If you’re a landlord or property manager, you’ve probably had your fair share of bad tenants. It’s inevitable that as a property manager, you will have a bad experience with a tenant at some point. Late payments (or no payments at all), being a constant disruption to the neighbors, violating the rules in the rental contract, illegal activities—these are just some of the most common problems landlords face with bad renters every single day. Unfortunately, there’s no foolproof way to avoid a bad tenant. Even the most thorough screening process can still allow bad renters to slip through the cracks. However, there are a few things you can do to protect yourself and your investment in the event you end up with a problem tenant. Read on to learn how you can protect your property from renters.
Attract a quality tenant.
The best way to protect yourself from bad renters is to avoid them entirely, right? As we touched on above, there’s no sure-fire way to prevent yourself from renting your property to a tenant who intends to cause you nothing but headaches and trouble, but there are some steps you can take to protect yourself from ending up in this position. For example, by making a few simple upgrades to your property, you’ll be able to make it even more attractive to higher-quality tenants. Even small projects that aren’t overly expensive or time-consuming—like repainting the walls or adding window treatments to each room—can capture the attention of tenants who will appreciate a more updated space (and may even be willing to pay a little more in rent, too).
Perform background and credit checks.
Many landlords mistakenly skip this step in the screening process because it costs money, but if a few dollars is all that stands between a good tenant and one who could potentially create heaps of problems for you in the end, then we say it’s well worth the small investment. Background checks vary in cost, but most can be completed for anywhere between $10 and $25. Credit checks cost anywhere between $30 and $50 and can provide you with information regarding a potential tenant’s credit history, including late payments, loans, and any evictions. This information can help you determine whether a renter is right for you based on how well they manage their money. Be mindful when considering a renter’s credit score. A low credit score doesn’t necessarily mean a bad tenant. There are a number of reasons why someone might have a low score, such as divorce or no credit history. Instead, use the report as a whole to determine whether the tenant is right for you.
Sign a rental agreement.
Most states agree that both written and oral contracts are legally binding and enforceable by the law. However, when it comes to renting out your property to a tenant, written agreements between you and your tenants are in your best interest. The rental contract should include the rental rate of your property and when rent is due, the amount required for a security deposit, the length of the rental agreement and any other terms you want to include, such as rules about smoking or how many pets are allowed on the property. In the event that a bad renter violates the terms of your agreement, you will be protected should you have to take your case to civil court.
Require a security deposit.
As a landlord, you’re not legally required to collect a security deposit from your tenant, but it’s highly recommended that you do. A security deposit is an amount of money—based on the rental rate and varies by state—that a tenant agrees to pay before moving into a property. Many landlords request security deposits from their tenants to protect themselves in the event the property becomes damaged and requires repairs or there is a breach of contract. Depending on which state you live in, you only have a certain amount of time to return the deposit once the rental agreement has ended. As soon as your tenant moves out, make sure to inspect your property thoroughly and let your tenant know (in writing) whether you’ll be returning their deposit based on its condition at move-out.
Document everything and do walk-throughs.
First and foremost, before any tenant moves into your property, you should always make sure to document its condition thoroughly. This includes taking photographs and videos of the property from the top-down, including the walls, flooring and windows. Throughout a tenant’s occupancy, keep records of your interactions and document any complaints and warnings you have to give. As a landlord, you’re allowed to do a walk-through of your own property. Consider including a term in your rental contract that requests at least two walk-throughs during the agreement. Give your tenants at least 24 hours’ notice and make notes of the property’s condition during the walk-through. Always make sure everything you document has a date and time stamp on it.
Make sure you have insurance.
While it’s not required by law that you have an insurance policy on your rental property, it’s highly recommended that you consider getting one. As a landlord, you need to be able to protect yourself from the financial risks associated with a bad tenant, including nonpayment of rent, property damage and even liability for accidents in the event your tenant is injured on your property—all of which can become very expensive if you have to pay for it out of pocket or face a civil litigation case. We recommend getting an insurance policy that is specifically designed for landlords that protects them from these risks and more.
Know the law.
As a landlord, it’s important that you understand your rights and responsibilities, as well as the rights and responsibilities of your tenants and what is allowed when it comes to a landlord-tenant rental agreement. Make sure you have a clear understanding of the landlord-tenant laws in your state so that you will be able to protect yourself if you end up with a problem renter. Each state and municipality has its own unique landlord-tenant laws and ordinances. You can find more information about your state’s laws on the Department of Housing website.