There are many people I know who do not like getting into the rental property business because of the horror stories they hear from friends about bad tenants. I have heard of the horror stories myself and experienced a few problematic tenants. But almost all of my tenants have actually been very decent which I find very encouraging.
Let me share with you the different types of problem tenants to watch out for and avoid.
1. The Delinquent Tenant
The Delinquent Tenant does not pay on time. They make all kinds of excuses and share many woe-to-me stories. The most common excuses are sickness or death in the family. It is therefore a good practice to state your rental payment policy and penalties in the contract. One time late payment is understandable but habitual late payments should alarm you that you have a bad tenant.
2. The Dirty Hoarder Tenant
There are tenants who do not keep the place clean and hoard things that are unsanitary which causes pesky pests. This will be especially problematic if you are handling multi-unit properties because it will affect your other tenants. I know of some landlords who refuse to lease out to a certain nationality because of horror stories of bathrooms being left black and dirty which require major renovations costing more than a year’s worth of rental income. Scheduled Inspections during their stay can help you deal with this problematic tenant.
3. The Constant Complainer
The Constant Complainer thinks that you are his personal electrician, plumber or all around handyman. This type of tenant is meticulous and believes that since he is paying rent, you are responsible for paying and handling all repairs. To prevent this problem, make sure to include a clause in the contract about who will shoulder the cost for repairs for normal wear and tear. Usually if it is minor repairs, it will be the tenant. For major repairs due to wear and tear especially for old appliances, it is the landlord. I also give the contact numbers of the building administration office, air-con cleaners and handyman so that the tenant can contact them directly.
4. The Noisy Tenant
The Noisy tenant creates sound pollution such as constant loud quarrels, barking dogs, dribbling balls or loud music. It can be an issue for multi-unit properties. The neighbors might complain or if you own the whole multi-unit properties, it can cause your other tenants to leave. Just make sure to have some house rules to prevent this to avoid complaints or animosity between neighbors.
5. The Multiplying Tenant
Do you limit the number of occupants that you will allow in the unit? More occupants mean more people who can cause damage to the property. There are cases wherein the tenant will declare only 2-4 occupants in the beginning but after a few months, their extended families come in. Your single-family unit now becomes a house of clans. It may be a good idea to state a limit in the contract.
6. The Reckless Tenant
Some tenants will not treat your rental as their own so they will not be gentle and careful with your property. Some have kids or pets that can damage your property. The security deposit should cover for these damages. Make sure to inspect the property when they turnover the unit back to you. You can even charge optional cleaners fee especially for short-term rentals.
7. The Professional Squatter
This is the worst tenant of all. Professional squatters appear innocent at the beginning but they suddenly become well-versed with the Rental Control Act (RA9653), the “Lina law” or Urban Development and Housing Act (RA7279) and other related laws. Counter this by familiarizing yourself with the same laws and knowing your rights as a landlord. Learn also the important documents and steps to take when your tenant fails to pay or if you need to evict your tenant. Sending out notices before the problems gets worse will protect you and minimize your exposure. If the problematic tenant sees that you are systematic and can handle your property professionally, they might just stay away.
There are indeed problematic tenants, but there are also more awesome tenants. My most favorite tenant of all time is a Filipino couple. They did not have a checking account but they always deposited their payment ahead of time and notified me. They were quietly happy living in my unit and when it was time for them to leave, they even washed the curtains, bedsheets and cleaned the place as if it were their own. The place even looked cleaner after they left! So don’t let a few horror stories discourage you from seeking the rewards of having rental income.
Jhoanna Gan So is the co-founder and President of Businessmaker Academy and HR Club Philippines. She is a Property Investor and Licensed Real Estate Broker (REB PRC # 0029553). She devotes most of her time to business education, real estate and her amazing family.