Every landlord has encountered a difficult tenant, with issues ranging from payment, property upkeep, or just general neediness. These are the tenants who make renewal decisions the most difficult. But the grass is not always greener on the other side. How can you decide whether to retain your difficult tenant for another rental term?
Whether you send them a lease renewal or a non-renewal document comes down to your long-term goal, the property itself, and the rental market. Here are a few things to think about:
1. What makes this tenant a problem child?
Is it because they melted the siding on your rental home with their grill and the house smells like wet dogs? Or is it because they pay on the fourth of the month, within the grace period, but after the official due date. Evicting a tenant whose habits are annoying but not illegal may not be your best move. Try to distill the issue down to its essence, and figure out whether the problem is costing you money, either now or in the future, or whether it is only an inconvenience.
2. Is the problem fixable?
If you haven’t issued a notice about the issue, then do so right away. This will put the tenant on notice that they need to remedy the issue immediately, and lets them know you are paying attention. It’s always wise to document any problem areas, and a lease renewal is a great time to modify your lease to codify your expectations. For example, if your tenant is always paying on day five of the grace period, then amend the lease to remove any grace period on rent payments (state law permitting). If they always pay beyond the grace period, increase the late fee (again, in accordance with local laws). It is reasonable to ask tenants to pay a deductible on repairs if they are always calling the repair person for “false alarms.” More stringent terms could mean that you lose the tenant through non-renewal, but if the situation is causing you stress, you owe it to yourself to try the remedies available to you.
3. Can you increase the rent to make it worth your energy?
Would an extra $50 or $300 make it more worthwhile to deal with the tenant and their baggage? If so, the most important question is whether your market would support the rate increase.
4. Do you have time for the eviction and replacement process?
If you don’t renew the tenant, do you have time to place another one? Consider that the tenant being removed may not be easy to work with in the process, as they may have wanted to remain.
5. Do you have property updates that are needed before you can rerent?
Some move outs can be done on the same day, if no repairs or updates are needed. Other times, a new paint job, new carpet, or new countertops may be in order. Along with costs that may soar in the thousands, scheduling and completing these replacements will extend your vacancy timeline, which adds up to lost rental income. Have some idea of your unit’s condition and have a cost estimate in mind before you go through with an eviction.
6. Is the grass greener on the other side?
There is no such thing as a perfect tenant. Know that a difficult tenant may be worth holding onto, depending upon the circumstances. And a normally easygoing tenant may put up roadblocks if you try to remove them from your rental. A realistic outlook will help you make the best decision, rather than imagining how removing a troublesome tenant will take care of all of your problems.
Hindsight is always 20/20. Be sure to consider the possible remedies and consequences of cutting a problematic tenant loose. Be realistic when answering the question “Is dealing with this tenant worth it?