As a landlord, I’ve dealt with some difficult tenants, and I’ve noticed they all tend to use very similar tactics. Setting boundaries is a necessity to keep things under control, and in the end keep all of your tenants happy while keeping yourself sane.
Don’t get me wrong. Most of our tenants are very good. Many high-maintenance types start showing their colors right away at the showing, which makes them easy to weed out.
But no matter how careful you are, you’ll always end up with your 10-percenters. They’re the 10 percent of the people you deal with who soak up 90 percent of your efforts.
A more common type wants to pay the rent in person, in cash, and a few days late. Every month there’s something they want fixed or some project they want done, and want us to foot the bill. The day they drop off the rent is a great time to talk about this stuff, but they may very well call some evening, or even at night, to talk about their latest idea.
The behavior comes down to boundaries. The best tenants assume there are certain boundaries and respect them without being told. But some others have to be told. Here are some of the boundaries we set.
Payment by check or money order, mailed to a post office box
We accept payment only by check or money order and it must be mailed to our post office box. This is a safety issue as much as anything else. I don’t know who our tenants talk to, but I know some of them talk a lot. I don’t know how many of them have met each other, but my most difficult ones want us to think they all know each other and they’ve talked about us.
Maybe they have and maybe they haven’t, but they sure make it sound like they talk about things they don’t need to be talking about, and I certainly don’t want a rumor floating around that we have lots of cash sitting in the house around the first of the month.
Conversely, I don’t mind at all if the word gets out that we’re a pain to deal with because we only accept payment by check or money order and make them send it to a post office box and they don’t even know where we live. It’s an extra step for them and an extra step and extra expense for us, but it dramatically reduces the chance of the tenant getting robbed, or us getting robbed.
It also reduces face time. People love to wheel and deal, and every time they see the landlord, it’s a chance to wheel and deal and ask for a $200 project. Not every tenant will ask for a $200 project every month, but some will, when given the opportunity. More on that in a minute.
And let’s face it. It’s rude when a tenant wants to work paying the rent in person into their Friday night plans and forces you to cancel your plans to accommodate their whims.
If you’re late paying the mortgage or any of the other bills associated with owning the property, your creditor will charge you a late fee. If your tenant is late paying the rent, you may not have the funds to make the payment on time, so it’s only fair that the tenant cover the late fee and the potential hit to your credit rating.
Writing a late fee into the lease and enforcing it protects you in that event, and it motivates the tenant to find a way to pay the rent on time. A late fee of $10 a day quickly cuts into the money available for other things, so it will get your rent higher up on the priority list.
Some tenants may see it as unreasonable, but it’s really not. A landlord should not have to take any extraordinary measures to make the mortgage payment every month. Some tenants, unfortunately, will push the limits, and the rent comes in later and later every month. In my experience, this especially becomes a problem in December.
Keep in mind that the gas and electric bills do have late fees, so if the rent doesn’t, the rent automatically falls behind them on the priority list. The late fee encourages everyone to be a responsible adult.
Have a business phone and standard business hours
When I rented an apartment, the office was open from about 7 am to 6 pm. If I called with an issue outside of those hours, I got an answering machine, and they called me back the next day.
I’m not sure why there’s a perception that a landlord who has a couple of houses on the side is on call 24/7 while a big apartment complex keeps business hours. But some tenants will push the issue.
What we did was sign up for Google Voice. Google Voice lets you set up hours that the phone will go straight to voicemail. We tell our tenants what our business hours are, and we tell them that we may very well be on the phone with someone else during business hours, so please leave a message if something is wrong. Google Voice transcribes the voice messages so you can read them like e-mail, which is nice. Once tenants get used to leaving a detailed message, turnaround can be very fast. We get a message saying the bathroom sink is leaking, so we call the plumber, then we return the call and let the tenant know what time the plumber will be there, and ask whether he or she will be home if if we need to come over to let the plumber in.
It lets us deal with issues very efficiently.
This also cuts down on nuisance calls. We had one tenant who would call us late at night about non-issues, such as the time she called complaining the hot water heater wasn’t working. Magically, when we called the next morning to let her know when we could have a plumber come out, the hot water heater was fine. They’d just been using a lot of hot water and it needed some time to heat back up. Now that she knows she’ll go straight to voice mail, she doesn’t call us at 9 pm about non-problems anymore.
Of course, when one of our tenants called at 7 pm one night and said the furnace wasn’t working, we returned the call within half an hour, scheduled for someone to come out as soon as possible, and offered space heaters in the meantime. When there’s an actual problem, a reasonable tenant is willing to leave a message.
Repairs happen when the professional is available
The other boundary we’ve run into is tenants wanting to dictate the time and date the repair will happen. And I’ve seen them cancel the service calls they so carefully scheduled, sometimes multiple times, and then a problem just gets bigger.
The solution is to schedule a professional to come out, and the professional comes out on that date and time. If the tenant can’t let him or her in, either my wife or I will come over and let the person in.
Some tenants resist this at first, but you tell me, what exactly is unreasonable about me scheduling a qualified professional to come out and fix a problem correctly? Absolutely nothing. A reasonable tenant appreciates the professional work, rather than a landlord coming over and rigging something up that might help, or could just as easily make the problem worse.
The up-front cost of this is a bit higher, but I think in the long run it actually saves us money. First, we get problems fixed quickly, and we’re more likely to get long-lasting repairs. Second, it reduces face time, so we don’t get hit with a request for a $200 project on top of whatever repair we’re doing. And third, the lasting impression is that a professional fixed something quickly, rather than me coming over and denying yet another request.
I probably come across like a cheapskate, but the rule of thumb that our realtor gives is that each house will need about $1,000-$1,500 worth of repairs every year, on average, and I’ve found that to be about right, though it’s definitely an average.
The thing is, if you’re sinking $100-$200 a month into nice-to-have projects on top of the necessary maintenance, there’s not much left after paying the mortgage, insurance, and taxes. And you’re not doing this to break even, you’re doing it to make a little money.
I used to know a guy who got into landlording intending to lose money every year for tax purposes. The last time I talked to him, he was losing more money than he had planned.
For a good tenant, it’s a good idea to do one project, right around the time you renew the lease, as a thank-you. You could install a new storm door, install a ceiling fan somewhere, do a little landscaping, install a nicer faucet in a kitchen or bathroom, install a programmable thermostat, or something along those lines. If you have to raise the rent for whatever reason, it’s definitely a good idea to do a project like that, to make it less likely that you’ll alienate a good tenant.
The key is to establish that improvements happen for good tenants, and they happen about once a year.