Dealing With Difficult Tenants

Difficult tenants are a reality of being a landlord. You’re going to have some. It’s inevitable. Defining “difficult” is easy and can include a variety of things. They don’t pay the rent. They don’t pay the rent on time. They’re noisy. A general lack of reliability with the given expectations. Sometimes they’re even belligerent and unreasonable. With that said, difficult tenants can also be time consumers. Tenants who complain incessantly about the most frivolous of things, are unreasonably sensitive, contact you constantly about the smallest of items, or even people who are combative with other tenants in your property for no good reason. Here’s a few tips for dealing with those that make managing your property difficult.

  • Define expectations: I do this all the time when renting to new people. Call it the old “I made it clear” kind of approach. I’m not talking about clearing up when you expect the rent. That’s a given (but a good idea to let them know nonetheless – i.e. a written lease). Let a prospective tenant know about your expectations with respect to noise, civility with other tenants (if you have a multi-unit), property routines like garbage removal and laundry schedules, and your expectations when it comes to issues and resolving them together. I once had a tenant who considered himself to be the Wyatt Earp of a fourplex I own. Besides constantly calling people out on every little thing, he didn’t seem to understand me when I explained to him that I didn’t need a superintendent, and that he was to report an issue that he was having to me directly.
  • Have A Proactive, Reasonable, and Responsive Attitude: Most tenants will tell you, an unresponsive and defensive owner is the main ingredient in what can be a resentful relationship between landlord and leasee. Imagine if you were paying someone rent, and they were constantly unavailable, nowhere to be found, and defensive when it came to addressing a problem that you considered fundamental in your home. As an owner, you have an obligation to be attuned to the needs, within reason, of your tenants. Things happen when you are a property owner, and most tenants will understand that. If you show a keen interest in working with those who rent from you, and are committed to finding a solution, you’ll find your tenants will respond – and this is one of the most effective ways to avoid having difficult tenants in the first place. It is after all, their home. Secondly – always be reasonable. Expect a reasonable attitude from the tenant as well. Be mindful of what you’re saying and how you’re dealing with an issue with a tenant.
  • Learn The Landlord and Tenant Act: Visit the Landlord and Tenant Board, or the equivalent entity or body in your municipality or province. Know your rights, learn and understand the rights of your tenants, and learn the protocols and processes that are associated with incidents and situations – including the non payment of rent and rental deliquency. Follow the rules. Be prepared for a difficult tenant to become a bad tenant.
  • Avoid the board if you can: It’s inevitable that you’ll probably end up attending a hearing at the provincial board. Hence the importance of knowing the act in your province. With that said – avoid the board if possible. Also – I find a lot of landlords I speak with use the “board card” or the threat of court way to early in any dialogue. If you pull that out the wrong way, you can turn what is a resolvable situation into a full fledged problem. You’ll be fronting the costs to resolve an issue or evict a tenant formally and it’s not fun. I’m a big believer that you should be serving notices and following process only in the worst of situations – like refusal to pay rent, habitual late payment, unruly behaviour or damage, or even with someone who is impossible to communicate with. if it’s possible to work out issues in a productive way without being in front of an arbitrator, do it.

Share your thoughts about how to deal with a difficult tenant.

Ottawa’s Residential Rental Vacancy Rate Climbs to 2.5%

A few days ago, Ottawa realtor Roch St. Georges sent this my way, courtesy of the Canada Mortgage and Housing Corporation. It’s the CMHC’s rental market report for 2012. The Ottawa Business Journal also had a nice little piece about it this morning that sums it up. Bottom line – the vacancy rate is up slightly. There’s a few factors at play here, like condos being snapped up by landlords, low interest rates, etc…but the vacancy rate is expected to drop next year.

Here’s a few choice bits from the report…

  • Ottawa’s residential vacancy rate edged in at 2.5 per cent for the year, up from 1.4 per cent a year earlier.
  • The average cost of renting a two-bedroom apartment also increased by two per cent. That’s lower, however, than the 2.3 per cent increase that took place in 2011.
  • An increase in the size of the rental inventory has played a role in the vacancy rate increase, as many of the new condominium units sprouting up across the city are being purchased by investors and rented out.
  • Nationally, Canada’s overall apartment vacancy rate has risen over the past year, with an increased supply of rental units and a slowdown in household formation by Canadians being cited among the reasons.

Read the article at the OBJ here:

Read the CHMC report here:

The Crazy Awesome Landlord Form

Had this video sent to me recently and I’ve found myself watching it a few times. While not totally my style, it’s interesting to watch. The video is courtesy of J.P. Moses at REI Tips (Real Estate Investing Tips) in Memphis, Tennessee. They offer a variety of free real estate forms for landlords in the United States at Free REI Forms.

The video gives an overview of a form that he uses called “The Way Things Work“. You can watch the video here:

It’s a landlord declaration of sorts – a very clear one. He offers a discount rent program if the rent is paid on time as an incentive, while also indicating that there is a 10% penalty in the event that rent is not received by 6 p.m. on the first of the month. The Way Things Work also goes on to clarify other rules and expectations – specifically the emphasis on communication as an essential component of a positive relationship between landlord and tenant. Again, while not totally my style – it’s interesting, and there’s nothing preventing a Canadian landlord from adopting something like this as an addendum to any written lease.

Check it out and share. What do you think of this approach?

Why You Should Look at More Than Just a Credit Score

You just showed one of your available units to an individual who’s made a great first impression. They’re employed, presentable, and they claim they’ve had a fabulous relationship with their previous landlord. Ok. Seems safe right? Then you check their credit, and discover they have a low credit score. Lots of landlords and property managers will be quick to tell you – forget it. If their credit is low, you’ll probably have a problem. Hold on a second – don’t write them off just yet.

There’s a great article about this by Kay Cleaves at Straw Stick Stone.

As you might know, credit scores only get higher when you borrow and pay back assorted lenders repeatedly. The best tenant theoretically is one who doesn’t engage in risky borrowing beyond their means, and is likely to have a very thin credit history. The part of the credit score that most landlords are interested in is the payment history component. It is possible to have a perfectly great tenant who pays his bills on time, had a great relationship with a past landlord, and is responsible, but has a low credit score. Keep in mind that the average tenant is usually younger, less experienced and less wealthy than a homeowner.

The payment history only accounts for 35% of the total pie, so in other words, while checking credit is something I’m a huge advocate of doing,  just looking at the credit score isn’t the most effective way of determining you’re dealing with a potential problem tenant.

If you’re being diligent, you should be asking for a landlord reference. Calling a former landlord, or as many former landlords as you can, and getting a sense of how that relationship was is also an effective gauge on what kind of tenant you’re going to have. Asking them questions about the previous tenancy, how they kept the place, etc is a must. From personal experience, I’ve been renting to an individual who had a low credit score when I initially showed him the available unit, but who I’ve never had an issue with payment wise, or for anything else. I spoke with their previous landlord and they provided a glowing account of a quiet and reliable individual who was recently out of school and had been working at the same place for more than 2 years. Speaking with the prospective tenant is another good way to get a sense. If a credit score is low, maybe there’s reasons for that. Maybe they’re new with credit, but a seasoned and responsible renter. Maybe they’ve recently applied and received new credit. Maybe they’re paying down some debts that were previously high. There’s an assortment of reasons why a credit score could be lowered that don’t reflect how an individual is with their landlord. Covering all the bases when deciding to rent to someone needs to be done – but basing an assumption on a 3 digit number, of which 35% of that number is what you’re really concerned with, might not be the most effective way in getting the tenant you want.

What do you think? Do you base tenancy decisions on payment history only? Share your thoughts.