Buy and hold real estate investing has become incredibly popular recently but your ability to succeed and enjoy a positive income is directly tied to your ability to avoid nightmare tenants.
There are good tenants, average tenants and absolutely horrific tenants who seem to have been put on this earth specifically to plague landlords. You need to avoid the latter at all costs.
Bad tenants don’t just jeopardize your ability to pull in a steady income, cause property damage which needs to be prepared before being able to lease it again or blow up your phone at all hours of the night and weekend. They can put a halt to your income and put you in a negative cash flow situation for months, talk badly about you whether you deserve it or not and fire off a barrage of lawsuits which threaten your financial security.
Avoiding taking on these tenants is the first step to protecting your real estate investments. The key here is great screening. Unfortunately even the most intelligent and experienced at real estate investing sometimes slip up here. Don’t become too over confident. Create a solid system and checklist for meticulously screening every tenant. Remember, if you are investing for the long term this tenant could be with you for the next 20 years. Isn’t it worth spending 15 minutes to do a background check and call references? Listen to your gut too.
Unfortunately, no matter how extensive your efforts to weed out bad tenants at some point you are going to get a deadbeat. It’s just part of real estate investing. Which is why it is much smarter to spread your investments, rather than putting everything into one basket.
When you realize you have a dud you need to be proactive about replacing them as soon as possible. Being late on the rent once because of a real, dire family emergency is one thing. Withholding rent for bogus reasons and calling the local news station to report you as a bad landlord is something else.
The question some may ask is if you can even evict someone today. In some extreme cases in the current market, sheriffs have failed to actually follow through and that is when they finally get around to it between foreclosure evictions. So what can you do? You should certainly follow through with eviction steps on time. However, you may also want to consider other options such as helping them to find other housing, even paying them to get out and above all be nice, it will go a lot further, though having a great attorney is often a necessity too.