A rental agreement is a legally binding contract, and it’s logical for a landlord to assume that a tenant will follow the rules, such as paying the rent on time and taking good care of the property.
While most tenants are respectful, every now and then a landlord may end up with a bad tenant. In this article, we’ll take a look at things that can make a tenant bad, how a landlord can deal with a bad tenant, and tips on how to avoid bad tenants in the first place.
- A bad tenant is someone who doesn’t pay the rent on time, violates a lease by having an unauthorized roommate or secret pet, or intentionally damages the property.
- Having a bad tenant can result in decreased rental income and high repair costs that affect the return on investment (ROI) of a rental property.
- Ways a landlord can deal with a bad tenant include using an online rent payment service, performing periodic property inspections, and hiring a property manager.
- Offering a tenant cash for keys is one way to get rid of a bad tenant before they do further damage.
What is a “bad” tenant?
The words “good” and “bad” can be subjective and mean different things to different people. However, when it comes to renting real estate, most landlords would agree that a bad tenant is someone who does one or more of the following:
- Consistently pays the rent late or not at all
- Refuses to pay a late fee when the rent isn’t paid on time
- Damages the property either accidentally or on purpose, beyond normal wear and tear
- Does not keep the home neat and clean, leading to issues like mold growth or pest infestation
- Violates terms and conditions of the lease agreement, such as having an unauthorized pet or smoking where not permitted
- Disrespects the neighbors or neighborhood by having noisy parties, parking in illegal places, or repeatedly breaking the homeowner association (HOA) rules and regulations
- Conducts illegal activity in, on, or around the premises
- Won’t leave when the lease ends, forcing a landlord to go through a costly and time-consuming eviction
Note that a bad tenant isn’t necessarily a bad person—only that their behavior isn’t what a landlord was expecting.
How to deal with bad tenants
Even with a good tenant screening process in place, it’s possible for a landlord to end up with a bad tenant.
For example, a landlord may have skipped speaking to a tenant’s references or asked the wrong questions, or a good tenant may have been unexpectedly laid off from their job a few months after moving in.
It’s important to stay cool, calm, and collected with a bad tenant and to stay professional at all times to avoid turning into a “bad landlord.” Here are common situations a landlord might face, along with ideas on how to deal with bad tenants.
Late rent payment
Many people forget to pay a bill every now and then, and tenants are no exception. To make it easy for a tenant to pay the rent on time, consider using an online rent payment system like Avail or TenantCloud.
Most rent payment services are free for a landlord to use, will send automatic reminder notices when the rent is due, and can be set up to prohibit a tenant from making a partial rent payment.
While a landlord may be tempted to let a tenant “slide” the first time the rent is late, it can lead to future bad behavior. If a tenant learns there are no ramifications for paying the rent late, they may do it again and again. When a tenant consistently pays late, rental income and cash flow suffer, potentially causing a landlord to pay the mortgage and other operating expenses late.
Having an unauthorized pet and subletting to a roommate are 2 common rules that tenants sometimes break. A landlord can discourage a tenant from breaking the rules by:
- Specifying on the lease who can occupy the rental property
- Asking previous landlords if the tenant has ever had a roommate or a pet
- Conducting routine interior property inspections with proper notice and periodic property drive-bys, including evenings and weekends
- Explaining to a tenant the potential consequences of breaking the rules, such as being asked to move out or evicted
- Considering an additional monthly rent and deposit for a pet or roommate, after conducting additional screening and adding a written amendment to the existing lease
- Requiring a tenant to obtain renters insurance to provide extra coverage for property loss and accidents, if allowed by state landlord-tenant laws
Having a bad tenant who damages the property on purpose is something that every landlord wants to avoid. While some wear and tear is normal, bad tenants have been known to destroy carpeting, break windows and doors, or even intentionally block drains.
Here are things a landlord can do to safeguard a rental property from excessive damage caused by a bad tenant:
- Collect a refundable security deposit from each tenant as allowed by state law as an incentive for a tenant to take care of the property, since a tenant will want their money back when they move out.
- Perform a move-in inspection with the tenant and complete a move-in checklist with photos or videos to document the property condition when a new tenant takes possession.
- Review with the tenant their obligations to keep the home clean and how to request repairs.
- Conduct routine inspections of the property inside and out, making sure to provide the tenant with proper notice.
- Point out to the tenant any excessive damage found during an inspection and the potential consequences, such as being charged for repairs, having all or part of the security deposit withheld, or being asked to leave or evicted.
- Obtain landlord insurance to provide an extra layer of liability coverage if a tenant destroys the property, or if the tenant or a guest files a lawsuit.
Maintain the property
Sometimes a tenant will pay the rent late or neglect a property as “payback” to a landlord who doesn’t maintain the property or charges rent that is too high compared to other nearby homes.
For example, if a rental has consistently high turnover or numerous repair requests from a tenant, it could be a sign that a property is in need of upgrading to justify the monthly rent price. Items like a roof that always leaks and old appliances that always break down can create health issues, such as black mold or fire risk.
Hire a property manager
For many landlords, the best way to deal with bad tenants is to delegate property management to a professional.
An experienced local property manager will take care of day-to-day details, such as advertising and screening potential tenants, negotiating a state-approved lease with the right addendums to protect a landlord and property, performing routine inspections and making repairs, and enforcing the terms and conditions of the lease.
Things to consider when looking for a property management company include:
- Expertise in managing specific properties, such as single-family rentals (SFRs), small multifamily properties, or short-term and vacation rentals
- Historical portfolio performance of the properties under management, such as average occupancy rate, median monthly rent, length of time it takes to find a new tenant, and ROI
- Necessary license in force, length of time in business, and recognition from trade organizations
- Fee and pricing structure and reporting and data capabilities
Tips for dealing with bad tenants
If a landlord does end up with a bad tenant who doesn’t pay the rent or damages the property, one solution is to offer the tenant “cash for keys.” In exchange for the tenant moving out without having to be evicted, a landlord will offer a bad tenant some cash to cover moving expenses or a deposit on a new place. While it may seem silly to pay a bad tenant, cash for keys can be much less expensive and time-consuming than an eviction.
A residential eviction can take several months or more and cost a landlord thousands of dollars, depending on the state and whether or not a tenant tries to fight an eviction. During an eviction, there’s no rental income coming in, and there may be a significant amount of damage to the property when the tenant is eventually forced to leave.
One way to reduce the risk of having a bad tenant is to avoid renting to one in the first place by thoroughly screening potential tenants. A good tenant screening process includes requiring a written rental application, running a credit report, checking background and rental history, and speaking to references.