Problem Tenant Solutions

Problem Tenant Solutions

Problem tenants are a significant drag on management resources. No amount of screening will eliminate them completely, but addressing problems early can reduce their negative impact on operations and profitability. Landlords faced with unhappy tenants need to think creatively to protect their cash flow and their buildings.

Residential property owners know that problem tenants will always be with us, which is why property management services offer leasing and general management, plus specific solutions to common, yet difficult tenant problems.

PROBLEM: Verifying Tenant's Care of the Property

Regular maintenance and property repairs are inevitable, but to mitigate such problems as best as possible, it is important that property managers offer regularly scheduled inspections at least annually. Bringing in a specialist to work with tenants regarding regularly-scheduled inspections and specific problems has several advantages. In addition to eliminating potential confrontation directly between the owner and tenant, the presence of an outsider sends a clear message that management considers tenant welfare very important and any problems that arise deserve immediate attention and resolution. 

Scheduled inspections tend to be general in nature and are intended to identify most repair needs or tenant abuse. When a need for repair is noted, it should be addressed by the maintenance staff or a licensed contractor should be employed to recommend a specific repair action.

PROBLEM: A Property Experiences High Tenant Turnover

The top reason tenants vacate apartments is repair disputes. Thus, ensuring maintenance responses are timely, high quality, and professional is the best way to maintain good tenant relationships. Regularly repairing and upgrading properties before complaints arise relays the owner's pride in the building and respect for its tenants. 

Tenants also often vacate under the perception that they can save money at a different property. To rebut such assumptions, frequently monitor competing properties' rents and amenities. Gauge the market, know where you are in it, and if you see rent decreases coming over the horizon, then drop your rents now. This strategy ensures a higher likelihood of occupancy and minimizes your loss to competitors who compete on price alone. Also, negotiate renewals with good tenants three or four months before their leases expire. Depending upon the market at the time, landlords may offer a discount or incentive for renewal. If rent increases are necessary, then modest annual rent increases are suggested for long-term tenants. Though it does take time to get a property to market, the savings in vacancy and turn costs more than make up for it. Another valuable tactic to reduce turnover is creating a sense of community among residents.

PROBLEM: Tenants Aren't Paying Rent

Tenants withhold rent for a variety of reasons, from temporary unemployment or cash-flow shortages to maintenance and repair squabbles. Communication is critically important when confronting this common problem, experts say. Understand the nature of the problem and the tenant and negotiate. If the tenant is temporarily unemployed or has other cash-flow problems, the most-effective rent-collecting method is structuring payment options. 

It's important to recognize that occasionally people may struggle with bills. Prorating the delinquent rent and late fees over the remainder of the lease is also a good way to collect, but getting a payment date commitment and following up to ensure payment plan compliance will ensure success. Typically prompt-paying tenants with short-term financial problems are ideal for flexible payment plans. However, if communication and negotiation fail to fix the problem, experts suggest convincing the occupant to leave voluntarily. If the resident is not able to pay, then explaining [eviction's] long-term impact on their rental history and credit will convince them to turn over possession. It is far more appealing to them for their future, and the [occupant] does not end up with legal fees piled on top of bad debt.

PROBLEM: Bad Tenants Slip Through the Screening Process

A simple application and credit check may not reveal prior tenant problems sufficiently. Landlords should conduct thorough background screenings involving interviews, credit checks, and employment and rental histories for all prospective tenants. The number one problem/solution relates to tenant selection. Yet room for compromise exists. Someone with bad credit isn't necessarily a bad tenant because people tend to pay housing costs first. If only one factor of a prospective tenant's background check is blemished, experts suggest proceeding with caution. Depending on the severity of the problem, property managers may ask for a larger-than-normal security deposit. It's a method to share the risk with the tenant, and often works out well.

EVICTION: The Ultimate Solution

Property managers should employ the above strategies when dealing with tenant problems, but in some cases eviction may be the only resolution. It is common known that once you give a tenant a second chance, it became necessary to give a third chance, a fourth chance, and more chances, until the inevitable eviction is done. This can result in less rent, more aggravation, and wasted time. An eviction notice to the tenant shows that you are serious about treating the property with respect and you expect them to do the same. 

Since landlords must prove cause for eviction in court, they should keep detailed logs of tenant nuisances as evidence in accordance with state and local laws. Experienced property managers agree that eviction can be the only resolution in some cases. But to avoid involving lawyers and the court system, landlords must remain visible and available to tenants both before problems arise and after. The key of a good property manager is to become the person that can offer solutions, not disregard problems.