SS205: Tips for Landlords Dealing with Terrible Tenants

Summary

In this episode of Strategy Saturday, Charles Krill discusses the inevitable challenges landlords face with difficult tenants. Despite thorough screening processes, issues such as unauthorized guests, constant complaints, late rent payments, property damage, and even criminal activities can arise. Krill shares effective strategies and practical advice for addressing these situations professionally and legally. From handling complainants and late payers to dealing with property damage and criminal activity, he emphasizes clear communication, understanding the law, and managing risks effectively to maintain profitability and minimize stress.

Highlights

• Landlords, managing troublesome tenants is a rite of passage. 🎭
• Don't let unauthorized guests crash the party—address it head-on! 🚪
• Remind tenants of their lease terms to curb constant complaints. 📜
• Paying rent late? Late fees can be a deterrent—use them wisely. 💸
• Who says you can DIY without permission? Unauthorized improvements need addressing! 🛠️

Key Takeaways

• Clear communication with tenants can preempt many issues 🗨️
• Understanding and adhering to legal responsibilities is crucial ⚖️
• Be proactive and professional to prevent escalation of tenant issues 🏢
• Set and maintain clear boundaries to avoid misunderstandings 🚧
• Regular inspections can prevent minor issues from becoming major problems 🔍

Overview

Being a landlord isn't always a walk in the park; it often comes with its fair share of difficult tenant tales. Charles Krill takes us on this journey, outlining key strategies and clear-cut advice for navigating these challenges head-on. With his wealth of experience, Krill categorizes common tenant issues from unwanted guests to constant complainers.

For landlords, understanding how to manage late payments is crucial for maintaining cash flow and keeping your properties profitable. Krill discusses practical advice for handling late fees, ensuring that communication is clear and policies are consistently enforced. This approach not only reinforces tenant accountability but also preserves the harmony of the lease agreement.

Prevention is better than cure, and this is especially true for landlords keen on avoiding major property damage or legal complications. Regular inspections and knowing your legal rights set the stage for a more predictable and stable landlord experience. Charles Krill rounds off his expertise with tips on professional conduct and the merits of detailed record-keeping, ensuring landlords are prepared for any bumps along the road.

Chapters

• 00:00 - 01:00: Introduction The chapter, "Introduction," focuses on dealing with difficult tenants as a landlord. Charles Krill explains that despite having a robust screening process, encountering challenging tenants is inevitable. The chapter promises to provide strategies and precise steps landlords can use to handle tenants who cause problems, such as those who host unwanted guests, constantly complain, or consistently pay rent late. It is a part of the "Strategy Saturday" series aimed at helping landlords manage problematic tenant situations.
• 01:00 - 03:00: Guests that Don't Leave In this chapter, the author discusses the issue of tenants having guests who overstay their welcome, creating management challenges for landlords. It is explained that such situations can sometimes be predicted or detected beforehand, but often they are unexpected. The author highlights the importance of managing these situations effectively to maintain order and compliance. Drawing from extensive personal experience, the author categorizes these challenging tenants, focusing specifically on 'guests that don't leave,' a scenario where a tenant's guest becomes a quasi-permanent resident, complicating tenancy agreements.
• 03:00 - 05:00: Constant Complainers "Constant Complainers" discusses the challenges landlords face when dealing with tenants who violate lease agreements by allowing unauthorized occupants. The chapter highlights the importance of clarity during the lease signing process and emphasizes the need for landlords to regularly verify the number of occupants in an apartment. It suggests proactive engagement with both the tenants who signed the lease and other tenants who may have observed potential violations, encouraging landlords to address issues promptly when they arise.
• 05:00 - 10:00: Always Pay Late The chapter discusses the challenges people face when applying for a lease. The primary issue highlighted is the inability to get approved due to potential issues in the applicant's criminal background. Additionally, it mentions the existence of constant complainers in the application process and the importance of clearly explaining expectations to them.
• 10:00 - 15:00: Property Damage This chapter discusses the responsibilities of a landlord in addressing property damage. It emphasizes the importance of responding promptly to issues, with a specific timeframe of addressing regular issues within a few days and emergencies immediately. The chapter advises landlords to conduct a walkthrough with tenants when handing over keys to confirm the unit's condition. An example given is fixing a faucet leak within 24 to 48 hours, highlighting that it's usually beneficial to resolve issues sooner rather than later, especially if there is a cost implication like paying for wasted water.
• 15:00 - 18:00: Criminal Activity This chapter discusses the importance of prioritizing property maintenance issues based on urgency, especially concerning water damage, which needs immediate attention. Examples are given during lease signings to explain to tenants that issues like water leaks are urgent and costly, and should be reported right away, whereas less urgent repairs like ceiling fan issues can wait a few days. Setting clear expectations with tenants about response times for different types of maintenance requests is emphasized.
• 18:00 - 24:00: Five Strategies for Dealing with Difficult Tenants This chapter discusses strategies for dealing with difficult tenants who frequently complain and make unreasonable demands. The key strategy emphasized is to remain firm with your policies and not give in to requests for non-essential upgrades or renovations. It is important to maintain the unit as it was rented, fixing only actual issues like broken appliances, to prevent tenants from taking advantage of your responsiveness by turning it into unreasonable expectations.
• 24:00 - 28:00: Cash for Keys The chapter 'Cash for Keys' discusses a situation where a tenant requested new cabinets from the property manager. The manager agreed to install the cabinets, with an understanding that it would result in a rent increase. Initially, the tenant agreed to this new rental amount, but subsequently tried to renegotiate, claiming they thought the rent increase was temporary until the cabinets were paid off. The chapter underscores the importance of clear communication and agreements in rental situations to prevent misunderstandings.
• 28:00 - 30:00: Tenant Screening The chapter discusses the importance of tenant screening and ensuring that all parties involved in a lease agreement are on the same page. It emphasizes that some tenants may try to bend rules to their favor and then fail to meet their obligations, such as paying rent on time. To mitigate these issues, it's recommended to provide a lease cover sheet outlining the main points of the lease in large print, including clear instructions on how to pay rent and specifics about late fees. These main points should be highlighted using distinctive methods, like writing in a different color, to ensure they are noticed and understood by the tenant.
• 30:00 - 32:10: Conclusion The conclusion focuses on managing tenant relationships, particularly regarding late payment fees. The speaker mentions the importance of being upfront about late fees, indicating that while they might let a tenant slide the first time, subsequent late payments incur a fee. They stress the non-negotiable nature of these fees and argue for balance by highlighting timely responses to tenant needs, like fixing issues promptly. This demonstrates fulfilling their obligations, thus expecting tenants to do the same.

SS205: Tips for Landlords Dealing with Terrible Tenants Transcription

• 00:00 - 00:30 are you dealing with terrible tenants trust me I've been there one bad tenant can cost you thousands but I'm here to show you how to stop that from happening whether it's tenants who have guests who never leave to ones who constantly complain about things that aren't broken or always pay rent late dealing with difficult tenants is inevitable no matter how great your screening process is welcome to strategy Saturday I'm Charles Krill and today we will discuss the best strategies for landlords dealing with terrible tenants so let's dive into the exact steps you need to know as a landlord having a challenging tenant is inevitable no matter how good
• 00:30 - 01:00 your screening is it will happen occasionally it is something you could have noticed or checked for beforehand and at other times it was unforeseen either way you must manage the tenant and resolve the situation effectively as a landlord for many years I've encountered a number of management intensive tenants and I've grouped them into a few different categories number one is guests that don't leave so you've rented to one person and then what do you know you start seeing another person showing up who wasn't present when the application and the lease were signed or
• 01:00 - 01:30 when you're showing the apartment I've combed this by speaking to the tenant who signed the lease as soon as I noticed it and I would also confirm several times during the application process how many people will be living there you might not know what is happening daily but if you see them or their car regularly and I would speak to other tenants to see if they consider the guest as living there if your other tenants consider this guest uh as a person that lives at a unit well there's something that you have to start talking to that tenant who sign the lease right away and if they live there they must
• 01:30 - 02:00 complete an application pay the application fee and sign a lease usually this is where the problem is that they probably aren't able to um to be approved for the lease in the application so there might be something that comes up on their background most likely on the criminal background um which is why they've uh maneuvered around um signing the lease the correctly the first time number two is constant complainers so during the application and Lease process I always explain my expectations and addition to
• 02:00 - 02:30 my responsibilities as a landlord if there's a problem I will address it within X days and if there's an emergency I will address it immediately maybe give them an example of each do a walk through with them when you hand over the keys and ensure they confirm the unit condition upon moving so if you've got water leaking you know a little bit of a drip from a faucet be there 24 hours no layer than 48 hours right um I'd probably make that earlier than later if I have to pay for that water anyway as a landlord and then I
• 02:30 - 03:00 water coming in from upstairs okay if that's something we're like immediately over there because any type of water damage is very expensive and it just um it wrecks havoc on so many different things at your property and um has to be immediately addressed so I would give these examples when you're signing the lease with them if they have an issue with a ceiling fan or something like this that's something that's like a couple days down the road right you know a couple business days down the road that we're going to we're going to get around to that and I think it's important to kind of lay that groundwork so when people start coming to you um
• 03:00 - 03:30 because they're going to might you might have people that are complainers and they're going to come to you and they're going to probably start with some smaller stuff and they'll consistently see how far they can push it and kind of how fast you'll jump at getting stuff fixed right and when the complaints start I hold firm with my policies if they want you to start fixing things that are not broken this is not how the unit was rented it it was rented as is and I will maintain the unit but I'm not making upgrades or Renovations unless something actually breaks like a stove and I've had one tenant um I remember in
• 03:30 - 04:00 um in the recent memory that he went to my property manager and wanted like new cabinets or something and the pro manager's like fine we'll put in like these new cabinets wherever it is and like we're going to raise the rent this much and um the tenant agreed and then you know a few months later they tried to go back and be like Oh I thought it was just until these cabins got paid they're like no no no this is the new rental amount and they stopped complaining they were trying to like weasel out of what they had already agreed to so you just have to make sure that um what people you know that
• 04:00 - 04:30 everybody's on the same page and that um you know you'll have some people that try to bend the rules get what they want and then not fulfill their end of it number three is always pay late so I always provide a lease cover sheet outlining the lease's main points on one or two pages in big print because people don't read the lease and one of these is how to pay rent and I physically write in the late fee one is charged you usually have like a permanent marker that's like a weird color so I'd write it in there I go late fee is this after you know how many days or after one day or whatever it might be depending on
• 04:30 - 05:00 your location how many late days you have to give them legally and you might say it's 50 bucks and I write in $50 and I personally let my tenant slide on the first late fee I don't tell them that if it is 24 or 48 hours late but after the first time whether it's one day or one week they are paying a late fee which is non-negotiable and you'll have people that try to push this but then it's also like listen um you know I'm compl completely upfront with them remember when you called me two weeks ago about the dripping faucet and when I came over the next day to fix it that is me upholding my end of lease when you pay
• 05:00 - 05:30 your rent late I pay my mortgage late and my lender charges me a late fee you know what I mean like really be honest with them what's happening when you're getting that money some people have this notion that landlords take the rent and just put it all in their pocket and maybe we're putting if we're lucky 10% of that in our pocket but uh a lot of it's going to pay other bills and other people you know what I mean and I have some tenants who consistently pay their rent late um I've had this in the past and you know they pay the late fee and if it's a consistent thing and they pay the total rent and the late fee within
• 05:30 - 06:00 like a week of the due date I might let it slide and I've done this before when I manage properties I'm not saying it's the best management tactic ever but um you know you are getting you are getting paid more money you're just taking on additional risk there but when you I make this decision and when you make your decision if you choose this you're changing your hat from landlord to Payday lender because now you're agreeing to take their rent late and really pretty much make them a payday loan until they get their next paycheck week later or whatever the time frame is
• 06:00 - 06:30 it if you're getting it weekly like late um and it's more than a week I probably that's not going to fly if you're getting like a few days late um every day like your you know your rent's due like in in Connecticut they got a 10day grace period right and it would be like so rent was due on the really you know the first but they had up to the 10th to pay so obviously everybody paid on the 10th right um and you have somebody that's going to pay on the 15th every month that's one thing if they start paying like on the 21st or something that's where something we have to change something you know what I mean and you got to nip that right away because that
• 06:30 - 07:00 21st becomes the 24th becomes now they're two months and you'll never it's like a gambler you'll never get caught up you know what I mean it's just uh it's a vicious cycle number four is property damage so tenants who don't respect your property can become expensive problems and this includes tenants making unauthorized improvements or tenants who cannot seem to get their trash into the dumpster and this must be immediately brought to the tenant's attention when is noticed when handyman or contractors go into units ask them
• 07:00 - 07:30 what the condition of the unit is and some people will suggest doing regular inspections but if you're changing HVAC filters or making minor repairs here and there you will most likely be in most units every few months and one thing too about the HVAC filters I find it funny when um certain landlords will be like oh yeah it's part of your lease to change the filters I'm not going to leave a $110,000 a piece of Machinery up to my tenants to change a very inexpensive filter
• 07:30 - 08:00 I will send someone in there have them change the filter because so many apartments I've walked thousands of rental units before and when you're walking in C-Class properties a lot of them don't even have the filters and the HVAC systems are like in terrible shape because of this and they just their lifespans are sh uh really short so it's something that also gives you the ability of going into the unit and changing out the filters and seeing what's going on there okay and that allows you to really doing an inspection
• 08:00 - 08:30 without really doing an inspection one thing about the trash is that when my dad had some uh many years back decades and decades back had uh some d-class properties and the tenants um some of the tenants on the third floor wouldn't walk their trash down they would just drop it off the third floor um balcony and try to make into the trash right this is something that has to be addressed immediately because it was a mess right so hopefully you're not buying declass properties but with any type of properties when you're having that happen it has to be immediately
• 08:30 - 09:00 addressed because one tenant does it someone else does it they're learning from it they'll know how far they can push you and you just have to stop this immediately number five is criminal activity when screening a tenant you will have access to the tenant's criminal background check and you can make your own decisions depending on your tenant screening guidelines minor infractions from years back don't really bother me but with a recent more serious offenses I might pass I'm all about second and third chances but uh not on my my dime especially when I'm just
• 09:00 - 09:30 starting out in my real estate investing Journey a few different tactics have worked for me over the years when dealing with difficult tenants number one is always be professional easier said than done however ensuring you handle every interaction with the tenant professionally will help you especially if this becomes a court problem and communicate clearly with the tenant ensuring the tenant understands 100% what is happening your expectations and the consequences number two is know the law and this is essential for all landlords no matter how many units you own or manage you have to understand the
• 09:30 - 10:00 law if you have any questions this is why you have a real estate attorney um in your phone call them the one that use for all your evictions and for your closings or for anything you have call them ask them before anything happens tell them how you would handle it um as you start sending them more business they won't bill you for these little questions three respond to issues immediately even if it's not an emergency it's crucial to respond to your tenants and address their issues promptly especially if they are difficult tenants because they are the ones that can become a problem and keeping line a communication open with
• 10:00 - 10:30 them as you're rectifying the problem will avoid escalation and um this means like if anybody sends here you know for instance if you're getting you're on text minute communication with your tenants which I highly suggest you don't they should have a call because it makes it so much easier for them to report issues to you and um contact you but um if it's something where they send you an email or they put an issue through like kind of your your system if you have a like a an online payment system or where they put issues into when they're paying their rent portal um respond to immediately and be like oh you know I'll
• 10:30 - 11:00 take care of this right away you know send him an email back I'll take care of this immediately and um you know it'll be like two business days whatever it is let them know exactly what's going on and that you received it and this way they know that um you're on top of it even if you haven't started the wheels in motion and getting it fixed they're aware of it and if it's a bigger problem like a hot water heater maybe it's a an odd siiz hot water heater and they don't have it at the plumbing supply house and you have to wait uh for it to come in or whatever it might be you know what I mean and this will happen sometimes especially with older prop properties that have like weird things right this
• 11:00 - 11:30 is something you have to keep in contact with them right or specialty furnace or boiler whatever it is let them know hey this is the day it's going to come in this is what I'm expecting and just give him like that regular update and that's going to keep him he's on top of it everything's fine there's no problem you know what I mean um especially important with difficult tenants uh number four is maintain detailed records this is especially important if you go to court keep a detailed record of when you spoke to the tenant or when you tried to contact them and this help you stay prepared for possible eviction allowing
• 11:30 - 12:00 you to move quickly if this is where the situation leads you will thank yourself your attorney will also thank you because it makes their job easier too right they're going to be able to do their job more efficiently because of it um you don't want to have their hands tied anywhere so you want to make sure that you're following what they're saying during the process of being a landlord and then also you want to provide this documentation to them uh when it gets to that point hopefully it doesn't but if it does at some point it will get to that point with some tenants send written notices I don't think landlords do this enough and not just
• 12:00 - 12:30 like a first class letter um certified mail is pretty inexpensive for what it does to the to the tenant in the sense of knowing how important this is um but certified mail being sent to the tenant when a tenant needs to sign for something it raises the level of importance dramatically it's not just like oh this could be junk mail this could be blah blah blah this could be anything when you sign it um while they're turning around and walking away from their front door after signing it they're going to be opening it and they're going to read it and they're going to take it more seriously than you
• 12:30 - 13:00 just sending some mail that they just leave in their you know box for a week or something right um we used to use a process server who worked a lot in our city and he would uh drop off letters to tenants face to face and back in the day I was like when I self-manage properties it was probably like 20 or 30 bucks and you know since our office was very close to our rental properties they would just like stop we'd call them he would just like stop by and I don't know what he was he was a pretty imposing size guy you know he's process server I mean you know they have a special physique that makes them more efficient at their job
• 13:00 - 13:30 just like a bouncer would and um it's a difference it's somebody else showing up differently at their door and delivering the letter to them I mean there's not like it's not like a Shakedown but it's something that um you have $ 20 or $330 uh you pay the person I give him cash he goes down the street he knocks on their door and he drops off the letter and um when that's happened that's been a very effective method for getting paid and there's there's nothing wrong with it you can have someone that works for you deliver a rent letter to someone um there might be rules about leaving it on doors and stuff like this so other
• 13:30 - 14:00 tenants can see it which isn't really the classiest thing ever but um it's best you know you go down there and give it to them but it's also something if you have a process survey you're using or if your attorney has one he'll give you the name of the person and uh just give him cash they'll go down there they'll do it um or have your attorney do it depending on how that property is owned um you have to speak to your attorney first about that but that was something we used to do that was pretty effective and um it signifies a seriousness of the matter which is another step over certified letter
• 14:00 - 14:30 number five is cash for keys now some landlords get hung up on this because they think they are in the right and you need to minimize your losses eviction is extremely expensive so any type of vacancy is expensive people not paying rent is expensive um evictions are put all this together and add more onto it of how expensive it can be so get the prom tenants out of your property as fast as possible and with as little damage as possible this is not about being right um this is about uh being successful at what you're doing and cash re Keys usually checks both of these
• 14:30 - 15:00 boxes also have uh the tenants you know the tenant the name and the cash they accept so when you talk to that um tenant you know ask them um the cash price that they will accept and offer to pay them more if they leave sooner so I remember doing this one time with a girl and um I don't know what the reason was she was working she just wasn't paying rent and um it was like2 or $300 that she offer that she said if you give me that I can move by time and I said i' give her even more and if she moved
• 15:00 - 15:30 quicker and she did and I was like it has to be like broom you know broom clean kind of thing um I don't want all the stuff left there I don't want damage I walked the apartment really quickly it was a small one-bedroom I walked the apartment I was like okay this is fine just leave it like this with your stuff out of here and um I'll give you this and yep um she hustled to get that thing done and um so she could get the additional money on top of it and that was the EAS way of doing it I was able to get it clean paint it rent it um you know within weeks instead of waiting
• 15:30 - 16:00 months for someone to dry their feet and having to go to court having to go back to court having to talk to attorneys having to pay attorneys all the stuff that goes with it so it's it's maybe um you feel wronged at first but you just got to get them out and it's easier just to cut your losses short and just get back to um tighter screening better tenants for longer periods and of course um this is a binding condition of the unit so try to walk the unit before you agree on the amount as I said before it's super important I don't want to just make the agreement over the phone I
• 16:00 - 16:30 if I do that I want to make sure that I have access to walk the unit before I sign on it in the sense of sign on like agree on it you don't have to sign right there I would have something theyd sign afterwards that's like Hey we're um you know we're canceling the lease and I have something um maybe your attorney can draw something or you draw something up and you know send it to your attorney have them to say this is fine I would have them sign that and then you give them the cash and um I would get a receipt for that too you know what I mean just saying that hey uh I'm going to give you you know I'm going to give you $400 you're going to leave we're ending the lease right now you know what
• 16:30 - 17:00 I mean on this day and um that's that we're done and you're giving me the keys back so you don't have access to the unit and everything's fine you got a receipt you got the money um it's pretty much straightforward and uh you won't hear from that person again number six and the last one is tenant screening and I harp episode after episode about tenant screening because it is one of the easiest ways to fill throughout less than ideal tenants from the good long-term tenants we want to stay in our properties for years okay check out episode ss89 when I go over some
• 17:00 - 17:30 important tenant screen questions as we close here um know that this is the cost of doing business and being a landlord if you have losses from one tenant the real way of staying profitable as a landlord is not to drag people through and try to get every penny out of them and take them to um you know evictions and then try to bring uh you know get um collect money from a collection agency this stuff could work um but for most people it's just going to be easier for you to have more unit and tighten up your screening and it's
• 17:30 - 18:00 similar to any other business having more clients having more customers having more tenants insurance companies do this by they hedging their Risk by having millions of customers to cover their losses as they occur and as a landlord the more units you own um the more units you can spread out your losses from one property or one bad tenant so I hope you enjoyed please remember to rate review subscribe submit comments and potential show topics at Global Investors podcast.com if you're interested in actively investing in real estate please check out our courses and mentoring programs at syndication superstar.com that is syndication
• 18:00 - 18:30 superstar.com look forward to two more episodes next week see you then have you always wanted to invest in real estate but didn't have the time didn't know where to find the deals couldn't get the funding and didn't want tenants calling you since 2006 I've been buying income reducing properties in great locations that provide us with consistent passive income while we wait for appreciation in the future and take advantage of tax laws while we're waiting and unlike your financial adviser we invest alongside our investors in every property we purchase check out to invest with harborside.com if you like the idea of
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