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Dealing with a nightmare tenant and what I learned.

Owning real estate can be a great investment, but it can come with some downfalls. My first home became a rental when the military made my family move and we couldn’t sell (we purchased the house 4 months prior). It was a nightmare to deal with, and I don’t want any of my writers to go through this if it can be avoided.
Here are the four things I learned from being my own property manager with my first nightmare tenant.

1. Get a property Manager

After having managed my own properties for many years and many mistakes, I cannot stress enough the benefit of having a strong landlord on your team! In the beginning, I thought I couldn’t afford/ didn’t want to pay for a landlord, don’t do that!

Having a good landlord is key to ensuring a stress free (or significantly stressed reduced) experience of owning rentals.

My biggest take away from this experience, is to hire a professional! Most people wouldn’t change their car engine by themselves, you’d hire a professional, why would that be any different for an asset like real estate.

Hire a good property manager – it will save you years in stress reduction!

2. Stick to the rental agreement

When these tenants applied, they initially asked for a lower rent (they asked to lower it by $100/month). They stated they are a retired military family who just moved here and needed lower rent to help with their move. I thought this was a nice family, with a military retirement who needs a break, so I gave it to them, this was a mistake.

I’ve found if tenants are asking to change the agreement for rent before even signing it, (except for people asking about pets), they usually intend on breaking/changing it again. Much like they asked for a change to the rent price in the beginning, these tenants also asked for a change on the day rent was due after missing a rent payment.

If you already have a property manager, make sure you’re clear on the terms of your lease and ensure they can legally enforce it.

3. Cash for Keys

Cash for keys is a strategy to deal with unruly tenants. Essentially, the premise is that the tenants are hurting for money and cannot make rent, so the landlord pays them to leave.

The strategy suggests it’s cheaper to pay them to leave than evict them. This strategy has had mixed results for me, with most tenants leaving, but some trashing the place. Where this property was located, there are fairly strong landlord laws. They have a 5 day pay or quit notice (meaning you have 5 days to pay rent or leave). Even in states that favor landlords, you can still be waiting over a month, sometimes upwards to 6 months! That’s a lot of time with a hostile tenant in the asset, a lot of damage can be done.

Usually the payments range between $500- $1,200, although I’ve never had one as low as $500!

Here is some math to show how it works.

1 month rent (cash for keys) < $1550 * 3 months (eviction process and relisting the property) = $4,500 minimum loss

vs

Cash = -$1,200 to leave in 3 days and get this back on the market in 3 weeks, not months, limiting your risk and time the property sits empty.

4. Get the neighborhood involved, or a friend with a trailer

When the tenants had abandoned the home, they left it a complete disaster! They had trash all over, the doors had all been semi-painted jet black, rotten food in the fridge and the sink. They also left a huge amount of belongings, including personal documents, clothes, furniture, etc.

None of this was really valuable to me nor could I use any of it to furnish the property for an Airbnb strategy. I was solely dealing with this eviction, my wife was pregnant at the time and I had to get this place ready for rent! I asked my neighbor to help me get the washer to the sidewalk for bulk pickup.

After helping me, he looked around and said,

‘Ya know boss, we can get that cleared out lickidy-split, ‘specially if we can keep some of the stuff.’

And there it was, within hours we had ten plus neighbors all introducing themselves and cleaning out the house with smiled on their faces. What would have taken me days to do myself was all finished within 6 hours. My one wish if I ever have to deal with a cantankerous tenant again is to have a trailer or a friend with one. This is to clear out all the junk and debris that a bad tenant may leave.

Those are four tips I learned from my first nightmare renters so hopefully you won’t have to! If you are dealing with a painful rental situation, I hope this article can provide you with some guidance for your next tenant.