Investing in real estate can be one of the best long-term investments you can make. However, you can only hope you have low maintenance tenants, as bad tenants can be the cause of a lot of headaches. If you do end up with bad tenants - what can you do about it? Whether you’re managing the investment yourself, or have a property manager, let’s look at how you can properly handle having bad tenant situations.

Be Firm, Not Confrontational

From the beginning, it serves you best to be friendly, but firm. Property managers can often serve this purpose, as they’re a neutral party whose responsibility it to serve your interests. It can be easier for property managers to keep things business and not let things get too personal. If you’re managing your own property, you need to balance friendliness and firmness. Try and create a business relationship with your tenants based on fairness and transparency. If there is an issue, you need to address it immediately. There are HOA and community regulations in place and you need to ensure your tenants follow them. If your tenants are being loud, bring it up to them immediately and give warnings if needed. If your tenants continue to be uncooperative, then let your policy and procedures take over.

Stick to Policy/Procedures

Aside from the initial screening process, this may be your most important property management measure. You need to have a strict process for handling any issues that can come up: non-payment, property damage, loud tenants, etc. If your tenants are disturbing the peace, bring it up to them immediately and give warnings if needed. If a payment is missed, start your process for payments options or eviction. If there’s property damage or repairs need to be made, make arrangements for the repairs immediately. If your tenants aren’t cooperating with getting the repairs done, then take your preparatory measures or start the eviction process immediately. The bottom line is to have step by step procedures in place and to move swiftly.

Structure Payment Options

Consistent late payments or the first missed payment are big red flags that need to be taken seriously. You don’t want to be stuck making payments for the property, so you either need to be flexible and ready with payment options, or evict immediately.

Payment options to consider:

• Temporarily allow partial payments
• Forgive one payment and add the balance to future payments
• Restructure the lease

This is where you can exercise some sympathy and work with the tenant, depending on your trust, or lack of trust with them. If you get the early impression they may take advantage of you, then don’t even bother with payment options and move forward with eviction. If your tenants have made payments on-time for a long time and have simply fallen upon hard times, then work with them temporarily.

Quick Eviction Process

If you work with a property management company, they’ll likely have the eviction property down to a science. However, you would still be wise to verify what their process is. If you’re the landlord, then make sure you understand the legal process and have an attorney ready that’s well versed in landlord-tenant law. You want to avoid costly landlord-tenant disputes and make sure the lease and procedures are clearly defined. It’s best to be prepared in the beginning and have an attorney review your lease agreement and ensure reasons for eviction are clearly defined. A well-constructed lease is your absolute greatest defense against bad tenants. Even with an eviction notice, some tenants will ‘squat’ and stay in the property. Unfortunately, this can turn into a costly situation for you. You may need to count your losses, lick your wounds, and learn your lesson for the text tenant.

Sell the Property to An Investor

If you simply want to be rid of the burden of bad tenants, but want to avoid the eviction process, then you can sell your property to an investor. If you choose to disclose the difficult tenants, then you may need to sell at a discount. However, there are many investors out there that will buy properties for cash, in any condition. Some of these investors may also WANT to purchase a property with bad tenants. They may have the systems in place to deal with these kinds of things. Solving your problem can be seen as an opportunity for them, if both sides benefit. If property ownership has become too stressful and you prefer to just cash out, then you can let an investor take the property of your hands.

As you can see, bad tenants can be a landlord’s worst nightmare and cause a lot of sleepless nights. But there’s no need to fear if you’re prepared to take necessary actions when situation calls for it. To recap: create a relationship of trust with your tenants from the beginning, stick to procedures, have payment plan options, move on the eviction process quickly, and have investor contacts if you want to sell the property. Happy landlording!