I hate to break it to you, but you are probably to blame for some of your rental woes.
I recently read an article about a couple who said their experiences with terrible tenants (as a side note, I call them residents instead of tenants) are enough to make them quit the business. To this, I have two things to say, 1) if you have a negative opinion of renters, you should quit the business, 2) I’ll bet I can point to several reasons why they had the experiences they did. Here we go:
1. Not having a clear, written policy for applicants. A written policy makes the requirements clear for everyone- staff included. Your policy should consist of an application, and it should outline your standard income and deposit policies for every single resident. Every single time.
The screening process from the application should include processing credit and background checks as permitted by law, pay stubs for the last 60 days showing three times the monthly rent (or your threshold), and written permission to check out the previous addresses. While you can’t ask previous landlords opinion-based questions such as “was this a good or bad resident?” you can ask if the renters fulfilled the lease terms as agreed, if the deposit was returned, how many people were on the lease and if there were pets.
2. Changing the rental policies when the occupancy tanks. Goodness gracious, I have seen this move A LOT. When a property takes a nosedive on occupancy, and it is difficult to find qualified applicants, many owners will temporarily drop the standards.
To be clear, I am not saying that bad credit makes for a bad renter. It’s a little more nuanced than that. Generally, in this move to drop the standards, there is a sense of desperation. Owners and their agents become more susceptible to prospective renter stories (“what had happened was…”) and begin letting in people with prior evictions, sketchy proof of income, or other issues.
Many owners will also drop the required income threshold or offer a huge incentive like a free month of rent. This move hardly ever pans out, and then the unit is tied up with nonpayment or other issues. Pick a standard for your rental policies, review them annually (or semiannually), but make sure you have a good reason for changing them. And make sure you document it.
3. Not having clear eviction proceedings for nonpayment of rent and educating the resident on what that means. Spell out when the rent is due, what the grace period is, and what happens if the obligations are not met. This includes sending out late notices the day the rent is late and then following the procedure for eviction according to your attorney. If you work out a payment arrangement, get it in writing and hold them to it. And know that it is unlikely they will ever break this cycle once it starts.
There is no doubt that bad things happen to good people all the time. People lose their jobs, health issues flare up, people get divorced. And sometimes obligations can’t be met. However, if you find yourself doing a lot of evictions, you need to ask yourself why. The likely scenario is that issues in nonpayment are brought to fruition by not screening your residents properly or by bringing them in during a time you temporarily dropped your standards.
4. Not reading the lease agreement with the resident, so they know their responsibilities for upkeep, cleanliness, maintenance, proper notice, and lease break fees. EDUCATION EDUCATION EDUCATION. Listen, I know what it’s like to work in a busy office. Sitting down for 30 minutes to go over a lease agreement feels like a total pain in the ass. And it is, but it’s less of a pain in the ass then cleaning up a disaster.
I did not have disastrous outcomes with one person that I read the lease agreement with. This is not to say that I didn’t have residents with issues. But my residents were aware of the policies from jump and were proactive in remedying the problem. It’s hard to say, “but I didn’t know” after a human has sat with you for 30 minutes to read a lease.
5. Not doing maintenance chores! Twice a year, send proper notice to the residents that you will be walking the unit to check smoke detector batteries and the a/c unit (the right to enter with proper notice should be written into the lease agreement). While you are there if you notice violations in number of occupants or pets, send a letter to cure. Also, if you observe extreme issues in housekeeping such as hoarding, or bugs, or a meth-making operation, those are hazards that need to be addressed right away. It is easier to get issues cleared up early with proper communication and education.
Your unit is your property, and you have a right to hold it to reasonable standards as described in the lease. But there is a line here. Your renters do have a reasonable expectation of privacy. Document your right to enter, and always send ample notice.
6. Not doing a walk through with the residents on move-in day. Want a trashed property on move out day? Skip the move-in inspection walk through. This is your opportunity to set the tone for the condition of the unit and your expectations for how it should look when they leave. Does it work every time? No. But again, spending time with a human while looking at the property provides a point of contact and education.
Sometimes no matter what you do, you get unpaid rent and trashed apartments. That is the nature of the business. What I can say is this, as someone who spent 10 years in the business and worked with over 30 multifamily properties (and learned a lot through trial and error), I encourage you to –> Hire an attorney, know your local landlord-tenant laws, and fair housing laws, stick to your guidelines, and educate your people. When you have your own house in order, you make it easier for your renters to do the same.