How To Deal With Difficult Tenants In Your Residential Rental Property

How To Deal With Difficult Tenants In Your Residential Rental Property

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It’s a subject that many investment property owners deal with, but don’t often enjoy talking about– difficult tenants.

You know, the ones who create damage, are late with their rent payments, or straight up break the lease.

Today, Principal Broker and Owner Bob Mack shares some insight into dealing with difficult tenants, and how a rental house management company like Advanced Solutions can help.

How To Deal With Difficult Tenants In Your Residential Rental Property

Q: How can property owners prevent tenants from damaging the property?

A: The most important thing to have with any tenant situation is make sure that up front you have a very strong lease. We have a very strong lease that we use for tenants that has been developed over years.

That lease is going to allow you to act on infractions more efficiently than a weak lease.

Another thing that you will use to make sure tenants aren’t damaging the property is that you want regular scheduled inspections, including both external and internal inspections.

We like to do external inspections monthly, and that’s just a drive-by to verify the property condition, and to make sure the tenant is taking care of the outside. Generally, if they’re taking care of the outside, they’ll be taking care of the inside too.

We also like to do internal inspections on a regularly scheduled basis- either once or twice a year.

You’re notifying the tenant of entry, making entry, and then recording the results of that inspection.

Any time you find any infractions on the inspection, you want to make sure you act on that.

Most of the time, you’ll be using the “Comply Or Vacate” notice, which will notify the tenants of the items they have to fix, and then you will go and inspect after that notice has been used.

Many times, an inspection and a “Comply Or Vacate” can fix a problem that you encounter.

Advanced Solutions Property Management can make this easier for owners through our proprietary method with procedures and processes in place that automatically do these things on a monthly or bi-monthly basis, and we’re able to act on these to make sure tenants are behaving in accordance to the terms of the lease.

Q: How can property owners make sure tenants pay on time?

A: Again, it starts with a solid lease. You want to make sure you have a clear lease, with clear late fees. Once you have a tenant in the property, and you find there is a late payment situation, ymake sure you act accordingly and act the same way every month. Have policies in place to ensure to tenants can expect a “Pay Or Vacate” when the rent payment isn’t posted on time.

We have automatic rent reminders that go out on the first and the thirds of each month, and we allow our tenants to set up auto-pay, so rent is automatically withdrawn from their account at the same time.

Q: How can investment property owners best deal with out of control tenants?

A: This is also mitigated with a strong lease that allows you to take action within specific time frames. If we have a non-payment situation, and the tenant is unwilling to make payments, then obviously we are going to use the 3-Day “Pay Or Quit” on the same day every month for every tenant.

You want to keep those interactions business-like, you don’t want to use emotions in these situations.

Then after the 3-Day “Pay Or Quit”, you will move into the court action. It’s very important in these situations to record all tenant conversations and communications in writing. Phone calls are easy, but they’re hard to present as evidence in a court of law. We cover these situations in our free e-book

Q: How does a property management company handle difficult tenants differently than a landlord?

A: First and foremost, we don’t let emotion enter the scenario.

When it’s an individual landlord who owns the property, their emotions are tied directly to that property because that is an asset that they worked very hard to purchase and maintain, and so it’s very easy for a landlord to become emotional during these situations.

With a residential property management company, we keep the transaction very business like, and although it can be hard with difficult tenants, we make sure that we’re handling it in a professional manner, and not letting the situation escalate.

Also as stated before, we use processes and procedures that treat all tenants the same, so that every tenant understands what to expect from the management company in every situation.

Q: What makes ASPM better than other PM companies in Salt Lake

A: It’s the experience we have as a staff!

We have over 65 years of experience managing properties.

Also our managing team are investors themselves, so we manage properties as though we were managing our own properties.

We have very low staff turnover, and that allows us to manage more effectively.

We are certified commercial advisors, which allows us to work with owner investors, and make sure we maximize the return on investment that owners bring to us to manage.

If you’re interested in learning how a Salt Lake City area property management company like Advanced Solutions can help take care of the landlord tasks, so you can enjoy being a property owner… get our FREE “Property Management Pro Tips” e-book here.

How To Deal With (And Ultimately Avoid) Tenant Payment Issues

How To Deal With (And Ultimately Avoid) Tenant Payment Issues

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Ask any property owner what keeps them up at night, and besides major repairs and market conditions, a common problem is payment issues from tenants. Bob Mack with residential property management company Advanced Solutions Property Management in Salt Lake City shares insights on how owners can avoid payment headaches with a few simple tips.

How To Deal With (And Ultimately Avoid) Tenant Payment Issues

What are common payment issues that property owners are dealing with?

Do you have tenants that are constantly just a little bit late with their rent payments? Maybe they’re always making their payments just after the due date, or always just a little bit short of the full amount.

Other tenants are constantly asking for more time, and over time it adds up and what they ultimately owe you grows too.

Other issues may include insufficient funds notices for paper checks. And once a tenant is behind on their rent, sometimes they’ll threaten to withhold payment unless you do a repair, which isn’t legal in the state of Utah.

The main takeaway here is that once a tenant gets more than one month behind in their rent, it’s very difficult for them to catch up.

Why are payment issues a big problem for property owners?

Payment issues are a problem for owners because the relationship degrades. Soon tenants avoid contact with their landlords, and that could lead to tenants not making contact with the property owners for maintenance issues, because they don’t want to interact.

Also late payments almost always lead to later and later payments if it’s not dealt with effectively at the beginning.

Like I mentioned before, once the tenant gets behind on their payments, it’s very hard for them to catch up, and that could lead to them not adhering to other terms of the lease.

If they’re already breaking the lease in one area, they could easily see that breaking other areas of the lease isn’t a huge issue for them.

Payment problems could lead to cash flow issues for the owners, because expenses like insurance and repairs and legal actions still happen even when the tenant is behind on their payments.

What’s one thing a property owner can do TODAY to avoid a payment issue?

The most important action an owner can take today is to create minimum rental requirements for their properties, and have those requirements in writing.

Make sure to adhere to those requirements with each applicant. Don’t let some go through, and others not, and never accept cash from a prospective tenant who wants to pay multiple months ahead of time.

At Advanced Solutions Property Management, we’ve found that if someone has cash today, you can’t be entirely sure where they got the money, or if they have employment or credit issues. Never have the tenant push you into signing a lease just because they have a few months of rent right now, because after those months pass they won’t be making additional rent payments.

How can a property owner benefit from having a handle on payments?

The big picture shows that your business will run much more smoothly if tenants are adhering to terms of their lease and making their payments on time.

This will allow you to concentrate on the important things like purchasing more properties and increasing cash flow, instead of chasing after tenants for payments.

Is Hiring A Property Management Company Worth The Money?

Is Hiring A Property Management Company Worth The Money?

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Many people venture into rental properties unaware of the amount of time and effort it takes to actually manage them.

The truth is that sometimes, we just don’t know what we don’t know.

The larger a property is, or the more properties involved, the more complex, difficult and expensive it becomes to run them.

The main question for most property owners, “Is hiring a residential property management company really going to be worth my money?”

Is Hiring A Property Management Company Worth The Money?

There are specific situations where having a property management company overseeing your properties can be a huge advantage for you. This will save you countless amounts of both time and money.

Here are 5 reasons why hiring a property management company makes sense:

1. Decrease Your Vacancies

A property management company can help you by advertising your property, screening prospective tenants, and placing them. But, this is not all.

A property management company makes your property more desirable in other ways, too.

Hands-on care and maintenance management along with positive tenant relations will dramatically help your property’s curb appeal and reputation.

2. Collect Rent and Process Evictions

Collections and evictions can be two of the more uncomfortable and time-consuming responsibilities of owning a property.

Hiring good property management will take those responsibilities off your plate.

Having a streamlined process for making payments and clear and open communication will make collections more successful.

In the case that rent can not be willingly collected from tenants a management company can actually process an eviction for you, saving you the time and hassle of going to court yourself.

If you are a new property owner and not familiar with all of the legalities of the rental and eviction processes, a residential property manager could literally end up saving you a fortune! 

3. Maintenance Management

Depending on the company that you choose and the agreement you make, you may find that some or all aspects of maintenance management can be handled by your property management company.

This saves you, again, both time and money.

Hiring a full-time maintenance person is costly, and that is only after a long search and screening process to find the best-qualified individual.

Hiring a private contractor for each job would not only become tedious, but the cost would certainly add up, too. 

4. Tenant Management

People are not perfect, and not too often predictable, so tenant management is a major component of having a rental property.

If you only showed up once a month to collect rent, you would have no idea what was actually happening to your property.

To be legally and fully aware of what is going on inside your property, it is necessary to have professional move-in and move-out inspections.

The outside maintenance of the property should be checked regularly as well to be sure it is properly maintained. 

If you own several units or an entire complex, tenants will interact with each other.

As much as we would hope it would never happen, tenant disputes do occur.

This is where having a property manager who is familiar with both the property and the tenants makes navigating these types of situations significantly easier. 

5. Retirement

When the time comes that you want to retire or relocate, but you want to maintain your investment property, a property management company is a perfect choice.

Yes, you may need to pay out a little more in expenses, but hiring a management company means that your property will truly become a passive investment.

Rental Property Tips

3 Key Aspects To Consider When Purchasing A Rental Property

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Investing in a rental property is a great way to create an alternate stream of revenue for yourself. This could even be a great way to supplement your retirement plan. The thing about rental properties as an investment is that only some properties actually make a good investment. What is it about a property that makes it ideal as an investment rental property? 

Defining Factors of a Successful Rental Property

Here are the key aspects that you will need to consider when purchasing a rental property. 

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Property Location

If you have even considered investing in property, you have no doubt heard how important the location is, and that is completely true. The location of a rental property will be a huge factor in its marketability, vacancy rate and much more. 

While you may find the low price of a property in a low income area very enticing, you may not find that the property will actually end up being a success. In this situation, you are likely to see a higher rate of both vacancies and evictions. If the school system is suffering or the area has a high crime rate, the cost to you may be significantly more than choosing to pay the higher property taxes of a better area. 

You have to balance what amount of rent you can charge with the amount that you need to pay out to keep the property running. You must also consider other factors as well, though, as they may dramatically influence your figures. For example if your tenant turn over rate is fairly high and you often have damage when rehabbing the unit for a new tenant, that is a large hit to what you might mistakenly consider profits on the unit.  

Property Condition

The condition of the property is only second in importance to location. If a property has been well maintained and kept in good condition, not only will this end up saving you money for years to come, but odds are, the property likely has a good reputation as well. On the flip side of that coin, a property in poor condition is a sign of many, likely far deeper problems. Not to mention a likelihood that the property has developed a bad reputation as it is in ill repair. 

When it comes to problem properties, there are actually situations where the price can not be low enough to sell the property. A distressed property can in some cases actually cost you money. If it also happens to be in a bad area, you could find yourself stuck with a property. This could take a huge upfront investment and years to turn a profit from.

Property Management

Property management is a full time job. When you purchase a rental property, you will need to either commit to running it full time or you will need to hire a property management company. Many people choose to hire a property management company. This is because it makes owning the property a passive investment as opposed to an additional responsibility. 

It is also important to note that many property owners choose to hire management companies because property management can become complicated. Especially when dealing with laws and codes specific to the city and state. 

How To Know What Type Of Landlord You Are

How To Know What Type Of Landlord You Are

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Sometimes you can tell at a glance when a property has a good or bad landlord. A good  landlord manages their property well. This means service and convenience, a well cared for property and usually happy tenants. A bad landlord manages their property poorly and it shows. At their rental property, nothing is getting done. The property looks a mess and there is a line of angry tenants. Today we will look at the factors that make up good, mediocre or bad property management in Utah.

property management SLC UT

There are many different types of property management in Utah, including large management companies, property managers and individual landlords. Any of these could be a good or bad landlord, but one thing is certain, everyone wants to live in and own a well managed property. Consider these factors and see what kind of landlord you are! 

Great Landlords

Great landlords are or employ highly effective property managers that have a well ordered system and property. Tenants know they can count on first-rate service and convenience. These properties are usually the most sought after places to live. Great landlords:

  • Respect the Business: It is easy to become passionate about your investments, however, rental properties are a business and you must make decisions about them with a calm, clear mind, not clouded by emotion. 
  • Invest in Professionals: Experienced private landlords know the value of professionals that they work with. They invest in the best high quality professionals and then trust the expertise that they are paying for. 
  • Don’t Interfere: Landlords hire property management companies for their expertise and experience and can securely take a step back. They let professional property managers do their job.
landlord

Mediocre Landlords

Mediocre Landlords keep their property up and running, they are basically doing okay. These landlords may even turn a profit, but they lack some of the needed expertise to take their property to the next level. These are the kinds of properties that people rent when they are in a pinch, while they look for something better. Mediocre Landlords:

  • Always Look for a Bargain: Finding a good deal and doing research to choose the best option is a great thing. However, taking the cheapest offer just because it is the cheapest offer, regardless of the quality of the service or product provided will almost always land you with a lesser product or service.
  • Micromanage: A need to micromanage may be a personal trait or it may come from a lack of confidence in the owner’s choice of property or management company. Whatever causes it, micromanaging paid professionals is one thing that definitely keeps a mediocre landlord from rising to be a great landlord. 
  • Don’t Save for Maintenance: When you own rental properties, maintenance is just a fact of life. Not having a viable maintenance budget and savings for emergencies is a trap that keeps mediocre landlords from being great. Sadly, this even puts some landlords into a position of trying to delay or avoid maintenance costs. Should disaster strike, it could take a mediocre landlord down to being a bad landlord. Or even worse, not even being able to keep the property at all. 

Bad Landlords

Bad landlords are the ones that inspire jokes and make people dislike landlords in general. One experience with a bad landlord can leave a renter suspicious of landlords for a long time. Some bad landlords are so bad, they even deserve the term slumlord. Bad landlords: 

  • Ignore Maintenance: These are the property owners who only do the bare minimum to keep a property running. They refuse to make repairs until there is no other choice. Even then often hire “a friend” who can provide them with a good deal. 
  • Increase Rent Blindly: It is okay to increase rent when the market has changed or the property has been upgraded. Bad landlords increase rent to increase their own capital. They’ll do this even if the area is not what it once was or no improvements have been made to the property. 
  • Go Beyond Haggling: These owners aren’t looking for a deal, they want to get everything they can for next to nothing. This kind of behavior only leads to a diminished property and diminished services. 

Why Landlords Fail

There are many specifics to any circumstance that allow things to play out the way that they do, however, when it comes to failing as a landlord, there are some common themes to what goes wrong. These are the most common reasons that landlords fail:

  • They lack preparation: Many people can see the opportunity in investing in rental properties, but unfortunately do not realize how much time and effort it takes to run them. 
  • Purchase too much too fast: Often a great businessperson can choose amazing investments, but by purchasing more than one quickly, may not have the resources in place to manage them all.
  • They ignore technology: Many landlords do not want to invest in property management software systems, but this is a necessary investment. Without this technology, your rental properties will lose out to others who have more convenient communication and payment systems.
  • They overpay for some things and underpay for others: Maintenance can make or break a landlord. Failing to do proper research can cause a landlord to overpay for maintenance items and other costs, but the danger in underpaying is poor service and lousy quality. 

Be a Successful Landlord

Commitment, capital and planning are the necessary ingredients of a great landlord in the making. You want to make sure that you maintain professionalism, stay informed, create a financial cushion and hire the very best professionals that you can find to advise you.

 

When Does a Guest Become a Tenant?

When Does a Guest Become a Tenant?

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When Does a Guest Become a Tenant?

Whether it’s a property manager or landlord, they both spend a lot of time and effort recruiting good tenants. They use expert marketing, run background checks and establish a full move-in process. One of the biggest disappointments in Salt Lake City property management can be all of that effort being wasted when a guest becomes an unscreened and often unwanted tenant.

In these types of situations it is very important for a landlord to be aware of their rights. It also helps to know the difference between a tenant who has signed a lease, a guest and an unauthorized occupant.

These are the different types of people who may occupy your property and the terms used for them:
  • Tenant: this is the person (or persons) who applied for the rental property and signed the lease for the property. The tenant is the legal resident who is responsible for paying rent and caring for the property for the duration of their lease.
  • Authorized Occupant: This is a term that describes people who legally reside in the rental property, but legally can not sign the lease. Most often this term applies to the children of someone leasing your property, but is occasionally used in other circumstances.
  • Subletter: This is a person who is added to the lease after the lease’s term has started. This can be done properly, when the original tenant makes the landlord aware of the subletter. They are then subject to the same background checks and other standards as the original tenant. However, this can also be applied to a person that has moved into a rental with the original tenant. In this situation the landlord may not be privy to the situation. The landlord may or may not be aware of the additional person’s presence in the rental property.
  • Extended Guest: Landlords must allow tenants to have guests. However guests who stay for extended periods should be reported to the landlord. If the long term guest is helping to pay rent, they become an unauthorized occupant.
  • Squatter: This is an unauthorized guest who refuses to leave the property. This can also be applied to a tenant who refuses to leave after their lease ends. A property manager can help navigate this situation in a safe and legal way.

How Unauthorized Tenants Become a Problem

There are a few reasons why someone living in your rental property without a lease or your approval can be a serious problem. 

  • There is no lease, or the lease cannot be enforced: The purpose of a lease is to set out the rules of the rental agreement, if there is no lease or it cannot be enforced, there is no way to require these persons to follow property rules. This can be incredibly detrimental in an apartment community or HOA community. It may even cause fines to be lobbied against the landlord in some cases. 
  • There is an increased risk of damage to your property: Because there is no lease, it is significantly more difficult to hold these individuals legally or financially responsible for damage that they may cause.
  • Lack of Payment: As you can guess, when these people cannot be held legally responsible for your property, they are often unwilling to pay rent. In some cases, criminals intentionally try to find these situations to scam and take advantage of a landlord. In Salt Lake City, property management companies can be a great deterrent to these types. These scammers count on finding landlords who don’t know the laws and want to avoid lengthy court cases; they know a property manager will use the court system to force them out and force payment. 

When Should you Add a Guest to the Lease?

A guest should be added to the lease, with due diligence, when they stay for more than two weeks in a six month period or if they are helping to pay for rent. That said, if you have a problem with unauthorized tenants, you will need to take legal action. If you are unsure of your rights as a landlord or you feel the situation is out of control, you may want to consider hiring a Salt Lake City property management company to help. An effective property manager can prevent most unauthorized tenants through supervision and good communication. When this fails, a property manager can handle the situation through the court system.