How To Avoid Problems With Bad Tenants

If you’re in the real estate business long enough you will eventually have an encounter with a bad tenant. Most of us have already had experiences that have made us consider selling off our rentals. However, there are a few steps you can take to make sure your property and your tenants remain relatively maintenance-free.

How To Avoid Damage To Rental Properties By Bad Tenants

1.) Perform Pre-Screening and Background Checks

The process of screening a rental application can be tedious but a little effort goes a long way. Before you allow anyone to take possession (or even sign a lease) it is important to know who you are dealing with. You will want to run a credit check and verify employment and income. But beyond that it is also important to perform a tenant screening. This will help you verify the information on the rental application by giving you information about the individuals liens and bankruptcies as well as relatives,known associates and employers. You can also perform a criminal background check, which will list a complete history of the all recorded criminal activities. You will need a signed authorization in order to perform a tenant screening or a background check however this has become relatively common and you can also pass on the cost to your tenant by charging an application fee.

2.) Charge a Rental Deposit and Require Renter’s Insurance

Of course you will want to charge a deposit to account for any unpaid rents or property damage. But where many people go wrong is not charging a high enough deposit. We recommend that you always charge at least one full month’s rent as a deposit. Many landlords get scared and don’t want to ask for big deposits but we have found that the tenant’s ability to pay a large deposit not only keeps them from damaging the property, but is also an indication of the tenants ability to make timely rent payments. May of our clients are charging two months rent plus a full month deposit.
It is also important that you require a minimum amount of renter’s insurance. There policies are fairly inexpensive for the tenant and you should always require proof of coverage prior to possession.

3.) Hire a Property Manager

Let’s face it, property maintenance can be a major pain. The furnace always goes out at 7pm on a Friday and guess who the tenant is going to call? Not you, because you hired a property manager to handle it. A good property manager will also keep an eye on the property and develop relationships with the neighbors so they can be informed if there is any suspicious activity at the property. Although it is an expense, a good property manager is worth their weight in gold and a mitigation of cost.
How To Avoid Problems With Bad Tenants