Soothing the Headache and Heartburn of Bad Tenants

by | Apr 26, 2019

As a property owner, it can sometimes feel like the Wild West when it comes to selecting your tenant pool – not knowing who to trust when it comes to partnering up. Or maybe as a new property owner, you inherited a troublesome tenant mix.

Either way, no one wants a bad tenant, and while it may be inevitable, there are steps you can take to limit your bad tenant risk.

What Makes a Bad Tenant?

Let’s start off with defining a bad tenant. A truly bad tenant is one who doesn’t conform to the rules and regulations agreed upon in the lease. They’re the ones not paying their bills, continually avoiding communication with management and disregarding notices. They’re the ones telling the white lies, continually making promises they can’t keep.

The cost of a bad tenant can be incredible – lack of rent, re-leasing costs, costs to evict the tenant and the toxic environment that can spread to other tenants in the property. So, how do you see the warning signs before signing a lease?

How to Avoid Getting a Bad Tenant

While the process of qualifying tenants should be part of the initial leasing process, the burden of a bad tenant immediately falls to management once the lease is signed. Owners can greatly benefit from bringing management into the process of qualifying tenants, as they serve as advisors to the owner.

Management can play an active role in helping to ask and answer important questions:

  • Does the prospective tenant have relevant experience?
  • Does he or she have the financial resources to make a go of it?

Management can also help determine if the tenant prospect is an appropriate complement to the existing tenant mix, rather than a confliction. A good leasing broker will consider these factors before presenting the tenant prospect to the owner. However, the management company should act as a second line of defense, potentially uncovering other issues that are better handled up front. Remember, the difference between selling a property and leasing one is the difference between having a meal with someone and marrying them.

How to Work with a Bad Tenant

Okay, so everything looked good in the beginning, but now you’ve got that bad tenant. Working with a bad tenant is an art form, not a science. An owner must work to avoid the embarrassing, uncomfortable and uncontrollable situation where the bad tenant gains the upper hand, removing the power from the owner.

Wise management will realize that there’s a large grey area in between a perfect tenant and a bad tenant that needs to continually be monitored. Often, a tenant in trouble can still be saved from the “bad tenant zone.”

Management needs to be open to working with problem tenants, and in rare cases, even open to renegotiating terms. If management is able to establish frequent and honest communication, that’s a good sign that there’s a growing relationship, where management can work with the tenant to find a satisfactory solution to mutual problems. 

How to Get Rid of a Bad Tenant

Ah, the point of no return. It really puts the “un” in “fun.” This is the point where as management, you realize that this tenant must go. These tenants are just toxic – bad for business and bad for the property owner.

Each owner will judge the time to cut a bad tenant loose differently, and often, the best move may be having a management firm on your side for consultation. Also, management is almost always cast as the role of the bad guy in this common play. By delegating these tough duties to a management firm, owners can move themselves into the background, helping them retain a better position in the court of public opinion.

Trout Management to the Rescue

For a property owner, having a strong management firm like Trout Management by your side is like having an honorable and orderly police force at your disposal, working with existing tenants to maintain law and order.

A property isn’t healthy without an entity to uphold tenant peace and order. If you’re spread too thin in responsibilities, it may be a good time to call in the cavalry.

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