Wow have we had a busy few weeks. I am writing this from inside one of our rentals as we do the tenant turnaround dance (read: cleaning, repairing, listing, itemizing deductions from deposits).
Some of you keep up with my DIY renovations/building, but some of you join in on the real estate investment fun (or maybe both?). I’m going to pull it back to that side for a bit. We have spent the last few weeks juggling tenants and getting our houses presentable! With each new rental comes a unique set of lessons about tenants, so I figured I would share some we have experienced ourselves.
Ten Tricky Tenant Situations
Tenants not paying rent.
Yes – even if they pass all of your screenings, this can still happen. We had a nice couple who moved into one of our houses. Income, employment history, past rental history, credit checks, everything checked out! So what happened? They fell on hard times – health issues popped up suddenly and he lost his job. Suddenly, they went from perfectly comfortable to not being able to make ends meet.
It was a sad situation, but at the same time we are operating a business. We gave him one or two grace periods (outlined in our lease), but then a month came where the grace period came and went without word. We were coming up on 10 days past when the grace period was over and we started to prepare for an eviction.
I am so non-confrontational you guys.
It was really hard for me to make that decision, knowing the situation. However, it was their third strike with the rent. For me, it helps when I put rules like that out there for myself. I am pretty prone to anxiety when it comes to these things, so if I have it in my brain that after three strikes, that is when I take action, then it helps propel me to act. I had reached out to a lawyer and everything! I had the letter drafted and ready to send. At the very last minute, we received a call from them saying that they had basically abandoned the property since they couldn’t pay and to thank us for being so understanding of their situation.
The best thing you can to avoid this situation is to really do your due diligence in screening them. The second best thing you can do is prepare yourself legally and mentally for if this happens to come up. What will your plan be? Communication is key. For good tenants who have fallen on hard times, maybe you can work out a structured payment system with them to help with their cash flow issues (if it is a temporary problem). If it comes to it, the eviction process is pretty straightforward, but it helps to ease my anxiety if I know that we are within our rights as landlords with the help of a lawyer.
Neighbors Cause Problems
This one was our most recent issue – our first rehabbed property, is in a mostly quiet neighborhood. Except, apparently, for the next door neighbor! He has an issue with substances and somehow got crosswise with our tenants. He had it fixed in his mind that they were bad people (even shining lasers in his eyes at night!) and would regularly appear on their doorstep at all hours of the night., muttering nonsense and peering through their front door window. Very scary for them, but they reached out to us about it because we have a very good working relationship and they wanted to remain with us as landlords.
Luckily, we had a property that was coming available within the upcoming weeks and were able to move them away from the troubled neighbor within a pretty quick time period. This was a first for us, but really the communication and problem solving between all of us helped it go smoothly.
It is important to remember that domestic violence, sexual assault, stalking or harassment is a viable reason to break a lease without repercussion. There are a few things the tenants need to have to back the claims up, but if a lease is broken due to these reasons, it is not considered a violation of the lease.
Tenant has a service animal.
Landlords can’t charge a pet deposit or pet rent for a service animal. Another thing you can’t do is ask why they have a service animal. However, you can ask for written verification from the proposed tenant’s healthcare provider.
If you end up housing a service animal, the tenant is still responsible for the actions and damage caused by their animal. Landlords can write warnings and even evict if the animal is causing significant damage to the property, disrupting the neighbors or posing a threat.
Major Repairs While Tenant Occupied
The two biggest repairs we’ve faced have been sewage related – gross. The tree roots grew through the pipes that led to the main city sewers and then, because the houses were built prior to a certain year, they did not have back-flow valves installed. So that means that if they get backed up, the sewage goes right back into your house!!
Those were the most fun calls. Ugh. One time we had to prematurely break a lease because it was no longer fit for the tenants to live. The second time that happened (different house), luckily everyone and everything was fine. Both times, the “Acts of God” from the tree roots were not covered by insurance, but the damage inside was 100%. Thanks insurance! Advice for this is to always have great insurance coverage and ensure that your tenants have renters insurance to protect themselves. Take care of anything you notice is causing problems sooner than later so you can hopefully avoid a larger problem down the road.
Disclosures
Each state is different with a lot of things, and disclosures are no exception. Some important disclosures are:
- Tenants’ rights to move-in checklists that document damages.
- Tenants’ rights to be present at a move-out inspection.
- Details on installation and maintenance of smoke detectors and alarms.
- Presence of other environmental and health hazards (the lead-based paint, mold, etc).
- Smoking policy.
- Recent flooding in the rental unit.
- If your house was used as a meth lab previously prior to the tenant’s occupancy.
- Legal contact information (typically it is on your lease).
Refusal to Make Repairs
We have never refused to make repairs, except when they are extremely minor such as a nick in the drywall. Each state has an implied warranty of habitability – as in you are promising the tenant that the property is suitable to live in. If a property is in a state of disrepair and the tenant has requested the repairs, then the tenant can choose to fix the problems and deduct the cost from rent, move out or even report you to a state building inspector. It can even result in a lawsuit against you!
Maintain the Tenant’s Right to Privacy
A tenant has a right to privacy – you should not enter the tenant’s rental unit without first giving a 24 hour written or verbal notice. If there is an emergency, however, the notice is not required. We had an emergency situation arise with the plumbing at one of our houses. The seal had busted on the exterior of the house and it was streaming gallons into the neighbor’s yard while the tenant was at work. We emailed the tenant to let her know we would be headed over immediately and fixed the issue within the same day.
Keeping Security Deposits
We have had to keep and deduct from several tenant security deposits. The main reason we opted to keep the entire deposit stemmed from abandonment or breaking the lease completely. While we had the right to pursue the entirety of the unpaid rent for the term of the lease, we just opted to keep the deposits and not pursue legal action due to the circumstances surrounding the abandonment.
We are legally required to send an itemized list of deductions and the remaining deposit monies within 30 days of a tenant’s move out. Our most recent turnovers left us with some damages that we needed to have repaired, so that’s what I am up to today! I am meeting a cleaning crew and handyman to determine estimated costs of repairing the damaged flooring, damaged door frames, and destroyed blinds. Further, it is stated that at move out the tenants should clean the property thoroughly. If we have to pay someone to clean it due to it being completely disgusting, guess what? We pass that cost along.
However, document, document document! That’s where the move in and move out inspection lists come in handy. We inspect it with them in the beginning and at move out and take pictures of the damages. We also capture their signature on the agreed upon damages. CYA people (cover your ___ 🙂 ).
Handling Abandoned Property
When a tenant leaves behind their stuff, you have to treat it as abandoned. As a landlord, you need to notify the tenant of how to claim the property, cost for storage, where to claim the property and how long they have to do so. If they remain unclaimed, you can sell the property, throw it away or keep it. In our most recent cases, the tenants verbally agreed for us to take some sweet C-clamps and saw horses!
Insurance
There is the no brainer of insuring your property against natural disasters and other damages, but you also need to make sure your tenants have renter’s insurance. It is a requirement of our lease and it protects their property in the event of a natural disaster, fire, flood, etc. Also, though, you need to consider insurance against litigation. Tenants could pursue legal action against you if you mess up, so you need to make sure your legal costs and damages are covered. We have an umbrella policy that covers the “excess liability” above the limits of our basic policies.
So, there you have it – just ten tricky tenant situations in a sea of them. As we continue increasing our investment portfolio, I’m sure we will come across even more! We hope that by strictly screening at the beginning of a tenant/landlord relationship and clearly outlining our rules we can avoid coming across any issues that might have taken us by surprise otherwise. I can honestly say that each tenant brings a whole new learning lesson, some more pleasant than others.
Great information and so timely for me. I am dealing with a building situation at the moment. Reading your post definitely gave me encouragement
Great! We are dealing with some issues related to the security deposit right now, but after consulting with a lawyer we are more confident in the decisions we made. It’s probably because we are newer to this that we are so anxious when it comes to the harder decisions!
I also learned to always try to do the walk-through with the Landlord. When we were moving from Savannah, GA, to Florida, there was an emergency that delayed our packing, and the office was closed by the time we finished cleaning everything. Since we REALLY needed to get on the road at this point, we took pictures an left a voice message about the situation and mailed the keys with a written note as a reminder of the situation. A few weeks later, I got a call from a collector that the apartment was charging us $500 for “cleaning and repairs.” I called back fuming ready to submit the pictures and to show all the work-orders we had submitted WAY before we left. The collector asked if we did the walkthrough with the Landlord, and as soon as I said “no”, he just gave a long sympathetic sigh and told me that our fee was one of the CHEAPEST that he’s had to call for, so the Landlord had to have been searching for every little thing to report. That’s when the collector told me from that point on to ALWAYS do the walkthrough with the Landlord and to write down every little thing during move-in inspections, even something small like chipped paint.
Yes!! I agree, if you can, always do the walk-through together so that you can both sign off on the inspection report on the same page. It helps protect both people. Sorry that you had to experience what seems like shady landlords/property managers 🙁
Thank you. We just moved again to a cheaper place (Florida expensive), and fortunately, our last Landlord was super nice and caring. We did the walk-through together and I admit that I was expecting something shady, which I feel bad for now. He actually seemed impressed with the upkeep and we got back a majority of our deposit, so win-win for all of us.
This would have been helpful back when we had renters!
Wow! Sounds like a lot to be a renter! My brother rents a house and has had similar issues. Not an easy task to evict anyone!
Definitely is a commitment to become a landlord. When I sold my condo years ago, I briefly considered renting it. Although a great income, the above is why I didn’t rent it. So much goes into it and staying on top of the ever-changing laws.
I live 12 hour drive from my tenant, and all I can do is pray she’s taking care of it. So far, so good. Rent always early. Professional. And I do have neighbors that can report any issues. It’s tough, and I’ve been extremely lucky so far.
This is helpful for the tenant, too. I have had to deal with 3 different shady landlords over the years. Refusal to fix a leaky outdoor faucet (that was leaking behind the siding) that was costing me money on utilities, a claim that I had to pay to replace countertops that were more than 25 years old and ‘linoleum’ type that were chipping on their own due to old age. and a claim that I had damaged landscaping (which fortunately was NOT on the lease for upkeep, but also I had taken pictures when we moved in to share our new home with family and also a lot of pictures over 2 years of the kids playing outside that showed no actually change in the yard (except maybe more dandelions). They had claimed we took out bushes and perennials. Grrr!
Goodness. It’s so hard being a business owner and a renter. These are great things to watch for and prepare for. Yikes!
Such great info! I have many friends who have tenants and I plan on sharing this with them. Personally, I was surprised when reading the service dog part. Really interesting to read!
Great advice! Thx
This is such good information! Lots to think about if you want to be a landlord.
Great information to keep in mind for future endeavors!
I have never had to deal with any of these issues, but have two friends who went through some of these problems with tenents! It’s crazy what people can get away with in YOUR property!! Needless to say they no longer rent!
This was very interesting to read. We’ve been considering moving into this realm, but I’m afraid there’s so much we aren’t aware that we need to know. Ha! This was very insightful. Thank you for sharing!
These are great tips. We are looking to buy a beach house and renting it out until we retire. I am keeping this article for later.
This was such an interesting read as a renter. Someday I’d love to have my own rentals. Such great points and so nicely written. Thank you.
We have been landlords for almost 20 years now. Experience definitely builds confidence in dealing with tenants! I have some stories!
We owned a second home for a while that we rented out. The first family was amazing, then they needed something a little bit bigger. The second family, oh my stars, they were a nightmare. It was enough that we eventually sold the home and got out of the landlord businesses. Your article is spot on and the problems/solutions you referenced would have been a big help to us 20 years ago.
Great information. My husband and I are looking into renting, but not sure. We will be revisiting this post together.
This is such great information! Lots to think about when dealing with tenants.
You pointed out a lot of things to consider and look out for as a renter! We are looking to build a new home and we were going to keep ours to rent out because it’s in a highly desirable neighborhood and could create a nice extra income stream but you’re making me rethink if we want to take all this on. Thank you for this great article!
As a realtor and property manager I’ve dealt with all of these situations plus some! You are right…set the rules up front in the lease and document everything. I’ve had to show up in court and having documents, saved communications, etc are so helpful.
We had a tenant threaten to sue us just the other day after we deducted from the security deposit due to significant damage. We had documentation of everything and she signed off on the damage with me. Then when we actually deducted for it, she claimed we tricked her for so many things! (All of which she signed off on in the lease)… Documentation is vital!!
Thanks for the great information, which will surely come in handy.
Great tips and things to consider if renting. My husband and I (more me) have been thinking about renting out property. Great to know this info.
It’s worth it, but can get stressful at times! Some of our more challenging properties we are considering having a property manager handle so we don’t get so stressed out! Lol
Good information for those seeking to rent out their property.