Are you worried about dealing with headache-inducing tenants? Well, lucky for you this week’s Insight Article may help with just that! I’ll explain how to lay down the groundwork in order to avoid these sticky situations before they even happen.
There are many, many, many, many, many (multiplied by infinity) horror stories that have happened in the past that I won’t be writing in detail about because every single situation is going to be fairly different. It’s almost impossible to predict and foresee what will and what could go wrong. When you’re dealing with housing issues, neither the tenant nor the landlord enjoys the process and it always ends up getting emotional to a certain degree. However, always keep in mind that these headache-inducing situations happen only far and few in between, and even though it’s a pain to deal with, these issues are totally worth it at the end of the day because the reward is very substantial (in other words, your tenant is paying down your property!). If you’re going to make $50,000 dollars in 1 year from your investment property, then you have to ask yourself, “Is dealing with a tenant issue that may take 5 hours of your time worth it?” Essentially, you’re asking yourself if your time is worth $10,000 per hour. I would say yes.
So here are a few insights and steps to having a winning tenant-landlord relationship:
#1 – Have the right mindset.
First and foremost, being able to handle a tenant well starts with having the right mindset. Treat your property like a 1-bedroom hotel. This is because your tenant becomes your client. You want your clients to enjoy their stay and to continue paying rent so that you can cover your mortgage payments. If the tenant calls for some repairs, then respond within 24 hours and fix it (as long as the repairs are within reason of course). The worst thing for you to do is to be an absentee landlord. Being an absentee landlord will cause to your tenant to be more reckless in your unit.
#2 – Setting the precedent with late payments.
The second thing to keep in mind is setting the precedent at the start of the lease. At the start of the lease, I always inform my tenants that if they are going to be late paying for rent (whether there is an excusable reason or not), I will always serve the N4 immediately. The N4 is the notice of late payment. The reason why you want to do this upfront (i.e., on the very first day of being late for the rental payment) is that the N4 must be served 14 days before the next steps can be taken for eviction. The longer you hold out on serving that N4, the more problems you may have in the future, especially if the tenant has more issues than just not being able to make their rental payments. Furthermore, the upfront N4 sets the precedent that you will not tolerate any late payments. Remember, every late or missed payment is a mortgage payment coming out of your own personal pocket!
#3 – Do regular inspections and check up on your property.
The third thing is to always do an inspection every 6 months. You are legally allowed to do an inspection as long as you give 24-hour notice. I usually do this during the summer months and a few weeks before Christmas. Letting the tenant know that you will inspect the unit every 6 months will make them take care of the property better. Furthermore, it lets you check in on them every 6 months to make sure no major damages have been made. Remember, you’ve made a major financial investment in this property, so showing up once every 6 months for inspection should be the easy part.
#4 – Be NICE!
The final thing that I’d like to add is that during my Christmas inspection visits, I usually bring a small gift. Either a bottle of wine or a Starbucks gift card as a token of my appreciation. As much as I like to run my properties like a business, I don’t like to come off cold to people who are helping me pay off the mortgage on my investment property. For that, I am grateful and appreciative of them.
The Wrap – So if you follow those 4 steps, you’ll likely avoid a lot of the tenant issues that other people may have. I find that being a good landlord is like walking a fine line between running the property like a business and being nice enough but not a pushover at the same time. I hope that helps to set some ground rules for your next tenant-landlord relationship. Trust me, it’ll be a lot easier to handle tenants following those steps above.
Until Next Time, Happy Real Estate-ing,
Zhen
Zhen@PrimePropertiesTO.com
