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.
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.
April 25, 2024
