From Late Rent to Property Damages: How to Deal with Bad Tenants

how to deal with bad tenant

With 10.6 million Americans earning income from rental properties, being a property owner is a widespread source of revenue. Yet, it is not without its challenges. One of the most daunting can be dealing with bad tenants, whose behaviors range from consistent late rent payments to causing excessive property damage.

These situations can be incredibly frustrating. However, it’s crucial for landlords to approach them with professionalism and care. This article will shed light on who exactly constitutes a “bad” tenant and share useful tips on how to deal with bad tenants.

What is a "Bad" Tenant?

A “bad” tenant can be characterized in numerous ways, but most landlords agree that the typical profile includes one or more of the following behaviors:

  • Regular late or non-payment of rent
  • Refusal to pay late fees when rent is overdue
  • Intentional or accidental property damage beyond normal wear and tear
  • Neglect of cleanliness, leading to problems like mold or pest infestation
  • Violation of lease terms, such as unauthorized pets or smoking where not permitted
  • Disrespect of the community through noisy activities, illegal parking, or consistent violation of Homeowner Association (HOA) rules
  • Illegal activities conducted within the rental property
  • Refusal to vacate the premises upon lease termination, resulting in a costly eviction process.

How to Deal with Bad Tenants

The key to handling bad tenants is staying cool, calm, and collected at all times so you don’t turn into a “bad landlord.” Knowing how to get rid of bad tenants can save property owners time, money, and a lot of unnecessary stress. Even with robust tenant screening processes, landlords might still end up with problem tenants. But how should you manage these situations?

Here are some situations landlords might encounter, along with ideas on how to deal with them.

1. Late rent Payments:

Every now and then, people forget to pay their bills, and tenants are no different. Baselane makes it easy for tenants to pay their rent on time. Baselane’s online rent collection tool makes it simple for tenants to pay their rent on time. This service sends automatic reminders in advance of when rent is due and can prevent tenants from making partial rent payments.

2. Property Damage:

Experiencing property damage due to a tenant’s negligence is every landlord’s worst nightmare. Here’s a concise plan to protect your property:

  • Collect a refundable security deposit, incentivizing tenants to maintain the property.
  • Conduct a move-in inspection, documenting the property condition with the tenant.
  • Clarify tenant’s responsibilities for upkeep and repair requests.
  • Carry out regular property inspections with appropriate notice.
  • Highlight any excessive damage during inspections, discuss consequences like repair charges, security deposit deductions, or eviction.
  • Invest in landlord insurance for added coverage against tenant-caused damage or lawsuits.

Tips for Dealing with Bad Tenants

Understanding how to deal with difficult tenants is crucial for maintaining a harmonious landlord-tenant relationship, so let’s delve into some effective tips that can help manage such challenging scenarios.

Screen potential tenants carefully:

Checking credit reports, rental history, and references are essential steps to avoid problematic tenants. It gives you a glimpse of their reliability and financial stability. Baselane’s platform streamlines this process by giving you tools to screen your tenants, making it easier to evaluate prospective tenants efficiently.

In addition to that you can evaluate the tenant in the followings ways (not comprehensive):

  • Meet the tenant in person and interview them
    • Ask them about their long-term plans? Are they planning to stay 1 year or 5 years?
    • Ask them how they plan to take care of the unit?
    • Ask them about cleanliness
  • Check-out the tenants car – is it clean?
  • Ask them for references from their current or previous Landlords

Provide a comprehensive lease agreement:

A detailed agreement is crucial to set clear expectations. It should specify who can occupy the property, the rules, when you can inspect the property and the consequences of violating them. A solid lease agreement is your first line of defense against potential tenant issues.

Set up an online rent payment system:

Baselane’s landlord banking feature provides a secure and easy-to-use online rent payment system. It sends automatic reminders to tenants, accepts only full payments, and streamlines the tracking of payments, ensuring that rent collection becomes a hassle-free process.

Be consistent with late fee application

Regular application of late fees discourages habitual late payments. Consistency in enforcing the rules can help maintain a professional tenant landlord relationship while ensuring tenants understand the importance of timely payments. Use Baselane to help enforce and collect the late fees.

Conduct routine property inspections:

Regular inspections can help you keep track of the property’s condition and prevent potential damage. It also shows tenants that you’re proactive about maintenance, encouraging them to treat the property with respect.

Have a clear, professional communication line

Effective communication is key in resolving tenant issues promptly. Baselane’s all-in-one platform simplifies communication between landlords and tenants, helping you respond swiftly to tenant concerns and keep them satisfied.

Collect a security deposit

Collecting a security deposit is not just a basic procedure, but it can also serve as an effective strategy when dealing with demanding tenants. This deposit acts as a financial incentive, encouraging tenants to look after your property. With Baselane’s security deposit account for landlords, the collection and refund process becomes straightforward and transparent, adding a layer of simplicity to your property management tasks.

Respond to repair requests promptly

Quick responses to repair requests can prevent minor issues from escalating into major damages. This helps maintain your property and shows your tenants that you are committed to providing them with a well-maintained living space.

Consider a "cash for keys" agreement

If you are dealing with particularly difficult tenants, offering them cash to vacate might be a cheaper and faster solution than eviction. This approach could save you significant time and legal costs.

Obtain landlord insurance

Insurance provides extra protection against unexpected tenant-related damages. It’s a worthwhile investment that could save you from significant financial losses.

Offer Cost-Effective Tenant Incentives

Retaining good tenants is crucial for your cash flow and reputation. Offering them incentives that enhance their living experience can be an excellent strategy. These incentives can range from financial ones, such as discounts, rebates, or credits for rent payments, referrals, renewals, or upgrades, to providing free or discounted services and amenities. For example, you could offer free Wi-Fi, parking, and laundry services or organize community events like barbecues or movie nights. Personalized gestures such as birthday cards or welcome baskets can also show your tenants that you value them.

Incorporating this strategy could not only help retain good tenants but also motivate challenging ones to improve their behavior.

Hire property managers:

Nearly half of landlords manage their own properties, while 44% hire someone or outsource property management. The remaining 11% are landlords who manage but do not own.

For landlords with multiple properties or those who prefer to offload the daily hassles, hiring a property manager could be a viable option. They can manage advertising, tenant screening, lease negotiations, and routine inspections. Baselane’s landlord accounting features can help streamline the process for managing the rental property finances for landlords and property managers.

Final Thoughts

Choosing between Landlord Studio and Tenant Cloud largely depends on your needs as a landlord or property manager. However, Baselane’s commitment to exceptional customer service, ongoing product development, and unique features, such as landlord banking and integrated bookkeeping, make it a compelling option for landlords seeking a more comprehensive solution.

Remember, the right property management software tool can transform your operations, streamline your tasks, and ultimately enhance your rental business’s success. Evaluate your options carefully to select the platform that best aligns with your unique rental property accounting and management needs.

*Please note that the information provided in this blog post is intended to serve as a guide, and it is always advisable to contact the software providers for the most up-to-date and detailed information.*

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Financial Technology, Real Estate Investing, and Property Management, Accounting and Tax, Finance
Saad started his career as a Certified Public Accountant (CPA) working for a top-tier accounting firm. He was responsible for helping audit alternative investment funds. He later worked at a hedge fund where he was responsible for preparing financial statements and implementing new technology. He also ran a successful private tax practice for five years.

After completing his MBA at Duke, Saad joined The Boston Consulting Group to do management consulting. At BCG his experience spanned several industries and growth projects across Pharma, Retail, and Technology companies. His passion for democratizing finances led him to Plaid, a fintech, where he worked with large Banks and Financial Institutions to make finances and money easier for all.
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From Late Rent to Property Damages: How to Deal with Bad Tenants