Inevitably, someday you are going to come across a problem tenant. Perhaps more irritating than fingernails scraped across a chalkboard, the problem tenant will cause you numerous troubles. Nothing will make you happier than the day your problem tenant moves from your property.

You’re going to find that it isn’t always easy being a landowner. Collecting rent can sometimes be as easy as holding down a lion and giving it a root canal—without anesthesia.

Every single problem tenant you encounter can make your life miserable. In this chapter, you will learn some techniques for dealing with your problem tenants.

A good tenant is a tenant who pays the rent on time, does not abuse the property, and gets along with the neighbors. A good tenant may have hobbies and habits that you don’t agree with, but that doesn’t matter. To be a landlord, you will need to develop a little bit of a laissez-faire, live and let live demeanor.

So what is a bad tenant? A bad tenant is anyone who doesn’t pay their rent on time, abuses the property, or agitates the neighbors. What about good old widow Jones? She keeps her home as neat as a pin. She always has fresh baked goods to share with you whenever you’re at the property. She’s always kind and neighborly. She’s also three months behind in rent. Ms. Jones is a bad tenant.

Widow Jones is also a fictional character. Most problem tenants don’t just have one problem. It seems like real-world bad tenants have problems that at least come in threes. The same tenant who can’t make the rent is the same tenant who litters cigarette butts everywhere and stores his motorcycle in his living room (and Dave wishes he were making that up).

Bad tenants are loud, they litter, they live in filth, and they intimidate the good tenants. Bad tenants have unauthorized pets and ill-mannered children. Bad tenants move their ex-con cousin or recently released relative right in to your freshly scrubbed housing.

Before we fill you in on how to cure the bad-tenant blues, first understand who is to blame for this mess. Is it just bad luck? Is it the sinful nature of man? Just one of those things? No, it’s none of the above. Every bad tenant was selected by a landlord. You probably inherited your bad tenants when you bought your property. Always remember that prevention is the best cure for bad tenants.

In Chapter 14, you learned some important steps in managing your properties. The first rules of working with tenants are to first screen carefully and then put everything in writing. The moment you overlook these simple details, be prepared for problems to develop quickly. A marginal tenant can blossom into a real problem if you give him or her the opportunity.

For many real estate investors, the problem tenant is the one who does not pay rent. There are many others. Tenants who have substance abuse problems can turn any property into a drug den. Tenants who can’t live peacefully in their rented space become police problems. In a multifamily property, problem tenants can influence your other good tenants to leave.

In your lease, you should specify the date the rent is due, usually the first of each month. You should also specify when the rent is late, and should assess a late fee. Make sure you hold all of your tenants strictly to the terms of your lease. This policy should be black and white, with no shades of gray. Either your tenant pays the rent on time, when due, or they are on their way out of your property. Be tough when you need to be.

Record all late rent payments, just as you would all on-time rent payments. Note the date the money was received and even the check number. You need to establish a paper trail, especially if you need to evict a tenant. Going to court and proving to the judge that your tenant has not paid rent on time for the past five months is going to help your case.

The key to rent collections is to have a policy and to stick with it. You can’t allow each delinquency to become an agonizing personal decision about what to do about this particular tenant based upon the strength of your relationship with them. If your collection efforts are haphazard, you may even find yourself inadvertently committing fair housing violations.

A good policy specifies all rents are due on the first of the month. Allow a five-day grace period where rent can still be paid without incurring a late fee or other collection effort. On the fifth of the month, distribute a reminder notice to any tenants as yet unpaid. Late fees would now apply. On the eighth day, file an eviction in the proper court having jurisdiction on any tenant that remains unpaid. (Jurisdictions may differ when you can actually file the eviction notice. Whatever the minimum day is, that is the day you should file.) While this timeline may seem harsh, it is necessary to remove a nonpaying tenant by the end of a month.

Note that should the tenant come forward with the rent anytime prior to the eviction being completed, you could accept their money and reinstate their tenancy. Most security deposits are equal to one month of rent. If the tenant gets more than 30 days behind in rent, your odds of incurring uncollectible losses escalate. Never allow a tenant to get more than 30 days behind in rent.

There are exceptions to this timeline, of course. If a delinquent tenant who has been otherwise reliable in the past reports a problem, you may want to work out a repayment plan with them. But the same thinking applies. You still do not want to allow them to get more than 30 days behind. You will learn more about repayment plans later in this chapter.

To be successful in your collection efforts, you will need to understand the local laws governing evictions. Again, your local apartment association can be of great help. More than likely, there are special forms applicable to your state for use in collections and evictions. Stock these in advance of ever needing them.

An eviction can be expensive for you. Depending on the jurisdiction, it will probably take at least 30 days or longer to discover the delinquency, file for an eviction, and recover the rental unit. Evicted tenants often leave their apartment completely trashed. You will likely incur more rental loss and repair and cleaning charges prior to being able to rent the apartment. Naturally, there will be the added expense of advertising and your time.

Of course, you can expect to get a money judgment against the evicted tenant, but good luck collecting it. You should docket the judgment so that any future creditors will be put on notice of the existence of your judgment. You can also pursue an earnings garnishment if you know where your tenant is working. But understand this: posteviction collection efforts are a losing game. You would be better off and money ahead by spending your limited time screening future tenants more thoroughly and by pursuing the next real estate deal.

Not every bad tenant is guilty of nonpayment of rent. David had a tenant perfectly capable of paying the rent because she made plenty of money as a prostitute working out of her apartment. Listen to your other tenants and the neighbors. These people are living there with your tenant. If they say there is a never-ending stream of visitors every Friday night from 11 P.M. to 3 A.M., they are right. Do not dismiss what they are telling you. You want to know about any strange or illegal activity.

Some tenants are slobs and create pest control problems. David has had tenants who kept the entire apartment covered in several feet of rotting, stinking trash. Only a narrow path wound its way around the garbage to the various rooms. Flypaper was distributed throughout the unit to keep the bugs down. David does not get angry with tenants like this. Circumstances like these reflect a mental health situation.

Some real estate investors physically pick up the rent each month at their properties. It is often convenient for the tenant, and it allows the investor to check out their property. This may not be an option in all cases, but it does help to collect rent due, and to keep an eye on the property.

Other tenants live with you in peace for years before moving in a new boyfriend or taking in a troubled adult child or relative. Then the trouble starts.

It would be impossible to catalogue every problem that you could face as a landlord. All of these problems have one thing in common. No matter who your tenant was before, they have now become a bad tenant. You’d better take action before they cause the good tenants to move away.

Nonpayment of rent is easy to prove, but these other lease violations are more difficult. There are three requirements for success. You must first have a lease with well-drafted rules that prohibit these kinds of behaviors. You must then have a paper trail of thoroughly documented lease violations. Finally, you must know landlordtenant law.

When your bad tenant commits a lease violation, make careful notes. Details speak to truth. If your tenant had a wild, loud, late-night party, try to get all the details that you can. Try to count the number of people in attendance, even getting names. Additionally, noting the name of the song that was blasting over the stereo is helpful. Take photographs of any damage.

If you wind up in court over the matter, you will have all the details, all the facts. Your bad tenant will almost certainly not be as well prepared if they show up at all. They will probably say something like, “well, I didn’t think it was that loud ….”

Obviously, before the matter gets to this point, you should try to resolve the matter by both verbal and written warnings. Working from the assumption that your tenant is hopefully a good tenant and whatever incident that occurred was a one-time aberration, begin the process by simply calling to tell the offending tenant that you have received a complaint that you feel you must investigate. Document the call by making some notes that you place in the tenant’s file.

If problems persist, employ the kind of warning statement that you read about in Chapter 14. If the problem is still not resolved, inform the tenant that further violations will lead to a termination of tenancy. A sample letter follows:

Sincerely,
AB Properties

Be sure that you never bluff, but always back up any warnings with appropriate actions should there be further violations. In all interactions with the bad tenant, written or verbal, maintain a tone of detachment. Never allow the situation to degrade into a shouting match, nor should you ever engage in anything that could be construed as a personal attack.

If you can’t gain the tenant’s cooperation, you are going to have to proceed to an eviction. In order to be successful, you will need to correctly fill out a legally enforceable eviction notice and have it properly served on your tenant. You must be certain the portions of your lease that were violated are indeed legally enforceable provisions. In other words, you have to know the law.

As mentioned earlier, knowing the law dictates that your lease be drafted to address the laws unique to the jurisdiction where you are operating. If the eviction notice is properly filed with the court and served on the tenant, then and only then can you get your day in court to state your case and present your evidence about why this tenant should be removed. Just as you would send a notice for nonpayment of rent, be efficient demanding that all other terms and conditions of the lease be observed. For example, your lease agreement might require that no junked automobiles are allowed to be stored on the property. When one appears, send a letter demanding the vehicle be removed within a specific, reasonable length of time.

Bad things can happen to good people. There are automobile accidents, serious illnesses, and sudden job losses. If you have a tenant who has always paid the rent on time in the past, and suddenly can’t pay because of a major uncontrollable event, you probably want to do what you can to collect the rent and keep the tenant. A tenant who calls you and explains what has happened, and asks for some additional time to pay, is probably not a problem tenant.

If this happens to you, tell the tenant that you must still send the notices. Work out a payment plan, and put that plan in writing. In the letter, thank the tenant for calling and working out a plan of payment. The following presents a sample letter for your review.

Mr. Thomas Jones
123 Main Street
Anytown, WI 53403

Sincerely,
Kenneth C. Knight
Knight Properties, LLC

Include with the payment plan letter the appropriate notice to initiate an eviction such that if the tenant fails to comply with the payment agreement, you can immediately file for an eviction.

Work with tenants when you can, but don’t become the local charity, or you will quickly enough be a candidate for charity yourself. Realize that accepting partial payments can be tricky. Depending on your locality, the acceptance of a partial rent payment may cause you to start the eviction process from the beginning. In this case, there may be a legal form that you can use that will allow the receipt of a partial payment without having to start the eviction process over. Check with your local attorney for advice on accepting partial rent payments.

You are protecting your interests by putting your agreement in writing. Should the tenant not pay the rent, you have a strong argument showing a judge that you tried to assist your tenant by making an agreement to accept the rent at a later time.

In your written agreement, be friendly and businesslike. Always keep in mind that whatever you write in a payment arrangement letter could be introduced in court as evidence.

Some tenants are terrible. Each day they are in your property is another day of aggravation. It could be a day where they are loud, slamming doors, yelling, and partying. On another day, it seems like their children are hosting every other kid within a three-block radius on your property. They are hanging from trees, and bicycles are everywhere. Bushes are dying, and while you do not know the exact reason, you must assume it is from something the tenants are doing. The kids are dirty. They are playing with a mangy dog, even though you have a no pets policy. Of course, this dog is a stray—and not your tenant’s dog.

The past New Year’s Eve, a shotgun blast was heard from the back porch—all in the spirit of celebration. The recycling bin overflows each week with an abundance of beer bottles. One of the dependable neighbors tells you that at night they cower in their living room, afraid to look out through tightly closed window blinds.

Let’s call our fictional fright family the Get-Thee-Gones, so that you’ll recognize their name later.

One of your real problems with such tenants may be that they do pay the rent—on time, and as agreed. You can’t evict them for nonpayment of rent—if they paid it.

What do you do?

You need the full power of the bad tenant remedies mixed with a healthy dose of the creative solutions that we are about to explore now.

The obvious solution for unpaid rent is to receive the rent payment from the tenant. Your demand for payment must remain clear and show no signs of wavering.

Other problems can often be handled with written notices. If there is a violation of the lease or your rental rules, send a letter, identifying the violation and expecting full compliance. Do not allow things to slide. If you show that you don’t care about loud noises or accumulating garbage, you are sending a powerful message to a tenant. You probably will not care about rent payments, either.

For violations of your rules that are obvious, take a photograph (such as accumulating trash). Make notes of the time and date the photograph was taken, and keep it in your files.

Evicting tenants is never a pleasurable experience, but sometimes, it is the only way to handle the problem tenant. Each jurisdiction has established its own manner and procedures to evict a tenant.

The standard procedure is for the landlord to file an eviction action in the proper court after notices were delivered to the tenant, and the tenant failed to comply. After the tenant received notification of the court action, the tenant responds to the complaint filed by the landlord. A hearing is scheduled, where both sides have the opportunity to present their case. The judge decides who wins. If the landlord wins, the tenant is ordered to pay any unpaid rent and other damages, and is ordered to vacate the premises. If the tenant refuses to do so, the court will order a sheriff (or other law enforcement agency) to evict the tenant. With that court order, the proper authority will enter the premises, and physically remove the tenant. What happens to their personal property depends on the laws of each jurisdiction. Following the eviction, the landlord has control of his or her property again.

As stated, this procedure varies throughout the country. The important point to note is that the landlord does not physically evict the tenant, but rather the proper legal authority, under court order, does.

Some potentially problematic tenants can be handled with an incentive. One technique that has worked for other real estate investors is to offer a rent discount to any tenant who pays their rent on or before the day it is due. It works this way: you rent a property for $715. However, if a tenant pays the rent on or before the twenty-fifth of each month, they are entitled to a $25 discount. In other words, they rent the property for $690. Their rent check can’t bounce, and it must be in your hands on the 25th to qualify. Property owners who use this technique are often amazed at what a tenant will do to enjoy a rent reduction.

This incentive need not actually cost you anything. You could build a late fee into the base rent. By paying on or before the first, the tenant gets a “discount,” or they avoid the late fee, depending on your perspective. Of course, if rent remains unpaid, additional late fees could apply.

Sometimes, when you are handling the very worst tenants, you need out-of-the-box solutions. Remember the Get-Thee-Gones? What do you do with tenants like this?

One emergency solution employed successfully in the past to easily and quickly remove the worst tenants is to simply pay them to leave. Such an offer should be accompanied by a throw-the-book-at-them eviction notice so that you have the benefit of both a carrot and a stick. The offer for them to move should have some immediacy to it and no payments are to be made by you until they are actually out. You may also need to forgive some or all of any back rent. Make the best deal that you can. But it may be better to spend your money on the bad tenant before they cause good tenants to move, even if the thought of rewarding their bad behavior seems disgusting. Be pragmatic about cutting this cancer out of your building.

Sometimes, the worst problems aren’t caused by your tenants, but rather, by the neighbors of your property. It should not need to be said that before involving the authorities, you try to work things out with your neighbors on a friendly basis. But if the problem persists or if you can’t gain cooperation, documentation again is the answer to your problem.

Take photographs, maintain accurate records, and promptly complain to authorities of any violations of ordinances or laws. Find out if your problem neighbors are owners or tenants. More than likely they will be tenants. If they are tenants, find out who owns the property and have a frank discussion with this landlord about his or her tenant’s behavior.

This could indeed be an interesting discussion. The result could range from your problem neighbors being properly controlled all the way to you acquiring another property at bargain-basement prices from a landlord fed up the tenant problems.

View your problem neighbors as an opportunity.

Real estate is expensive to buy and maintain, and above all, you made the purchase as an investment. You need to protect your investment. By purchasing casualty insurance, you are protecting it against fire, wind, and other accidental damage. You need to protect it by following the local laws when dealing with tenant problems.

Being lazy or lax is never the solution. You must actively protect your investment by properly managing your property.

The Least You Need to Know