Calendar icon June 28, 2023

Types of Tenant Problems and How to Deal With Them

Google “how to deal with problem tenants,” and you’ll see dozens of articles, probably written by people who have never managed property in their lives, about how to react when you have an issue with a resident. 

What these articles don’t understand is that thinking about “problem tenants” doesn’t get you anywhere. After all, if the problem is the person, your only real recourses are eviction or non-renewal. Not ideal! You’re also left reacting to issues after they’ve become emergencies rather than focusing on a proactive, positive resident experience in the first place.

Instead, property managers across the industry are starting to redefine the issue as “problem behaviors, habits, or situations.” While they can't control what others do, expert rental property managers are absolutely in a position to influence change in behavior, habits, and situations. 

 

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Here’s how we’ve seen professional property managers approach difficult situations and turn them into wins.

Types of “Problem Tenants” (hint: it's problem behaviors!)

Success for a property manager means creating and delivering the best experiences for 1) residents, 2) investors, and 3) property managers – a Triple Win. The Triple Win means finding solutions that benefit everyone. 

Rather than automatically assuming the resident is the problem, some property managers approach resident issues as a behavior that can be changed. They ask, “What are the behaviors and habits that I want to prevent, and the ones that I want to encourage?” Often the root cause is addressable and the behavior changeable.

So, first, it’s important to identify those common problem behaviors and then how to prevent them. 

Partial payments, late payments, and nonpayments

Can we get an amen? Late payment is probably the most common complaint among property managers since on-time rent payments are critical to managing your business. In aiming for a triple win, on-time payments are one of the top needs for property managers and investors.  

Residents may have any number of reasons they struggle to pay rent on time. Here are some of the most common reasons we’ve heard from PMs for why residents have late rent or unpaid rent:

  • The resident’s paycheck comes after the month’s rent is due. There are financial products coming to the industry that allow residents to split rent payments and pay back a third party before the month’s end for less than the cost of a late fee. Also, some PMs are providing financial literacy and education resources through partners like Operation Hope.
  • Residents are stuck sending checks in the mail. Most PMs are now leveraging tech platforms that can make payments easy-breezy. The issue may be more a matter of encouraging more residents to use it.
  • Some accounting platforms are tricky to use. The more convenient your accounting platform interface is, the more residents are likely to use it. 
  • It’s possible a resident had a large unexpected medical bill or other expense. You can set up systems to help them stay in communication with you about payments and set up payment plans for late fees if they miss. Some PMs are even allowing residents to access their security deposits and switch to a monthly alternative instead.
  • It’s always possible that they simply don’t have the income to pay the rent. PMs know this is a risk, and many focus on implementing better financial tools for their resident screening process.

Property damage

Another common issue is rental property damage. Most residents take care of the property — after all, it’s where they live! But we’ve all seen residents whose footprint goes beyond normal wear and tear, whether it’s due to negligence, abuse, unapproved changes, or DIY projects gone wrong.

Again, we’ve learned from innovative property managers that the best approach is to proactively create an environment where residents are motivated to take great care of the property. They ask themselves: How do we make it easier to take care of the property than not?

Think of it as putting the cookies on the bottom shelf. How do PMs get this done? Often, through a resident benefits package. A resident benefits package rewards residents for taking care of the property. A good package includes things like air filter subscriptions, credit support, and great insurance.

After all: When changing air filters is as easy as opening the front door, it gets done more often. When getting proper insurance coverage is as easy as signing the lease, it means fewer residents fall out of compliance.

Lease violations

Lease violations put everyone at risk. Here are a couple of examples:

  • Unauthorized occupants and animals – i.e., people or pets that didn't go through the proper screening and approvals process. Unexpected roommates or pets can become liability risks or cause revenue loss if the resident should be paying pet fees, etc.
  • HOA violations – i.e., breaking the agreements made with the homeowners association. Most single-family rentals are subject to some kind of HOA. Violations may relate to poor maintenance of the lawn, noise violations, or other "bad neighbor" behavior as the HOA codifies it. 

Illegal sublets

Subletting may fall under HOA violations or other issues.

One particularly controversial type of subleasing is Airbnb or other short-term rentals. Some cities and districts ban these kinds of rentals. Property managers are often experts on local regulations around rentals and help communicate those local and state laws with their residents. A legal advisor also goes a long way to help build a clause in the lease agreement.

Excessive complaints

Reasonable complaints from residents help PMs stay on top of issues on their properties. Broken AC? They’ll let you know. Gas leak? You depend on them to tell you if something is amiss!

But there’s a flip side to resident complaints, too. The unreasonable complaints. These are the phone calls that wake you up in the middle of the night over something you’ve already resolved. Or the complaint about something out of your control. Or maybe just incessant contact about little things that the resident could easily address themselves.

Tips to Deal With Difficult Tenants 

Before we talk about strategies to build good habits among your residents, we’ll also touch on some practical tips to deal with difficult residents – whether you’re looking to avoid the experience altogether or if you’re already facing major obstacles. 

Ensure you have a robust applicant vetting process

Obviously one of the best ways to deal with difficult residents is to avoid them in the first place. That might sound like a cheat of an answer, but any property manager will list this as one of the most important factors to success.

Every applicant should be given the same requirements in a tenant screening process, to avoid any discrimination and protect yourself, the applicant, and your investor. You should include a background check for criminal history and credit checks into credit reports, proof of income, employer and previous landlord references. Make sure you're aware of tenant rights laws in your area and taking care not to discriminate.

Keep written records of everything

Leaving a paper trail helps protect your job and your assets. If you’re a property manager, it helps build trust with the investors; if you’re an investor, it helps keep you legally protected and the trust of your other residents.

Call law enforcement when dealing with lawbreakers 

Don’t try to deal with lawbreaking alone. Call police or community officers to help you deal with illegal activity.

Keep your leases updated and bring up details when needed

Make sure that you and your attorney are regularly updating the terms of your standard lease and rental agreements. This helps to avoid any legal issues or additional expenses. Reminding residents of the details of the lease can help calm them down and establish clear boundaries around what they can and can‘t ask for.

Follow an eviction process if necessary

No one wants an eviction. But if your residents are putting you and other residents at risk, or breaking the terms of the lease, it’s time to consider giving them an eviction notice. Start with a written notice. Make sure you consult with a legal advisor to avoid an eviction lawsuit. Be sure you understand local ordinances around eviction.

Stay familiar with local laws and regulations

And, of course, all property management companies should stay up to date with their local laws and regulations. These differ widely from city to city and state to state, and are critical to stay safe, avoiding penalties, and providing fair service to every resident. 

How to Turn “Problem Tenants” into Happy Residents

These are helpful tips, but I’m sure you’re all nodding along like, “Yes, but this is the bare minimum!” After all, these steps are reactive. The Triple Win mindset is proactive. In addition to following the best practices above, Triple Win PMs ask: How can we make the resident experience so good that they want to stay, pay, and play by the rules? 

Here are some of the best tips we’ve learned from years in the industry.

Resident benefits package

One of the most practical solutions we’ve seen is providing a robust Resident Benefits Package that delivers on what your residents need. 

Benefits are extremely important to residents in single-family properties. In fact, a recent study found that 22% of residents planned to move to a rental with more appealing amenities better suited to their needs than where they currently lived. PMs attract the right residents and encourage the best behaviors with amenities and benefits.

A resident benefits package can boost the resident experience and help influence resident behavior. The next tips can be included in an RBP or separated out on their own.

Create an incentive program that rewards residents for good habits like on-time payments

Our resident benefits include monthly rental rewards for residents who pay their rent on time. Property managers are also able to create custom incentives to reward on-time renewal decisions, prompt survey replies, and more. It's a rewards platform for residents, but an incentive platform for PMs. This is the definition of a triple win! 

Support residents in building credit

Credit-building tools are another incentive for residents to pay on time – but it goes even further by actively supporting residents in their financial stability. Our credit building program automatically reports on-time payments to the credit bureaus, which has increased resident scores by as much as 20-40+ points.

Provide easy-to-use tech tools to support their experience

An online portal can make everything easier – from paying rent on time, making timely maintenance requests, and checking important rental unit information. 

Build ease into property care tasks like air filter changes

PMs are increasingly ensuring that things like air filters are taken care of automatically. Our resident benefits package includes regular filter shipments, which reduce heating and cooling costs by up to 15% and reduce HVAC work orders by up to 38%.

Provide a move-in concierge

Make your job easier with a move-in concierge service included in your resident benefits package. Residents turn four phone calls into one, and get their utilities and home services set up at their new address conveniently. When it’s that easy, it gets done more often. When there’s an experienced person helping, it also eliminates more mistakes.

Provide failsafe insurance coverage

The master policy included in RBP allows property managers to submit damage claims directly and immediately. And over 95% of residents choose it due to the competitive pricing, coverage, and convenience of just signing their lease. Our insurance program turns 41% lease compliance into 100% compliance.

These are just a few examples of how property managers are using benefits to encourage the best resident behavior. 

In fact, at Second Nature, we built every feature based on feedback from professional PMs who have explored how to turn problems into a Triple Win experience. 

Why a Professional Property Manager is Critical To Manage Difficult Tenants 

All of this is made possible with a professional property manager. What differentiates the pros from a “commodity property manager?" 

Commodity property management is built on a belief that property management is just a basic service of collecting rent and handling maintenance – a support function. This competitive approach is resigned to differentiating on old approaches by being a little bit cheaper. It’s a zero-sum game with winners and losers. And it leaves problem behaviors from residents unaddressed until after the fact.

Professional property managers are getting proactive about building triple-win experiences – built on the belief that property management is positioned as a strategic function for creating value. It’s generative. More property managers are asking how to grow the pie, so everyone gets bigger slices, and everyone wins. By stacking aligned, experiential value over time… it creates business relationships residents, investors, and team members want to stay for.

How the SecondNature RBP Helps in Managing “Problem Tenants” and Making Residents Happy

In the end, even most inexperienced managers typically know what's supposed to happen – i.e., rent on time, change filters, maintain insurance, etc. 

But the best property managers know not just what’s supposed to happen, they know how to make it happen. There are all kinds of exciting innovative approaches out there, and professional property managers are leading the way. We believe it will be the dedicated, passionate professionals who innovate and solve old problems in new ways. 

Learn more about how Second Nature partners with professional PMs on Resident Services that drive Triple Win outcomes.

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How to Optimize Operational Frequency with Processes and Software

Property management software is currently helping property managers establish efficient and reliable processes at a higher rate than ever before in the PM industry. With that development in the proptech industry has come the development of tech for self-managers that has changed the capacity of the accidental landlord. Thus, the demand for efficiency at scale has risen in order to separate the professional from the amateur, and the establishment of processes that allow such a thing has become a critical topic for professional property managers. Optimizing property management processes Carter Fleck of Triton Property Management, a growth-oriented firm out of northern Virginia that is approaching 300 units with larger goals for 2024, joins us to share his expertise on process definition. Fleck is the General Manager responsible for operations and strategic growth, and he has been developing effective processes to ensure efficiency at Scale at Triton, and in the process, he has garnered an understanding of how to do so. “A lot of failing,” says Fleck. “In the early days, we were getting a lot of good and bad feedback, but typically the bad feedback is what you adjust off of.” Fleck believes that assumptions are the enemy when it comes to defining procedures and sourcing software for your PMC. “The image that we use is if you're going to build a sidewalk before people even start walking on a field, it's kind of dumb. You have to see where people will walk first, and then you'll build a gravel path. So number one, you see where they walk, see where their intentions are in the grass, then you build a gravel path. And then eventually, once that walkway is established, that's where you build your processes and procedures.” The analogy is a visualization of the concept that you have to see how people operate before you can establish processes to make how they operate more efficient. Fleck encourages the negative experiences of process breakdown and cites them as the only way to really nail down what your processes should look like. “Over time, between the tenants giving feedback and owners giving feedback, we adjusted our processes. It's a mix between figuring out where the owners walk and where the tenants walk, and then building paths that align.” Fleck details an example of how Triton adjusted its process after an assumption it made got challenged: "We had an assumption that payment plans were helpful for residents," says Fleck. "And so the way we handled delinquency is we would reach out to them and would be like, ‘you need to pay this. Do you have a payment plan option?’ And they would always say yes. Our process was we'll put you on a payment plan, we'll invite you to a payment plan, you'll accept the payment plan, and then we'll monitor the payment plan. That in itself was a lot of work, but we thought it was doing well. But some of the owners that we had managed for mentioned that another property manager doesn't allow any payment plans. And if you're not fully paid up by the end of the month, then the eviction process starts if you’re over $500 due. So we're like 'alright, well, we'll serve you in that we'll change our processes.' And we did, and our delinquency percentage shrunk significantly. So, consistently, by the end of every month, we're around 5% APR. Whereas with payment plans we're like 5 to 10%.” Fleck obviously credits seeing the assumptions in motion as what prompted the need for process iteration, and he firmly believes that making too many of these assumptions is one of the biggest mistakes growing property management companies make. Like any business experiencing growth, process definition is critical to achieve efficiency at larger volumes. What Fleck is essentially advocating for is processes based on what you know, not what you think, and there is a big distinction. Managing property management software Fleck has installed both general and tech-based processes, and cites that understanding of how people interact with processes as the key in both areas. "They don't focus on user experience. That's really important. Number one, how the tenants like the tech, but specifically how the people who are using the tech are gonna adopt it. So when we were choosing a rent inspection software, we had so many people recommend one, software and I, we almost pulled the trigger on it. But then I was like, let's do a trial run on both these two. And we chose the other one because it was way better user experience for property managers. So user experience, both for us and for residents." Tech is a tool that is ultimately as good as its users, and if it's not used correctly or at all, its potential is wasted. An over-reliance on technology can actually go hand-in-hand with an under-reliance, as both often spring up from a lack of understanding of how to choose, implement, and manage it. In this vein, Fleck can't recall many property managers who operate with too much tech. As long as you're not purchasing redundant software and you've done and continue to do your due diligence, tech-based process can make your business more efficient. "I more often find myself having that conversation," says Fleck. "When I'm talking to property managers in my sub-market, who aren't connected with like a NARPM, who aren't connected with like a Crane group, or who aren't connected with a Second Nature, aren't connected to the tune of what the property management industry is doing and the cutting edge of it, I'm just like, 'you could save so much of your time and you could scale this so much more if you only even if you just had tenant Turner, or if you had LeadSimple.'" No matter what your story is a property manager, if growth is in the cards, so is process and technology refinement. Hopefully, Fleck's experience in these areas can help you stay efficient and organized as door counts grow.

Calendar icon April 19, 2024

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Why offer a tenant benefits package?

In the residential real estate sector, like everywhere else, residents and property investors alike are getting younger – and with this generational shift comes expectations for a certain level of convenience and support. To put it bluntly, today’s residents want their needs proactively anticipated. It’s something they're willing to pay (and stay) for. That’s where a tenant benefits package comes in. In this article, we’ll explore what a tenant benefit package is, how it improves the experience for both property managers and tenants, and crucial mistakes to avoid. Before we get into the details, we want to give a shoutout to our very own “Resident Benefits Package” – which is how we refer to the benefits comprised in the “tenant benefits package.” “Tenant” is not yet a legacy term, but we here at Second Nature are trying to evolve it. That’s because, in our experience, property managers work hard to make renters feel like they’re not just parties to a contract – they’re residents. On one hand, this is just humans being humans, but on the other hand, it also encourages them to invest in care for their new home and add value to the property. Ready to get started now? Build your Resident Benefits Package today. What is a tenant benefits package? A tenant benefits package is typically a bundle of services, conveniences, and provisions offered by a property manager on top of the basic lease agreement. They represent a triple-win situation for property managers, residents, and property owners, as they enhance the overall rental experience, generate additional income, and protect the real estate investment. It might include conveniences such as online monthly rent payment options, or portals for submitting maintenance requests and tracking their status. It could also include various financial perks, such as credit rating improvements that are contingent on on-time rental payments, or discounts on nearby services such as fitness centers. It might also include amenities ranging from move-in concierge or utility set-up services, to identity protection services, to HVAC filter delivery. The cost for resident benefits packages is typically included in the lease and added as a monthly fee, with the fee being dependent on the specific benefits. Indeed, the benefits contained in a tenant benefits package will vary depending on the property manager and the type of rental property. The overall goal is to provide tenants with an enhanced quality of life while simplifying the experience of renting. At Second Nature, we pioneered the only fully managed resident benefits package, in response to PMs who wanted to make their business stand out. Our RBP includes an array of services and supports for residents, from filter delivery to credit building to maintenance. Why should property managers offer a tenant benefits package? Beyond the triple-win considerations mentioned just above, there are compelling and concrete reasons why property managers should offer tenant benefit packages. We'll turn to these now. Ancillary revenue Some tenant benefit packages include optional services or add-ons that can generate additional revenue streams for the property manager. This might include things like renter insurance or HVAC filter delivery. Resident experience Tenant benefit packages deliver numerous savings and value to tenants, beyond the value they would get if they were obtaining the same benefits "à la carte." Additionally, by offering additional services and conveniences, benefit packages can make tenants feel valued and more satisfied with their living experience. For instance, maintenance hotline requests, tenant portals, and air filter replacements all make life easier. Add-on services like identity theft protection can offer a sense of security. And discounted renters insurance coverage, utility concierge services, or other perks can save tenants money. Decrease tenant turnover and vacancy rates In a competitive rental market, tenant benefit packages can be a major differentiator toward boosting retention rates and reducing vacancy rates. Properties that offer these packages can also attract a wider pool of qualified tenants, and potentially command higher rents. Note that certain benefits in the package, like online rent payments and maintenance requests, can automate tasks and free up the property manager's time. This allows them to focus on more value-added initiatives. How does the tenant benefits package improve the tenant experience? Tenant benefit packages can significantly improve tenant satisfaction in several ways, by making life easier, more convenient, and potentially more affordable. For instance, if an online portal (a baseline feature for most property management software) is included for rent payments and maintenance issues and requests, this eliminates the hassle of writing checks or waiting on hold to speak with someone about a clogged drain. In other words, tenants have the peace of mind of knowing they can manage their tenancy 24/7 from the comfort of their own devices. Some packages might include features like filter delivery services or regularly scheduled HVAC maintenance. This frees tenants from having to remember these tasks – and ensures their apartment is well-maintained. Certain packages might also offer "verified vendor" services – in other words, a vetted vendor network that can help provide a more secure feeling to residents when service providers are on-site. On the financial side of things, a benefits package might offer discounts with local suppliers for various goods and services, or on a renters insurance policy obtained through the property manager (with applicable waivers for residents who have their own insurance). This can save tenants money on a necessary expense. Some packages also help residents with their credit scores via credit reporting and credit building services, so they can transition from renting to home buying when the time is right. The idea is that the credit reporting program reports on-time rent payments automatically to all credit bureaus, helping residents build their credit simply by paying their rent on time. Some benefit packages include resident rewards programs that represent a powerful and positive incentive for on-time rent payments, including gift cards or cash. As far as living perks go, packages sometimes include added benefits such as access to fitness centers or community events. This provides tenants with additional spaces to relax, socialize, or stay healthy. Packages can include security deposit alternatives that serve to provide a means for residents to be financially liable for damages without having to pay a significant lump sum upfront, such as pure insurance, surety bonds, and ACH authorization programs. Ultimately, tenant benefit packages create a more professional and responsive image for the property management company, which helps tenants feel valued and allows them to experience a smoother, more stress-free rental experience. What are the mistakes to avoid when offering tenant benefits packages? Property management companies should take care to avoid certain pitfalls when implementing tenant benefit packages to ensure they are providing true value to tenants as well as delivering profitability to the PM company itself. For instance, it's important to ensure that the services you're offering are actually relevant to your target renters. For example, young professionals might appreciate discounts on gym memberships, while families might prefer pet-sitting services. You should also take care to clearly communicate what's included and not included in the package to new residents. Don't oversell the benefits – focus on how they genuinely improve the living experience. It's also very important to set realistic expectations for response times on standard maintenance requests, emergency maintenance requests, or virtual concierge services. Likewise, be clear on all available payment methods, as well as rent due dates, late fee structures, and any associated payment processing fees. If your package includes services from third-party vendors, ensure that these vendors are reputable and reliable. Research their customer service record and responsiveness to ensure a smooth partnership and a positive experience for tenants. Above all, regularly monitor the usage of different benefits within your benefits package. This can help you refine your offerings and ensure you're not spending where spending is not required. Looking for a Resident Benefits Package? If you’re looking for a “plug and play” resident benefits package, Second Nature’s RBP is the way to go. Designed to be easy to implement and simple to use, all the services it includes are managed by Second Nature – which means there’s no day-to-day upkeep required from the property manager: Second Nature keeps it running. It’s a simple way to grow your business and create great experiences that residents will pay and stay for. Learn more about our fully-managed Resident Benefits Package.

Calendar icon April 2, 2024

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