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A bad tenant can quickly sour any real estate investment. However, evicting a problem tenant is a long and tedious process that can wind up costing you more than it is worth. So, many investors start out by looking for solutions that do not require them to rely on eviction in order to remedy the situation.
So, what can you do?
While there a not a lot of ways you can legally discipline a bad tenant, there are a few things you can do to discourage poor behaviour before you are forced to rely on evictions to solve your problems.
If you would like to learn more about how to spot the signs of a bad tenant and how to take care of them before they impact your cash flow, click the link below to book a free strategy call with us.
Bad Tenants Are Every Investor’s Nightmare
Bad tenants can be one of the most headache inducing parts of being a residential real estate investor. From late or missed rent payments, to noise complaints, to negligent property damages, these individuals are a hassle to deal with. Sometimes tenants can quickly become bad tenants by simply not doing things – such as refusing to inform you of water damage that is beginning to spread in the property.
These tenants typically behave this way for one of two reasons, because they do not care or because they think they can get away with it. After all, some bad tenants are not necessarily doing anything that they can be evicted for, they are just being problematic for the sake of it.
So, how can you discourage this behavior without rushing straight to eviction as your solution?
Ensure You Have a Strict Lease
The first thing you should do before you ever allow tenants into your building is to write an air-tight lease. If there is a specific task or responsibility you expect the tenant to take care of, get it in writing. Many bad tenants will aim to exploit holes in their lease in order to avoid taking responsibility for the property when it is their turn to step up.
As well, if there is a rule you want to enforce on the property, include it in the lease. For example, if you want to prohibit smoking in your property, you need to include it as a clause in your lease. Otherwise, your tenants will be free to smoke indoors as they please whether you would permit it or not.
However, when drafting your lease, you should always take precautions to avoid including clauses that cannot be enforced. Notably, no-pet clauses are a common clause written into leases by inexperienced or uninformed landlords who do not realize that they cannot enforce such a rule – even if the tenant signs the agreement.
Discover How To Rent A Property With This Step By Step Guide
Keep Detailed Records
Whenever a tenant misbehaves or acts out of line, make sure to take down a detailed record of the situation and let them know that you are keeping a record. Often during the eviction process, property owners are required to provide proof to back up their reason for evicting the tenants. So, even if you would rather avoid going through with an eviction, keeping a record shows the tenant that it is a possibility for you to follow through with one. This may encourage a bad tenant to change their behaviour to avoid consequences.
Increase Inspections and Visits
If a tenant is choosing not to keep you informed about what is happening on the property or allowing the property to fall into disarray due to neglect, you can combat this by scheduling inspections and visits more frequently. Not only will this provide you with the ability to catch any problems that may be happening with the property early, regardless of whether they inform you, but it also provides pressure on the tenant to take care of the property because they know you are going to come by and see the condition, they have left it in.
Confront the Bad Tenant on Key Issues
Another important step in handling a bad tenant is confronting them directly. While you may be keeping track of their behaviour and recording the signs of their neglect towards the property, this does not guarantee that they are acknowledging their own fault in the situation, nor the potential consequences of their actions. So, whenever necessary, you should have a face-to-face discussion with the tenant in order to ensure that they understand the full weight of the situation.
Cash For Keys
If the previous actions do not remedy the situation with your tenant, there is still a way to remove them without resorting to eviction straight away. Instead of filing for eviction and going through the long, drawn-out process it takes in order to remove the tenant, you can offer them a financial incentive to terminate their own tenancy instead of requiring you to evict them.
While it may seem odd to offer cash to a tenant showing bad behaviour, cash for keys is often much cheaper and much faster in the long run than following through on an eviction.
Remember: Sometimes Eviction Is the Best Available Option
While you may want to pursue an option to take care of bad renters without evicting them, sometimes you do not have any other option. Notably, if you have a destructive tenant who needs to pay for damages they caused or a tenant who refuses to leave, eviction may be the only path forward. In this case, you should make sure that you do everything by the book and know where to report bad tenants and refuse any partial payment or settlement offer until the process is complete or else you run the risk of jeopardising the eviction proceedings.
If you are worried about problem tenants impacting your cash flow, you should consider insuring your mortgage against non-paying tenants. To get connected with an agent who can help you, reach out to us at LendCity and we will gladly refer you to a trustworthy insurance provider who can give you the protection you need.