How to Handle Problem Tenants

If you ask most residential real estate investors, they will tell you one of the biggest challenges in managing rental property is handling tenants who become a nuisance. If you’re in the game long enough, it will eventually happen to you.

The difference between average and great real estate investors is how well you manage these scenarios when they pop up. Here are some of the ways you can get through tenant-related difficulties:

Screen Them Out

The best way to handle problem tenants is to not have to deal with them in the first place. Establish an effective screening method, which should include:

  • Running a background and credit check
  • Ask for multiple references and contact them all (including past landlords)
  • Verify income
  • Speak with candidates in person to get a feel for their personality

Clearly Communicate Expectations

Communicate with your potential tenants verbally and through a well-written lease. Have all expectations clearly laid out in writing not only as a way to prevent problems, but also to give you clear leverage when discussing the issues if they arise.

Don’t Handle Them Yourself

If you’re not comfortable with confrontations, it’s one of many good reasons to consider hiring a property manager or management company whose business it is to handle conflict in a professional manner. It’s not free, but it can keep you free of worry.

Be Flexible, When Possible

Every landlord’s financial situation is different. Even if money isn’t tight, it’s perfectly reasonable to take a rigid stand on timely rent payments. However, an argument can be made for the benefits of working with renters who come into hard times.

First off, that last point is an important factor. If the evidence shows your renter is simply irresponsible with their money, it’s likely not in your best interest to prolong your relationship. However, perfectly good hard-working people can occasionally have bad luck. Those are the people you may want to make accommodations for.

For instance, if your renters are having a tough time making next month’s rent, consider offering

a payment plan with a defined path for catching up. If they are going to normally be reliable renters, it’s worth the short-term inconvenience to you to make these accommodations to retain them for the long term.

But Don’t Make Flexible a Habit

There’s a difference between working with a tenant in need temporarily and accommodating them all the time. In other words, don’t be wishy washy. Lay out the ground rules clearly and make sure they understand you expect them to follow them. It’s not unlike a bad romantic relationship when one person steps all over the other one who is “too nice” and takes the abuse.

Stay ‘Above Board’

There is a proper process for handling tenant issues. Renters have legal rights, so make sure you follow the letter of the law. That way if eviction is necessary, they can’t make it difficult for you to proceed.

Stay Calm

Don’t let your emotions run the show. If you get emotional, you open yourself up to making bad decisions that can haunt you in the end. Besides, it’s always best to conduct your real estate business in a professional manner.