Owning real estate is one of the best ways to invest your way to wealth and financial freedom. Real estate allows you great leverage, giving you control of hundreds of thousands of dollars in assets with very little down, and can create passive monthly cash flow. But with rental real estate there is a little bit of risk. The people who you choose as tenants have the ability to make your life a bit of a nightmare sometimes. Here are a few of the worst-case tenant scenarios that you need to plan for as a landlord.
Worst-Case Tenant Scenarios You Need to Plan For: Not Paying on Time
The first worst-case tenant scenario that you need to plan for as a landlord is tenants who don’t pay on time. Your tenant agreement dictates that rent is due by a specific date and time each month, and after that time a late fee can be incurred. As soon as a tenant is late on payment they are technically in breach of contract, so you should make sure that you keep good records of any late payments so that you can prove frequent delinquent behavior if you were to pursue legal action and eviction down the line.
Leaving a Property Trashed
Another worst-case tenant scenario that you need to plan for as a landlord is tenants who leave a property trashed. While it may sound crazy, you wouldn’t believe the way some people behave in properties that they don’t own. Pursuing action against a former tenant often isn’t worth the expense. It is always best to start by talking to your tenants and seeing if you can negotiate. Usually, people are willing to work outside of the legal system to make things right. Requiring a security deposit from the get-go is a smart way to avoid being left to pay for all the damage yourself.
Worst-Case Tenant Scenarios You Need to Plan For: Violent Tenants
The final worst-case scenario that you need to plan for as a landlord is violent tenants that won’t leave. If you have to evict a tenant and they grow violent, abusive, or belligerent, you are in danger and should report to the police immediately. This will be important to prove in court that you made efforts to de-escalate and that you can document the issues. This will help with eviction proceedings.
Tenants can be a nightmare if you choose the wrong people. But as a landlord you need to be ready to deal with bad tenants. Plan for these three worst case tenant scenarios and plan for how you will deal with them as a landlord.
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