Mastering the Art of Difficult Tenant Management: A Guide for Landlords
Owning rental property and being a landlord can be a rewarding experience but also comes with challenges, especially when dealing with a problematic or difficult tenant. I have created this guide packed with tenant management tips to assist landlords looking to learn strategies to deal with conflictive situations. Let’s dive in!
Whether it’s late rent payments, property damage, or constant noise complaints, problematic tenants can cause a lot of stress and frustration for landlords. But don’t let difficult tenants ruin your experience as a landlord, there are ways to handle these situations and protect your property and peace of mind – all while maintaining a positive landlord-tenant relationship.
A Tenancy Management Guide for Landlords
First and foremost, it’s important to understand that not all tenants are created equal.
Some may be simply forgetful when it comes to rent payments, while others may have more serious issues – such as a lack of respect for property boundaries. Identifying the root cause of the problem is key to finding a resolution.
Identifying the problem
This may seem obvious, but it’s important to take the time to comprehend the specific issues you’re dealing with. Are the tenants consistently late with their rent? Or maybe causing damage to the property – or disturbing the peace?
Once you have a clear understanding of the problem, it will be easier to develop a plan of action.
Have you been triggered?
The way you answer this question can significantly influence how your problems with tenants play out. Landlords can be ‘triggered’ when a problematic tenant does something fairly minor or unimportant that directly goes against your views as a landlord.
Recently, I was discussing with a tenant the fact that their rent was late. He explained they were running short on money and asked if I could consider a slight delay on the rent. What triggered me was that while I was at the property, I could see that the tenant was paying a commercial gardening service to tend and weed their garden rather than doing it themselves. I was upset that they placed such a low priority on the rent… I was triggered!
Being triggered can cause problems with tenants. What often happens when a landlord is triggered – speaking about myself – is that it can affect all your interactions with the tenant. You only see the negative in everything the tenant does rather than seeing the positive.
In the above situation, I had to ‘re-frame’ the situation and see the tenant as being house-proud and looking after the property. While they may have their priorities out of balance, it is not the deal-breaker I was viewing it as.
Continually reflect and review how you are coming across to the tenant…even your problematic ones. If they are being difficult, that does not mean you need to be difficult yourself.
Effective communication and documentation
One of the keys to handle difficult tenants is to focus on clear communication. Establishing clear expectations and guidelines from the very beginning can help prevent problems from arising in the first place. This includes outlining the terms of the tenancy or lease, discussing the consequences of late rent payments, and setting boundaries for property use and maintenance.
Another important aspect of dealing with difficult tenants is to document everything. Keep detailed records of all communication and any incidents that occur, including dates, times, and names of any witnesses. This documentation can be crucial in the event of legal action.
I always try to use my property management app or email and text messages when discussing anything significant with the tenant. When using an app such as Your Home Our Home to manage your tenancy, you can record (and store) chat messages and audio discussions during house inspections. This makes it easy to show a timeline of what happened while also portraying the tone of the communications if you need to go to mediation with anything.
Show restraint in communications
I try to go out of my way to be kind (without being a pushover) in all my communications. Small things make a difference. For example, I avoid using ‘blame statements’ such as “you are late with rent”. Instead, I say “I have not received the rent for this week” which is factual and clear without attacking the tenant.
Acknowledge the good things
Even during the days or weeks when you are working through a disagreement, be willing to acknowledge when the tenant does something good. If you notice them washing the windows or clearing up the section… say something kind and affirming. The tenant is far more likely to ‘play ball’ in the area of disagreement when they see you as a genuinely kind (but professional) person.
Tenant management when there is damage
When dealing with tenants who cause damages, it’s important to document these thoroughly. Take photos, videos, and notes, and provide a copy to the tenant.
As mentioned above, you can use an app to greatly simplify this process. This will serve as evidence in case you need to take legal action. Additionally, keep records of all communications and agreements with the tenant.
Noise complaints
Noisy tenants can be a nuisance to other tenants in the neighbourhood or the building (if an apartment) and can be difficult to handle. In these cases, you should have a clear and concise noise policy in place and enforce it consistently. Conduct regular inspections of the property, document any noise complaints and communicate with the tenant effectively.
Tenants with special needs
Tenants with special needs, such as mental health conditions or addiction, require a different approach. It’s important to approach these tenants with empathy and understanding and to communicate effectively to find a solution that benefits everyone. In some cases, you may need to involve a professional, such as a social worker, to help resolve the situation.
When the rent is late
If a tenant is consistently late on rent payments, it may be necessary to take legal action. This may include filing for eviction or taking the tenant to the small claims court or tenancy tribunal. However, it’s important to remember that eviction is a last resort – and should only be considered after all other options have been exhausted.
In some cases, offering incentives to good renters can also be an effective way to deal with difficult tenants. For example, offering a rent reduction or a gift card to tenants who consistently pay their rent on time can encourage them to continue doing so.
Another way to minimise payment problems from problematic tenants is by getting them to set up automatic payments. Many tenants prefer the convenience and simplicity of automatic payments, which also avoids the problem of them forgetting to pay rent.
Mediation of late payments
If I am seeking mediation for late payments I will take the time to create a detailed timeline document that puts screenshots of my emails and text messages into a single document – with clear date headings. Keep a folder of attachments and other docs related to that period, and reference these in the timeline document.
Tip: If you have these other documents in the cloud (maybe in your property management app) you can just include links to them in the timeline document.
By doing this, it will be clear to both the tenant and the mediator that you have been clear and reasonable throughout the process. It will avoid a lot of the ‘he said – she said’ discussions that can often derail a mediation. This will also put you in a strong position when discussing and negotiating any mediated resolutions.
Am I entitled to keep the bond or deposit when dealing with a difficult tenant?
For some landlords, the bond (or deposit) is the trump card that they keep up their sleeve. Their thinking goes… “when there is a tenancy dispute that leads to the tenancy ending, I can withhold some or all of the bond to get back what I deserve”. While this approach is appealing – after all, it gives the landlord a sense of power – sadly it seldom works. Plus, in many countries and states it is not even legal.
It’s a perception issue. Some landlords see the bond as a contingency fund that they can draw from when they need it – when there is a dispute with the tenant. However, tenants also see it as their contingency fund that they can draw on if they think the landlord deserves it.
In many countries/states the legal requirement is that the bond or deposit must be paid to a third-party agency or placed in an escrow account – check your local regulations. The bond/deposit is held in trust and can only be paid back when:
- Both the landlord and tenant agree that the full amount is to be paid back to the tenant.
- When both the landlord and tenant agree on any split of the bond with some going to the landlord for things like money owing or accepted damage by the tenant.
- When a mediator is involved to help the landlord and tenant reach an agreement.
- When the landlord does not dispute the tenant’s application for a return of the bond.
A philosophy I have developed as a landlord over time is to hold onto the concept of bond very lightly. I see the bond as forced savings for the tenant that may come in useful in the final wash-up of the tenancy.
Tip: It’s a good idea to reach an agreement with the tenant on what needs to be remedied, and how much it will cost before discussing with them how they are going to pay for it. The deposit is just one of the payment options. In some cases, it may be better to go through a formal dispute resolution process with the small claims court or tenancy tribunal, especially if the amount is more than the bond.
How much to charge for bond
Many countries and states limit the amount of money that can be charged at the commencement of a tenancy. Usually, landlords can decide on the number of weeks of rent that is paid in advance and the amount of bond that is payable, up to a maximum. For example, in New Zealand, the bond can be a maximum of four weeks’ rent, and the rent can be a maximum of one payment in advance.
For example, if the rent is paid weekly, the maximum amount paid in advance can be one-week; whereas if the rent is paid fortnightly the maximum amount in advance is two weeks’ rent.
Tip: Don’t forget to request the tenant to top-up the bond when you initiate a rent increase. This should be formally notified to the tenant and where applicable the money should be lodged with the bond agency or in the escrow account.
Tip: If the bond or deposit is to be paid into a neutral escrow account, check with your regulators whether this needs to be put in an interest-earning account.
Giving the bond back
In countries where a third-party agency holds the money, the process for repaying the bond is formalised for both the landlord and the tenant. In countries and states where there are no formal controls…be ethical and kind!
Incentivise good tenants
In some cases, offering incentives to good tenants can also be an effective way to deal with difficult renters. For example, offering a rent reduction or a gift card to tenants who consistently pay their rent on time can encourage them to continue doing so.
For my good tenants, I often provide a supermarket voucher at the end of the last inspection before Christmas. In the case of difficult tenants, this can sometimes send the wrong signals – I’m still working through the best approach. Let us know what you do in the comments section below.
Difficult tenant or difficult landlord? Tenancy management is a two-way street
When dealing with difficult tenants, it’s important to remember that the relationship is a two-way street. Landlords have rights and responsibilities, but so do tenants. By approaching the situation with empathy and understanding, it’s possible to find a beneficial solution for both parties.
I know it is really hard to get this balance right. Especially when the rent is really late and, at the same time, the tenants are having relationship issues or are going through a family sickness or job loss.
Pay it forward
For those landlords that like to apply a ‘social good’ component to the rentals they provide, there are a few small but impactful things you can do for tenants that will have a long-term effect on both them and you. For example, if you are aware that your tenants are going through difficult times such as a job loss, why not give them a ‘rent break’ for a few weeks.
If your tenants have teenage boys in the house that cause ‘adolescent-type damage’ you could cover the cost of fixing it rather than passing the cost onto the tenant. Maybe get the boy (or girl) that did the damage to assist with the repairs.
This may not apply to difficult tenants but rather result in good tenants becoming amazing tenants! The few times I have tried this approach, I was also amazed at how good it made me feel as a landlord! I was able to put yield and margins to one side and instead do a good deed!
Let us know if you have done this and what the impact was in the comments below.
Creating a Plan of Action
Having a plan in place for dealing with difficult tenants is crucial. This includes having a clear and concise rent collection policy, damage policy, and noise policy, and understanding the laws and regulations in your area.
It’s also important to follow a thorough tenant screening process. This includes checking their credit scores, employment history, and references. By thoroughly vetting potential tenants, you can better grasp their ability to make rent payments on time and if they have any history of being difficult tenants.
Enforce the Tenancy/Lease Agreement
If all else fails, it’s important to enforce the tenancy/lease agreement. This means taking legal action if necessary, such as termination of the tenancy or even eviction proceedings. Note that the accepted eviction process varies by state and country, so you will need to be familiar with local laws and regulations.
Before taking this step, document all previous attempts to resolve the issue, such as written communication and mediation. Moreover, consult with tenancy services or an attorney/lawyer to ensure that the eviction process is done legally and fairly.
Conclusion
In conclusion, mastering the art of difficult tenant management and conflict resolution is essential for any landlord.
By understanding the laws and regulations, using property management software, communicating effectively, and creating a plan of action, you can navigate the stormy seas of difficult tenants and protect your property and income. With the right approach and tools, you can become a master of difficult tenant management and make the most of your real estate investing – all while enjoying a stress-free renting experience!