How to Avoid Nightmare Tenants in Your Rental Property

Rental properties can be an ideal way to diversify your investments away from relying on stocks and bonds. You can take advantage of the favorable interest rates at the moment and even get a passive income in some cases. While this may seem simplistic on paper, things can go wrong fairly quickly.

The quickest way to add stress to your life is by unknowingly signing up a nightmare tenant. These are the people that continue to press your buttons and make you second guess your decision to become a landlord, despite your best efforts to establish a legitimate, above-board rental relationship. In addition to raising your stress levels, nightmare tenants can also put a major snag in your finances if you aren’t careful. We urge you to mull over the following points and learn how to avoid nightmare tenants in your rental property.

Use a letting agent

Unless you have the flexibility, time, knowledge, and inclination to be a landlord, we highly recommend using a reputable letting agent for your rental property. Letting companies are obliged by law to have their client’s best interests at the forefront. Ask around for recommendations of a reliable company in your area, and see how they can assist in making your rental property more straightforward.

Letting companies work either on a commissionable basis or charge a one-off fee for their services. Expect to pay anywhere from 5% to 10% for full management, which can include:

• Marketing your property

• Ensuring your property is up to code and local bylaws

• Finding and screening tenants

• Signing tenant agreements

• Collecting and holding deposits

• Collecting rent

• Chasing late payments

• Handling evictions

• Carrying out property inspections

• Arranging repairs and maintenance

• Making rent increases

• Renewing leases

Tenant screening

If you would rather take on the tasks of a landlord yourself, then we urge you to advertise that you’ll be doing a thorough tenant screening for every adult occupant. Nightmare tenants prey on unsuspecting landlords that cut corners or believe the sob story. Before you even think about meeting a potential tenant in person and showing your rental property, you can carry out an efficient, accurate, and speedy tenant screening, including a criminal background check and credit report.

Get insurance

Contact your local insurance broker to ensure that your insurance provides adequate coverage for property damage, lost rental income, and liability protection. While this might not help you avoid nightmare tenants in your rental property, it will limit the financial and emotional blow.

Remember to ask about whether such instances as vandalism, natural disasters, fire, flood, and appliance malfunction are included in your landlord insurance. To limit your liability, ensure your policy covers the replacement cost for any damages rather than the actual cash value, which may be negligible for older items.

We hope that we haven’t scared you off from investing in rental properties. The large majority of tenants are honest people who simply need a roof over their heads and will be happy to maintain your property like it was their own. Armed with the knowledge about avoiding nightmare tenants, we trust that you can have a lucrative future in the rental market.

This article does not necessarily reflect the opinions of the edtiors or the management of EconoTimes