enough to avoid all the possible troubles. For that, to help you learn further how to deal with bad tenants practically, we have listed for you here the two worst types:
A. Late payers and non-payers
As we mentioned before, the most common and repetitive issue you will face as a landlord is the tenants who pay you late or do not pay at all. The tenants’ reasons for not paying the rent on time are almost infinite that could range from having a bad memory to going through rough times and being financially incapable of affording the rent. And more often than not, you find yourself unable to tell whether they are being honest or not, especially if that happened in the first months of their contract period.
How to deal with this issue?
Communication is the keyword here. There are some general basic guidelines to follow here. For starters, give the tenants’ the benefit of the doubt because, after all, we all go through rough times where we would struggle with high financial incapability so maybe that is the case here. If this is the first time for the tenant to miss the due date for paying the rent, communicate the issue and make sure they provide you with a specific date or at least a time range during which they would be able to pay the amount due.
There is no fixed number of extra days – except for any grace period enlisted in the contract -to grant the tenant in such cases. This duration depends on many factors that include your financial history with the tenant (how consistent or inconsistent he has been with paying the rent on time) and how willing you are to go through the month without your second source of income. No matter what the arrangement you reach with him is, make the timeline for escalating the issue crystal clear for the tenant.
For example: after one week you would send the first alert, send the second alert after two weeks, initiate the eviction process with the tenant if the amount was not received within three weeks
B. Abusers and property-damaging tenants
This second type is not less dangerous than the first one. Those tenants pay the rent on time, but they would not mind breaking some laws (for example, you might not want any pets residing in your property at any point of time) or damaging some of the property’s contents.
How to deal with these tenants?
Communicate an address the issue directly; Depending on your assessment of the damage done, you could either warn them, add a special addendum to the contract to allow them to have a pet for example – if you believe it is not a big deal – or evict them if the violation is too severe for you. If you are leasing your property to a group of people, this can be a plus; you can ask them to influence the abusive tenant to stop violating the rules.
Finally, there is no perfect way to totally avoid leasing your property to the wrong person. However, taking some precautions and learning how to deal with bad tenants will help keep your investment a win rather than a loss of your savings.