While most financial advisors, successful real estate investors, and posts online often celebrate how effective real estate investing and rental properties can be at achieving financial freedom, these success stories often leave out the kinks and rough edges. And, to be completely honest with you, there will be times when you have to deal with awful tenants and end up suffering a lot of damages.
These situations are infamously known as tenant horror stories, and they’ve somewhat become an atrocious part of the real estate journey, something every veteran landlord can whip up countless gut-wrenching eviction experiences. What’s worse, these tenants often thrash the place before leaving, forcing you to spend even more on repairs on top of the income lost. So, we took it upon ourselves to teach you how to deal with the aftermath of a bad tenant.
Be Firm And Don’t Delay
First things first, if this tenant in question is still staying in the rental property as of this moment, do yourself a favor and get a lawyer ASAP to help file the eviction notice. The longer you wait, the more money is lost, and you don’t know what other damages they could be doing while they’re still there.
When it comes to protecting your investments, you wouldn’t want to gamble your savings with a dangerous individual you can’t control. So, be firm and see to it that they’re evicted to save yourself any more trouble in the long-term.
#1 Thorough Home Inspection
Once the problematic tenant is out of sight and nowhere near the rental property, the first thing on your checklist is to do a thorough home inspection and assess the property’s structural integrity. Depending on how long the tenant lived in the house and the things they did, there’s a slim chance you’ll only be dealing with minor repairs, but be prepared for any major repairs as well. You’ll want to ensure that the house is safe and fit for living before it goes back into the rental market.
- Cracks And Molds: While molds are often seen as a minor problem brought about by moisture or lack of cleaning, they can also be a sign of a bigger problem, especially if they’re accompanied by cracks in the wall. Apart from being a health risk, when mold is left unchecked, it can cause significant damage in places you don’t typically see, enough damage to collapse ceilings, cave in floorboards, and make walls fall.
- Broken/Rotted Floorboards: Another important thing to note is broken/rotted floorboards, relatively simple problems but can become quite expensive depending on the extent of the damage. If it’s isolated cases, then you can get away with affordable replacements. If wear and tear span an entire floor, then you’re looking at a hefty bill.
- Plumbing Problems: Although it would take a lot of mishandling to cause any major plumbing problems, a bad tenant can mess up the pipes or do something they’re not supposed to. In cases like these, we strongly recommend seeking professional help from a plumber to check if everything is a-okay or requires heavy lifting.
#2 Starting On Repairs
With all the assessments and evaluations out of the way, and you can guarantee the necessary fixes the property needs, we can now move on and start with repairs. Budget is always the thing in question, and while it can vary greatly depending on the repairs needed, you wouldn’t want to empty your profits and savings into one investment. So, as a good rule of thumb, save when you can but don’t skimp out on the essentials.
- Focus On Essential Fixes: Anything related to the home’s structural integrity or factors that directly affect a home’s livability should always get top priority. While they are often the most expensive renovations/repairs, they are also the things you can’t afford to cut down. A lousy repair is not a permanent fix, so think of it as an investment.
- Budget And DIY: If you have a bit of budget left over after the essential fixes, you’ll want to look into more affordable upgrades and try your hand at DIY options to save. Sure, they’ll require a bit of craftsmanship and effort, but it can be a great method of increasing the value without having to put down as much cash. For example, you could look into revamping the deck for curb value or installing new rain gutters to save yourself some roof repairs.
#3 Careful Tenant Selection
Assuming that the rental property is all set and ready to go, we now go back to the first step: careful tenant selection. While we hate to admit it, even us landlords and investors are partially at fault if we fail to screen our tenants properly, so this time, we need to be more careful when choosing.
A good benchmark is by checking for a good credit score as this is a sign of financial responsibility and proves they can meet the rental payments on time. You might also want to have someone check for the documents’ validity as some bad tenants have been known to be devious. Secondly, you’ll want to know their rental history; numerous evictions should tell you to steer clear, but if there’s only one, be sure to interview them before making any assumptions.
Overall, while there’s nothing we can do about going back in time and rejecting the bad tenant, look on the brighter side and think of this as a learning experience. Be thankful that it happened earlier rather than later so that you have the wisdom and knowledge to deal with a situation like this before it even becomes a problem. Feel free to share this information with your fellow real estate investors who are struggling with their tenants.