Nobody buys an investment property thinking they would like to have to deal with problem tenants. In fact, it’s the excuse usually given by those people who’ve always wanted to buy an income property, but never end up making the purchase. They think about the potential for the relationship to go badly and they let it keep them from making an investment that could add considerably to their quality of life and play a key part of their retirement plan.
Obviously, if you do buy an investment property, you would be very happy to never have to deal with a problem tenant. And that’s why you want to do everything possible to make sure your screening process is thorough and considered. However, sometimes a problem tenant manages to get through even the best process, or a good tenant falls on some difficult times.
Of course, one of the best ways to prevent a problem tenant is to be an engaged landlord. Making sure issues are resolved quickly and continually finding ways to make the property a little better for the tenant can go a long way. This could mean installing electric garage door openers or just having the gardens landscaped in the spring. Small gestures can really help strengthen the relationship with your tenant and make them feel comfortable alerting you right away of any problems.
However, it’s always wise to consider the possible issues that may arise so you can take steps to head them off.
In between first and last month’s rent
If you have a tenant who is late with the rent, the very first thing you want to do is reach out to the tenant. A quick phone call to see what’s going on could save you a considerable amount of grief. If the late payment is simply the result of a forgetful tenant sometimes the human touch will get paying rent back to the top of their priority list. If it becomes a regular problem, you may want to apply some heavier language, but there is no reason to lose your cool and jump to legal action too quickly. The important thing to keep in mind is that the process of removing and replacing a tenant can take a bit of time and cost you rental income in the process. If a stern, but professional conversation, can turn things around you can save yourself a lot of time and money.
If it turns out to your tenant is going through a financial issue, you may want to consider creating payment options for them to catch up on their rental obligations with the hope that they will return to being a great tenant quickly. However, if you create terms for a tenant always be sure to stick to the original agreement. If a once good tenant, continues to slide into being an ongoing problem you will need to protect your investment first and foremost. There is no sense allowing someone else’s financial trouble drag you into expensive problems of your own.
It’s not just the rent that’s important. Your income property is your asset and you’re expecting that the tenants you put in place are going to treat it with the respect it deserves. You need to be vigilant to make sure that maintenance issues are normal wear and tear and not a case of abuse. This is why it’s so important to schedule regular inspections with your tenant. This way if you notice anything serious you can address your concern directly with them before it becomes a major repair. Often just making a tenant aware of what you’re noticing (politely of course) can make them more conscious of what they’re doing and change their behaviour.
Having a regular maintenance professional do inspections with you can also be really helpful. They will likely catch things you might otherwise miss and will lend an extra professional tone to the visit.
The more difficult issue can be when it comes to standards of cleanliness. Even if the tenant is paying rent and not causing undue maintenance they may still be setting up a long term issue if they are not keeping the property clean. This is another area where your regular inspections will be important. If the situation looks particularly bad you will want to have a conversation with them about any worrying issues.
One strategy to help prevent cleanliness-related problems is to include an annual pest control inspection and sell it as a value you add that you are providing for the tenants benefit. Sometimes having the inspector mention potential future problems can make it seem more pressing and cause them to pay more attention to sanitary concerns.
The neighbours are restless
Let’s face it, some people don’t make good neighbours. And if your tenant is not getting on with the people immediately next door you may have a problem that you are forced to address.
While you will always want to encourage them to work the issues out for themselves, this is a situation that you should always see coming. As part of your overall regular inspection of the property, you should be taking the opportunity to chat with the neighbours. It doesn’t need to turn into an inquisition, but just making sure there are no simmering issues now could help you prevent a major fallout down the road. It’s also important to talk to your tenant about any issues they may be having with the neighbours. As the landlord, you may be able to have a conversation with the neighbour and have them take your concerns a little more seriously. Either way, if you end up with neighbour unrest, hopefully, you can intervene soon enough and suggest solutions. You don’t want to end up losing rental revenue and finding yourself back in the screening process over petty squabbles.
You are the landlord. The tenant is the tenant
This seems simple, but in our current age of AirBNB, you may find your tenant is taking it on themselves to sublease out your space in any possible number of ways. This is not something many income property owners are going to be ok with. Especially because you went to such great lengths to make sure you screened and got the right tenant. To now have that person passing it on to others without your involvement sort of misses the point of screening!
This is where you want to make sure your expectations are spelled out in the lease. Be sure to have your lawyer review this part thoroughly, or if you are working with a property manager be very clear about your feelings regarding the subletting of the space.
You will want to make sure that you have a very direct conversation with your tenant when they are signing the lease regarding this issue and the relevant clauses in the lease. Don’t assume they are reading it thoroughly.
Of course, this one may be more difficult to make sure that the tenant is acting in good faith. You can’t drop by unannounced and distinguishing subletters from visiting guests isn’t always easy from a drive by. This is another area where developing a relationship with the neighbours can be very helpful. If they know you and like you chances are they will be happy to confide in you any of their concerns about your property.
And when all else fails
When you decide to purchase an income property you will no doubt want to do a bit of research to make sure you know all the ins and outs of protecting your property from a problem tenant. In fact, it’s the risk of a problem tenant that inspires many owners to sit down with a property management company in the first place. If, despite all your best efforts, you do happen to you get stuck with a tenant who won’t pay their bills and you have to resort to having the tenant removed you want to make sure you are following the rules exactly. BC has some pretty steep fines for illegally evicting a tenant.
In BC, after a tenant fails to pay their rent by a set date, the landlord is able to issue a 10 Day Notice. This notice gives the tenant five calendar days to respond or 10 days to leave the premise. It usually plays out in a few different ways. If the tenant pays all the overdue rent the notice is cancelled and the tenancy continues as usual. If the tenant applies for dispute resolution, the notice goes immediately on hold and the Residential Tenancy Branch holds a hearing and makes a final and binding decision that both parties are obliged to follow. If however the tenant does not pay and does move the landlord can apply to the Residential Tenancy Branch for dispute resolution, seeking an Order of Possession & Monetary Order. Of course, at this point it will be overseen by an arbitrator and their decision must be served to the tenant who then have a short review process to apply for a review consideration. So by the time you are hiring a Government approved court bailiff to evict the tenant you are no doubt going to be out of pocket and likely out of patience.
The prospect of a problem tenant reinforces the need to always conduct a thorough screening process, be objective in your selection, and cultivate a good professional relationship with whoever you rent your property to. If you have even the slightest concern about doing the screening process having a chat with a professional property manager may be worth your time. And as I mentioned, even a great screening process won’t protect you 100% of the time so it’s important that you lay out strategies to manage the situations you can anticipate and know your rights well enough to handle the ones that catch you a little off-guard.