You are a property manager / landlord who thought you did a good job screening your tenants. But now, it is apparent that your screening process was inadequate and you have bad tenants. The most common problem is that tenants fail to pay rent, but that is not the only problem landlords encounter. Perhaps you have discovered that more people are living there than are allowed by the rental agreement.
You may have a policy against pets, but learn the tenants keep a pet ferret in the house. Then you find out the ferret is not housebroken. Maybe the neighbors are complaining about the horse in the back yard or the loud music that is played every night after midnight. Whatever the problem, you now know you have bad tenants. The big question is what to do next.
Before you do anything, review the landlord/tenant laws of your state and comply with them. Tenants have numerous rights and you must be careful. You cannot just tell them to move out because they did something you did not like. Carefully review the lease or rental agreement in order to determine if the tenants violated a provision. Even if the tenants have violated the rental agreement, you cannot force them to leave by threatening illegal action or by locking them out.
One thing you can try is negotiating with them. Give them an incentive to move as soon as possible, even if the incentive is that you agree not to file eviction proceedings that damage their credit rating. Gently remind them that if you are forced to take the eviction process through the court system, you will most likely be awarded compensation for all damages in addition to legal fees and court costs.
If they are not cooperative, or they fail to vacate the premises on the agreed upon date, you have no choice but to file for eviction. Each state has its own eviction process and you must comply with it. If you miss a step, you will have to start over.
Even if you scrupulously comply with the law, in some states it can take weeks or even months to get rid of bad tenants. If they are mad at you, there is no end to the amount of damage they may do to your property during the interim.
You should also keep a licensed Collection Agency on contract, and develop regular communication with them. The right collection's partner should be able to offer guidance on account placement frequency and timeliness, as well as advice on how to tighten-up your front end processes. Unlike property managers who carry the responsibility of multiple duties (marketing, leasing, maintenance, etc), collection agencies recover rent for a living (all day, every day). As a general rule of thumb, the earlier you place your delinquent accounts with a collection agency, the greater their chance of recovering your cash. (Sending accounts 0 to 60 days post move-out is typical).
The best way to prevent it from happening again is to review your tenant screening criteria. You need to get more information from prospective tenants other than just their credit report. You may decide to contract with a professional tenant screening company to help assimilate the information. However you decide to proceed, here are some suggestions for important information to require your applicants to provide.
• Get all relevant contact numbers: This includes phone numbers of employers, mobile phone numbers of applicants, email addresses and at least one emergency contact number. This way, if bad tenants move without paying rent or after having caused damage to the property, you will at least have a starting place for tracking them down.
• Obtain all bank account information: this includes location of the bank accounts as well as the account numbers.
• Verify employment: You need prospective tenants to provide more than just one month’s pay stub. You should ask for at least three months of stubs. For those who are self-employed, you should obtain three months of bank statements.
• Consider the ratio of tenant income to the cost of rent: Take into account the amount of debt the tenants have to be sure they will be able to meet their rent obligation.
• Check with previous landlords: Laws of some states limit what a previous landlord can tell you, but you can ask if the landlord would be willing to rent to the tenants again. The answer to that question tells you a lot. You can also uses services like RentForecast to reveal rental payment histories (good and bad).
• Do additional background checks: Do a criminal background check. A fraud or theft conviction may be a warning sign. A youthful conviction for drug possession may not seem important. You decide. Search the internet to determine if the prospective tenant is a registered sex offender.
No matter how detailed the background check and income verification processes are, it is almost inevitable that occasional applicants will slip through the cracks of the process. But, if you follow these guidelines, you will minimize the problem of bad tenants and enjoy the role of being a landlord.