Becoming a landlord is not without its risks. One of the biggest ones that you will face is a bad tenant. They are everywhere. A bad tenant might be someone who forgets or doesn’t pay on time and you constantly have to chase them up each month for payment, who sneaks in pets against your wishes or the type who are noisy party animals. No matter what type of bad tenant you get stuck with, here is what to do when a nightmare tenant moves in.
Screen Potential Tenants Stringently
It is essential that you screen any and all potential tenants as well as take steps towards enforcing strong risk protection policies for your property, such as having comprehensive tenancy agreements and conducting regular inspections. Even still, the vetting process of a tenant is never going to be 100% safe from bad ones.
If in doubt as to a good tenancy agreement and the time management involved in regular inspections, it is recommended that you speak with a property manager about your property. They will be able to assist you with the process to help avoid the potential of securing bad tenants, as well as help you manage them, should they occur.
Have a Solid Insurance Policy in Place
An effective property manager can assist you in preventing many mishaps that commonly occur, as well as addressing problems. But, there is only so much that they can do. Insurance can help enable you to recoup any losses that may occur due to a bad tenant.
A standard landlord insurance policy covers the loss of rental income as well as damage or theft to the contents of the home, although precisely what is covered will vary from policy to policy. A typical bad tenancy claim will involve losses due to rent arrears, water damage and accidental damage, so make sure that you policy has clear terms that are amenable to you on these topics.
It is also important to keep in mind that an insurance policy will differ based on whether you are managing the property yourself or using a third party. Coverage can also vary depending on if the property is being leased short-term (such as through Airbnb) or long-term. Also, in a cyclone prone area, such as Queensland, you are going to want to make sure your property is covered for storm damage.
Landlord insurance is a valuable tool for investors, but that does not mean that you can afford to be lax about signing up bad tenants in the first place. Nightmare tenants can best be circumvented by conducting adequate background checks on any potential renters. Speak to previous landlords that the applying tenant has rented property off of to establish what type of tenant they might be.
Bad tenants can make your life and finances miserable for a time, but with proper management and preparation you can avoid serious and long-term harm.