While it can be difficult to recognise good or bad tenants at the start of a lease, here are the top five tenant types all property managers end up encountering – and how to handle them.
Tenants can make or break an investment experience for landlords. While bad tenants are the minority, they can be an unavoidable risk for property investors. Tenants can often demonstrate five different behavioural types.
The late payer
A late-paying tenant can cause enormous stress on landlords, both financially and emotionally, particularly if landlords are relying on the rental income stream. The late payer may claim the cheque is in the mail, has gone astray or the bank has made a mistake with the money transfer. The end result is that the tenant falls into arrears.
While even the best tenants can suffer financial hardship, failure to pay rent is one of the most common reasons tenants are evicted. Renting only to tenants with a verified income and good rental history can help avoid late payers.
Rule-breaking tenants can be a headache for any landlord or property manager, regardless of their level of experience. Despite signing a lease agreement, some tenants will rebel against the policies outlined in the contract, including violating the pet policy, failing to adhere to noise requirements, smoking in the property or carelessly using property fixtures/appliances such as dishwashers.
In some cases, this type of careless living is particularly difficult for landlords to manage as it may not be covered by standard insurance policies.
Some tenants may take it a step further and break the law. Should a landlord or property manager suspect their tenant of taking part in illegal activity, such as drug manufacturing at the property, they should always seek police assistance before intervening.
While landlords are expected to keep up with general property maintenance, tenants are expected to keep the property clean, clear of waste and avoid deliberate or negligent damage.
Messy tenants can be careless with their cleaning, letting mould appear in bathrooms or stacking up dirty dishes in the kitchen which can attract insects and rodents. Meanwhile, unruly tenants may deliberately deface and devalue the property by punching holes or putting graffiti on the walls. This is recognised as malicious damage.
While a specific landlord insurance policy can provide some protection against the risks associated with owning an investment property, conducting thorough and routine property inspections can help to recognise any maintenance or damage issues before they escalate and become a major issue. If necessary, suggest areas where the tenant can improve.
Communication can make or break a tenancy. Too much communication can be a turn off for landlords and tenants alike, while zero communication is just as bad. The latter can be a warning sign for landlords.
Avoiding face-to-face contact and cancelling property inspections may suggest the tenant is trying to cover up non-compliant or possibly even illegal activity. Without regular property inspections, a landlord is unable to keep track of the condition of their property, which risks deterioration if issues are not addressed.
The role model
The ideal tenant is respectful and treats your property as if it is their own. This tenant pays their rent promptly, ensures the property is always well-presented and immediately reports any maintenance issues to the landlord or their property manager.
While property inspections can be inconvenient, good tenants understand why they are needed and accommodate landlord visits accordingly.
Before purchasing a pet or inviting a guest for a long stay, this tenant consults the landlord and seeks approval, understanding that the lease agreement is a legally binding document.
Carolyn Parrella is Executive Manager of Australia’s leading landlord insurance specialists, Terri Scheer Insurance. Terri Scheer provides insurance cover for landlords, helping to protect them against the risks associated with owning a rental property. These include malicious damage by tenants, accidental damage, landlord’s legal liability and loss of rental income.