No matter how careful you are at selecting your tenants, you will pick bad ones from time to time. That nice young couple will break up, leaving one who can't afford the rent, or the old lady in 1B will turn out to have a no-good nephew. This is serious stuff. No matter how much you personally like your tenants, your relationships with them must remain strictly about business, and you must protect yourself and your investment.
Stick to your guns. The lease spells out the rules and procedures about who lives in the apartment, when the rent is due, whether pets are allowed and so on. You have to stick to the lease and be firm and consistent about it.
- Three common reasons. Typically, tenants and landlords come to loggerheads over one of three reasons: the tenant failed to pay the rent or broke terms of the lease or the landlord wants to reclaim the property after the term of the lease or rental agreement has expired.
- The biggest headache. The most problems come from tenants breaking terms of the lease, because tenants often don't read leases closely or don't take them seriously.
- The nuclear option. Your ultimate weapon is eviction, which is a costly and time-consuming legal process, and rules vary from state to state. But it's there as a last resort.
Keep the lines open. The easiest way to avoid tenant disputes to begin with is to keep your tenants informed about what's going on around their home, like when painters are coming or a roof is being repaired.
- Regular information. Consider a tenant website or a simple newsletter to keep your renters informed.
- Talk it out. Specific problems with specific tenants should be discussed one-on-one, by telephone or in person. Remember to follow up if you give the tenant a deadline.
- Tougher tactics. If the matter isn't resolved after your talk, get the tenant's attention with a "notice to quit." This document, the first step in the eviction process, informs the tenant that the rent must be paid or the terms of the lease must be in compliance within a certain time frame (say three days to two weeks), or the tenant must move out.
Other options. Short of eviction, you have a few other options.
- Mediation. Many communities offer free landlord-tenant mediation services and for-hire mediators are also available. Mediators try to bring both sides into an agreement and, if both sides are open to the effort, most conflicts can be worked out after just an hour-long session.
- Money. If you want someone out of your building and they aren't budging, consider offering some cash. An eviction can take weeks, and it can drag on and on. If a little money convinces the tenant to move out by a certain date, the incentive may be worth it.
- Muscle. In many places you can hire the local sheriff's department to have a uniformed officer deliver legal papers, beginning with the notice to quit. That likely will get the tenant's attention.
What not to do. Don't pick a fight and don't lower yourself to a difficult tenant's tactics. That's a no-win situation.
- Don't be a jerk. You may be justified in losing your temper when a puppy shows up and the lease says no pets. But hold your tongue. You'll be more effective if you're simply firm and clear about holding the tenant to the terms of the lease.
- Don't retaliate. States have very specific laws about what landlords can do and can't. So don't change locks, throw possessions on the curb or turn off utilities. Don't even think about it.
- Don't drop your end of the bargain. Tenants may feel justified withholding rent payment or deducting the cost of repairs if you haven't followed through on promised repairs or improvements.
Adapted from The Wall Street Journal. Complete Real-Estate Investing Guidebook, by David Crook (Three Rivers Press, 2006).