How to manage a tenant that’s going rotten on you
Property investment has the potential to make you wealthy, give you a great stream of passive income (possibly tax-free if you’re an expat investor), and create a real legacy to leave your loved ones. But what happens if your buy-to-let investment goes wrong? What do you do if you find you’ve got a tenant that has gone rotten?
You’ve got to act quickly. It may cause damage, hold Friday night raves that last all weekend, or stop paying rent. Whatever the issue, how you manage it will determine the outcome. In this article, you’ll learn how to deal with a tenant from hell, and the one single strategy that will save you a whole world of hurt.
Tenants from hell – fiction or fact?
Before we discuss the one strategy that will protect your buy-to-let investment profits from real damage caused by rogue tenants, let’s look at how many tenants go rotten.
If you pay attention to the press, you’d be forgiven for thinking that almost every tenant leaves behind a trail of devastation. But we all know that media and TV sensationalise stories. Watch a TV programme like Channel 5’s ‘Nightmare Tenants, Slum Landlords’, and you’d certainly come away with the impression that every tenant is rotten to the core.
The fact is that investment property managers like Ezytrac Property Management report that less than 3% of their clients’ tenants cause any problems, and less than 1% become real trouble. To put this into real terms, as an average you’d have to have leased to more than 100 tenants before you suffer a real tenant from hell.
Why do investment property management companies have so few nightmare tenants?
Tenant vetting processes are a key to low rates of tenancy delinquency. Professional investment property managers run comprehensive background checks, examine credit scores, call previous landlords, and verify income.
The breadth and depth of background checks carried out by property management companies surpass that which DIY landlords conduct. Therefore, most tenants from hell are suffered by small, independent DIY landlords.
What should you do if your tenant goes bad?
Even the very best tenants can turn rotten. They lose their job, get divorced, or become long-term incapacitated. Whatever the reason, here’s what to do:
1. Act quickly
All eyes are on you. If you let a rogue tenant get away with murder, others are more likely to treat you badly, too. Plus, the longer you let a bad situation continue, the worse it will get. Always take the bull by the horns. Fast. As soon as an issue looks like being a problem.
2. Review the tenancy agreement
Read through the tenancy agreement to make sure the offensive behaviour is covered in the paperwork. It is another advantage of using an investment property manager. They have legal departments that continually update their documents to stay in line with the latest law changes.
Your tenancy agreement is your ultimate go-to resource, so make sure that it does what you want it to before it’s signed and your tenant moves in.
3. Stay calm and speak to the tenant
You may want to grab the tenant by the throat to throttle them. Resist the temptation. Stay calm. The law is on your side, and your tenancy agreement proves it. Although it can be a daunting prospect, plan what you’re going to say and speak to the tenant.
Let the tenant know the issue, and which clause of the tenancy agreement (or other applicable law) is being broken. Tell them the corrective action required. Give them a chance to put things right.
Put your conversation in writing, and either post or (preferably) email a copy to the tenant.
4. Stick to your guns
Don’t back down. Be firm, but fair. You’ve given the tenant their first ultimatum. You’ve already been more than generous.
If there are penalties that your tenancy agreement allows you to make, then make them. For example, if the tenant is late paying rent and you can levy a penalty charge, do so. Perhaps they won’t be late paying again.
5. Follow up every day until the problem is resolved
Keep on top of the situation, and follow up every day. Again, make a note of date and time of phone calls, and send a written summary to the tenant. Let the tenant know you mean business while remaining calm and diplomatic throughout.
6. Make the ultimate sanction
If the tenant doesn’t play ball and toe the line, you’ll have no option but to request they move on. Now it’s time to get prepared for a court case because the chances are they’re going to try to stick around for as long as possible while not paying rent.
Providing all your paperwork is in order, when the case goes to court, it will be short and swift. It’s not easy to make an eviction, but providing you follow the rules for the buy-to-let landlord to evict nightmare tenants, you’ll get there.
Again, buy-to-let investors who use an investment property manager have a distinct advantage. They’ve done it all before. They know the ropes. And they’ll have all the paperwork lined up and ready.
Hopefully, you’ll never suffer from a tenant from hell. However, the bigger your portfolio grows, the more likely it is to happen. Be prepared to act quickly if a tenant does go rotten on you.
Oh, and that single strategy that will save you a whole world of hurt? Use an investment property manager from day one. They make sure the i’s are dotted, and the t’s are crossed on all the paperwork. They have the best tenant vetting processes. And they have experience in managing tenants and evicting tenants from hell. That means a whole lot of stress relief for you.
Contact one of our team today on +44 (0)207 923 6100, and take the first step on the road to life-changing positive cash flow.
Live with Passion
Brett Alegre-Wood
