What’s the biggest headache of first time landlords?
Slow economy? Soft market? Sibor rise? Bad agent? No tenant?
Try again.
If you had been a landlord before, you would agree with me that no tenant is still better than bad tenants. As the saying goes, being single is far better than being stuck in a bad relationship.
Another tenant from hell
Last month I went for a haircut with my usual hairdresser and opened a can of worms by mistake.
“How long do you want to cut at the back?”
“Around 1 ½ inch.”
“Sure.”
“Are you still staying at Jurong East?” I shouldn’t have started this. It was all my fault.
“No, I’ve moved to Toa Payoh … did I tell you that I finally bought a flat?”
“Congrats! It’s nice to have your own place.”
“I have a spare room so I decided to rent it out.”
“Good to have a tenant helping to pay the loan.”
“That’s what I thought too. This young guy coming for flat viewing has good manners and a decent job. What’s more, he didn’t bargain about the rent.”
“That’s good. It’s difficult to find a good tenant, isn’t it?”
“You are right. It’s only after he moved in that I realized what a big mistake I’ve made.”
That’s how the new landlord started the endless complaints.
“Since he didn’t bargain, I agreed to pay for the utility bill. But whenever he’s at home, he turns on the aircon at full blast. When he takes a shower, he leaves the water running non-stop for at least 20 minutes.”
“Never mind the fact that his room is a big mess. But my living room, corridors and kitchen are all fully stuffed with his personal belongings. It’s difficult for anyone to move around the flat.”
I felt my hair at the back being trimmed from left to right. Then the pair of scissors moved again from right to left.
“He’s like a 10-year-old leaving behind left-over food, used utensils and dirty clothes, waiting for others to clean up after him. Dirtying and messing up the place are his routine. Cleaning and tidying up become my duties.”
“My tenant enjoys listening to music and watching TV at the loudest possible volume. Not to mention his friends who like to visit any time of the day …”
As my hairdresser continued to whine, I felt another round of trimming from left to right. Oh no, save some of my hair!
“I think it’s enough …”
“Enough? I’ve had enough. I put it clearly in the contract that rent must be paid on the last day of every month. But he has never been punctual. He has a different excuse every time. You know I am the one who pay for the mortgage, management fee, utility bill, cable TV, WiFi …”
The scissors went non-stop and I could feel more hair has gone.
“Could you stop …”
“I can’t just stop the contract. It’s one-year fixed. To be honest, I can’t even stand him for 6 months!”
By the time the grumpy landlord was finally done, I lost at least five inches of my hair.
“I really cut a lot this time.” The hairdresser said this while looking at my hair on the floor.
“Yeah. I think I don’t have to come back for a few months. Thanks for helping me to save money.”
Solutions to tackle common types of difficult tenants
Many first-time landlords think it’s a simple thing to buy a property and lease it for passive income. What they fail to see is: The moment their role changes from an owner to a landlord, problems have just started.
I have been a landlord since 2002 and have my fair share of experiences handling difficult tenants. Below are four types of tenants from hell commonly found in Singapore.
1. Tenants who like to bargain
They want to pay the lowest possible rent but need a king-size bed, a 3+2 sofa set, a 43-inch LED TV and a new washer-dryer.
They ask for 30 percent discount of the current rent to renew the rental contract, but can only commit on a month-by-month basis.
Sounds familiar?
Which landlord is not complaining about declining rentals and rising vacancy rates these days? Who is to blame for too many newly-TOP projects and too few good tenants?
Solution: Knowledge is power. Check URA website for recent rental transactions in the same condo or nearby projects. Use it as a neutral fact for negotiation.
Ask potential tenants to prioritize their requests. Consider any ask with a valid reason.
Keep rental properties in tip-top condition. With strong competition, poorly maintained properties are only giving tenants excuses to bargain for lower rent.
2. Tenants who attract complaints
Ever receive any complaint about your tenant from a neighbor or the management office? It can be making too much noise, or cooking curries too often.
On the other hand, some tenants have a tendency to call their landlords every other week for all sorts of things – unfriendly neighbors; how-to-use problems; aircon/water heater/light bulb/door lock not working …
Solution: Whatever the cause of complaint about or from your tenant, landlords have the responsibility to settle them immediately. Gather all the facts and find out the source of the complaint. Have a trusted property agent to act as the intermediary.
File and pass to the tenant the instruction menu of all the appliances in the property. State clearly in the rental contract that the tenant is ‘to be responsible for all minor repairs and routine maintenance of the premises not exceeding $150’.
3. Tenants who are always late
When landlords check with tenants for late rental payment, replies can range from ‘I thought I had paid’ to ‘sorry I forgot’, ‘let me check with my company’, very busy lately, currently out of town or having financial difficulties.
Whatever the excuse is, once the tenant is allowed to slip payment once, it is very likely to become a repeated offense.
Remember: The most important task of a landlord is to collect the rent from the tenant on time. Any late or missed payment will directly impact the ROI of the property.
Solution: I have an article in my book No B.S. Guide to Property Investment on ‘How to avoid late or missed payments from tenants’.
Ask tenants to settle rent by automatic transfer. Payment by cheque must be sent 5 days in advance. For multiple property landlords, standardize payment date on the 1st or 15th day of the month.
Allow a grace period of 5 days before sending a reminder. Remember to mention interest charged on late payment (12 percent per annum for rent unpaid for longer than 7 days or as specified in the contract). Never let any tenant get behind rent for more than 30 days.
4. Tenants who break rules
The landlord thinks that his property is leased to a single or a couple, only to find out later it has been partitioned into 5 smaller units to sublet to 10 other ‘tenants’.
Or the tenant may want to make some pocket money by listing the rented flat in Airbnb for short-term stay of foreigners traveling in Singapore.
According to URA’s rules on renting out private residential properties, it is against the law to rent out a private property (including a room) for less than 6 months on a daily, weekly or monthly basis. Any partitioning to create more rooms in a rented flat is illegal. Each occupant must have at least 10 sqm of space. The maximum number of occupants in a residential unit is 8.
Solution: Always check the passport, employment contract, business registration, etc. of new tenants to avoid housing illegal immigrants.
Specify in the contract to disallow unauthorized subletting or alteration without written consent of the landlord. Also state that if the tenant uses the property for subletting, alteration or illegal activities, the landlord will exercise immediate eviction.
Keeping trouble-making tenants at bay
The above are not isolated incidents and can happen to any landlord. Prevention is better than cure. We would like to believe that most tenants are good ones. That’s why it is the responsibility of landlords and their property agents to screen that one percent of black sheep in the rental market.
Before signing up a new tenant, always conduct a thorough background check – employment letter, credit report and references from the previous landlords.
One last thing: If your tenant has broken any rule in the contract and you need an eviction, sooner is better than later to get rid of him before he can do further damage to the premise and the ROI of your property.
This article was first published on http://www.propertysoul.com/