Once a Bad Tenant, Always a Bad Tenant
If you're new here (and you like what you read), you may want to subscribe to my RSS feed. Thanks for visiting! Scott
I have been beating myself up lately over my bad tenants. In the last 30 days, I have had to evict one tenant for non-payment of rent after only 6 months, ask another to leave at the end of the month after repeated police calls (and probably not collect their past due rent), and threaten another with eviction because of non-payment. Plus I have another one or two that are on the edge of eviction for non-payment.
If you remember back to January, I had made an Investment Property New Year’s Resolution to reduce my bad debt expenses. Unfortunately, like my personal goal to lose 10 pounds, I am failing. I decided to do some research and pulled all of my past and present tenant files and tried to find some common theme amongst all the “bad tenants”. I realized that while many of the problems are with the tenants, it appears I am the one enabling their bad behavior. Here is what I found.
If it walks like a duck and sounds like a duck, it is probably a duck.
While I rarely see a tenant that has a great credit report, the tenants that have problems paying their rent on-time (or ever) have typically shown a history of financial and/or rental problems on their background checks. The ones that have several items in collections especially seem to have issues with rent. I guess paying late and/or not paying a bill is in some ways like criminal activity or drugs, once you get past your first time, it just gets easier each subsequent time to not think about the consequences.
Bad tenants apply here
Over the last 30 days, I have been in full leasing mode as many of my leases expire either May 31 or June 30. Just like someone that leaves one abusive relationship and falls into another abusive relationship (often because they don’t feel like they can demand better), I found that I keep wanting to make exceptions for prospective tenants that have bad traits (I am in no way minimizing the plight of someone in an abusive relationship, I am just making a point). Although it is easy to deny the applicant that lies to you about the recent eviction, it is tough to say no to a single mom who is working 2 jobs but only takes home about $980 per month and wants to rent your $750 per month apartment. Can she and her child live on only $230 per month, even if she claims it is not a problem?
Lose a month of rent or have bad debt because of an eviction-which is worse?
Although I am not a fan of having a vacant rental unit and losing a month’s worth of rent, I believe that is an easier one time event than having to constantly call and hunt down your tenant for your rent. Plus, when you have a tenant that is bad at paying, each month you are also wondering if you are going to see the rent or if this will be the month you need to evict.
Realizing and admitting you have a problem is the first step in solving it. I am committed to demanding better tenants. Here are a couple things I am going to do differently:
- Never book an apartment showing without spending a couple extra minutes on the phone and asking them about their income, rental background, and other details. I think I have been quick to just set up an appointment because I am in a hurry when they catch me on my phone or because I just want to get bodies through the unit.
- If they have a history of bills in collection, run the other way.
- Ask for additional damage deposit if I feel like taking a risk on the person.
- Sticking to the rule that the prospective tenant must make at least 3 times the rent in documented gross income per month.
- Commit to doing a more thorough background check via phone calls to previous landlords and employers.
- Not accepting incomplete tenant applications or missing data.
I have been successful up until this point, but I want to improve my business and strengthen my cash flow by reducing my non-paying tenants. I also want to reduce my work and stress load by having tenants that always pay on time.
Scott Ficek owns and manages almost 30 investment property units from single family to multi-family. Find his website at www.minnesotainvestmentrealestate.com or receive his blog via your RSS Feed or in your Email. He is also a Minnesota Real Estate Agent with RE/MAX Advantage Plus in Minneapolis and helps new and seasoned investors buy and own Minnesota Investment Property.
This is actually helpful as my tennant pays late and does pay the fees but I end up expending energy chasing the rent etc but getting the fees. In hindsight I would not have accepted this tennant but so far I can deal and the fees are caught up. Still if I started over i’d get a vancacy for a month over the ??? I overlooked due to wanting to get my house rented. I think in the long run i’m good but that’s luck so the rule should still be followed by new landlords.
I now understand the strictness of my godmother who owns several apartments in our place. Our neighbors used to call her as “excessively nosy” on the families who are interested in renting her apartment. Reading your post made me realize that my godmother is doing the right thing. She is just doing those interrogations to screen and check the capacity of tenants to pay.
I am tired of people who seem to be ready to move into my property, only to blow me off at the last minute - close to the end of the month, when it slows down for potential renters. David Joseph Neawedde sent back my rental application, then ignored my requests for the firt month’s rent and security. I held the apartment for him for a week, which cost me a week in showing the place.
Once you get a bad tenant don’t forget to report them to http://www.bad-tenant.org. This way other landlords will know not to rent to them. I list all my bad tenants here and always check to make sure my next tenant is not listed here.
Gabby Gomez »
Interesting. I need to think about the liability of posting negative information about a tenant on a public site.
Until I have a signed lease and a check for the first month’s rent and the deposit - I continue to advertise and show the house. I would have told David Joseph Neawedde that I have run his app and he’s accepted, can he meet me that evening to sign the lease and pay the money. If he said no - I would have told him I was not going to take it off of the market.
Oh how very true! If it does walk like a duck and talk like a duck…..IT IS A DUCK!
Finding good tenants really seems to be the key of this business. Thanks again Scott for this info!
Your comment - Interesting. I need to think about the liability of posting negative information about a tenant on a public site.-
Just remember as long as you tell the truth and stick to the facts there is no liability.
There is no such thing as truth in a disagreement. Plus, truth is in the eyes of the listener.
If I say “they were very dirty tenants”, which may be true by my standards, but they may not see it that way.
Who is right? I think you have a case for slander.
I would personally not post onto a public site that sort of information. It is only inviting problems and potential lawsuits. Just my two cents.