How to tell if you have bad tenants, and what can you do about them?
How to tell if you have bad tenants, and what can you do about them?
As a property investor, it’s ideal to have excellent tenants. These people will make their monthly payments on time and look after the property as if it were their own. On the flip side, when you have challenging tenants, you may wonder if it’s all worth it!
Bad tenants can have a significant effect on your health and well-being. A property is often considered a lifelong investment, and you need the right type of tenant to ensure it is looked after in the best way. When you have bad tenants, regular property maintenance may not be completed, and you may face high repair costs. Bad tenants may not pay their rent on time and may intentionally damage your property when they leave, leaving you with a significant repair bill and potential loss of rental income as repairs are conducted.
Screening potential tenants and completing the vetting process is the best method for ensuring your property is leased to the right people. Keeping a close watch on your tenants is a good idea, even with these processes in place. But that does lead to the question: How can you spot bad tenants? And what can you do about it?
Regular Complaints
If a tenant regularly finds problems and makes complaints about your property, you may have an issue. While you’ll have the occasional issue with your property, you’ll need to make appropriate repairs as requested. If new problems and concerns are expressed by your tenant regularly, it can be a sign that you have a bad tenant.
When showing the property to a prospective tenant, listen carefully to their concerns and any issues. Most people are reasonably reserved during a property viewing, so if they express these views freely, you may expect a slew of complaints if you approve them as a tenant. You can even find that some tenants will use the ‘problems’ of a property as a reason to withhold paying rent. It is best to avoid overly complaining tenants altogether.
Applicants with too many previous addresses
If you have a prospective tenant that has moved several times in the last few years, it can be a sign that they have a troubled past living in rental properties. Many reasons a person moves around include trouble holding steady employment, issues with housemates, or problems paying rent and being evicted.
A prospective tenant who has moved frequently doesn’t always mean they have had issues at other rental properties. But it does mean you’ll need to complete additional investigations into their reasons. You can politely ask about their previous living arrangements and listen to their explanation. A person with a genuine response will usually divulge the information with few details. People looking to cover up a bad history will often over-explain the problems. Use your best judgement to determine if your prospective tenant is being truthful.
Rent consistently in arrears
A late rent-paying tenant can cause you all sorts of headaches. From the time it takes to chase up the payments to all the associated cash-flow issues. If you have a mortgage on the property, rent needs to be paid consistently on time to ensure you meet your financial arrangements.
You can check the tenant’s rental history and determine if there will be any issues with paying the rent on time. You may also check the tenant’s employment history to see if they’ll have a steady income and enough funds to cover their living expenses.
No references provided
Prospective tenants are usually more than willing to provide references. They may offer employment references and past rental references to secure your property. However, if your prospective tenant can not provide any (or are unwilling), this may suggest a poor history.
Conducting reference and credit checks is vital to ensure you get a quality tenant for your property.
What to do about bad tenants?
Dealing with bad tenants can be challenging, but there are some steps you can take to ensure you make things easier for yourself. If a tenant is constantly late paying their rent, you can start by asking some questions to find out what the problem is and see if there is anything you can do to help. You may find they have recently lost a job, have a repair dispute, or something else. Finding a solution to the issue is the best step forward, as going through an eviction process and finding new tenants can be time-consuming and expensive.
Dealing with late-paying tenants
When people pay tier rent late, there is usually some underlying reason. Talking to your tenant is the best way to discover their issues. If they’re having some financial difficulties, you can talk to them about making the payments in other ways, such as using credit cards or changing the payments from monthly to weekly.
You may also like to help them source a roommate to contribute to the rent or allow them to vacate the premises voluntarily if they cannot see their financial future changing soon. Some people feel trapped in a rental property and may think they cannot break a lease agreement. Evicting tenants is an option, but it is always best to request a tenant leave of their own volition. Most tenants understand that eviction can have ongoing consequences and may affect their ability to secure a tenancy in the future. Evictions are often only used as a last resort.
Problems with repairs
When you have outstanding repairs on a property, the tenants may consider withholding rent payments. To ensure this doesn’t happen, it is best practice to ensure all repairs are made promptly. A list of authorised repairers will help you complete repair tasks appropriately and keep your tenants happy. You can pass these details on to your property managers or authorise them to complete the repairs on your behalf.
Keeping a detailed record of all repairs completed, when a complaint was made, and when the repairs were completed will help you keep track of everything. Excessive complaints can be problematic, and your records can show whether they are genuine or excessive and unwarranted. If you receive a complaint about something repaired recently, you can show your record to the tenant as proof that the issue was fixed.
If your tenant is making excessive complaints to avoid paying rent, you may suggest they vacate the property if it is unsuitable for them.
Using a property manager to avoid bad tenants
Property managers are experienced at identifying and managing potential bad tenants. If you have existing bad tenants, an experienced property manager will know the best methods for removing them from your property and finding new tenants.
A property manager is the best tool for ensuring you have good tenants. Property managers will handle all the queries from your tenants and ensure repairs are completed within the specified timeframes. Your property manager will also follow up on any issues with late rent payments and determine the best course of action to ensure future payments are made on time.
How property managers can help with bad tenants
One of the best methods for dealing with problem tenants is to have an experience property manager on the case. Ignoring the problems of a bad tenant will only end up costing you more, and the faster things can be resolved, the sooner you can get your investment back on track.
Verify income
A tenant’s ability to pay the rent is one of the first checks a property manager will conduct. This can be completed through a series of questions for the potential tenant and contacting their employers.
In the best-case scenario, a tenant should earn around three times the rent. This will ensure they have enough funds to pay the rent and meet all ongoing living expenses.
Check references
References provided by landlords and property managers can be an excellent indication that the potential tenants are worthy. A good tenant will have few issues discussing where they previously lived, and a bad tenant may be less willing.
Your property manager will contact the tenant’s references and ask the right questions to see if they suit your property. References from family and friends are not usually accepted. Still, if the tenant has not rented before (such as a recent home leaver), you may need to rely on an employer’s reference. Any social media accounts may be checked, as they can provide valuable information.
Look for previous evictions
If the potential tenants have been evicted before, it doesn’t mean they are bad tenants. It’s possible they were going through a tough time and couldn’t meet the rent payments. However, you need to be cautious and seek more information. If the eviction was long ago or caused by a job loss out of the tenant’s control, you may have a good tenant who went through a bad situation. A property manager has the skills required to make that determination.
At Property Managers Melbourne, we have a team of property managers with the necessary skills to take care of your investment and handle any bad tenants. Call our team if you’re dealing with a bad tenant or need an experienced property manager.