Bad Tenants and the Role of Property Management: A Cautionary Tale

Bad tenants are something that every landlord will experience and be forced to deal with at least once during their real estate career – and that’s if they’re lucky. A bad tenant can cost landlords thousands of dollars in missed or late payments or damages, hours of valuable personal and professional time, and many headaches dealing with the legal process.

Even the most experienced landlords and property managers have regular experiences with bad tenants – the team at Highgate Properties have experienced a number of unfortunate run-ins over the years. We here at Highgate have decided to chronicle some of these experiences for readers in order to demonstrate the correct way to go about dealing with these tenants and the important role that can be played by property management companies like Highgate in these situations.

Bad tenants: More than meets the eye

One of the most compelling aspects of property management is the ability to get a snapshot of a tenant’s life, in most other industries, you never truly get to know your clients – in real estate, every new interaction with your tenants adds something different to this snapshot.

One of our most surprising experiences with a bad tenant involved a cash-rich tenant who had sold his house and was now renting a house for several thousands of dollars per month. What nobody knew was that this tenant was actually in the beginning stages of a three year descent into financial demise. This tenant had easily passed the appropriate credit checks prior to renting the house and kept an outward appearance of having a good deal of money to his name. Eventually, this tenant could no longer meet their monthly rent payments due to a long-term habit of misspending large sums of money on extravagant items.

Taking immediate action

The issue went to Ontario’s Landlord and Tenant Board (LTB) as soon as the tenant’s first rent check bounced – this provided an official paper trail of problems with the tenant which could later be recalled by the property manager if the issue went to the LTB. The tenant would go on to routinely be able to pay his rent and then submit checks which would again bounce, leaving the landlord to continue chronicling these missed or late payments with the LTB – in total, six notices were given to the tenant.

This behaviour continued until the tenant was finally evicted after a final unpaid rent payment – once he had begun living a lifestyle that involved spending money on extravagant items, he couldn’t go back to his old way of living. After his eviction, the property manager found item receipts for clothing over $650 that would cost around $60 at a regular store, among other things. The six filed notices with the Landlord and Tenant Board helped the property manager’s case, as it clearly showed that the tenant had a history of missed payments and was not going to overcome these issues.

Although this tenant appeared to be able to consistently make rental payments at first, it became apparent over a period of time that this was not the case. The income earned by tenants generally does not indicate whether or not a person will make a suitable tenant. Whether it’s a low-income or high-earning tenant, the only deciding factor for landlords should be the ability to pay the rent on time and in full amounts.

The important role of property management

One of the most important roles played by property management companies like Highgate is the ability to get to know tenants, building relationships with each and every one. This allows property managers and landlords to better understand when a tenant is heading down a path similar to the tale above, or if anything else is going off the rails. The only way this property manager was able to identify and understand the problems experienced by the bad tenant was through the careful building and fostering of a landlord-tenant relationship.

Building relationships is a time consuming process, as it requires trust from both parties which is built up through a variety of interactions over a long period of time. Independent landlords simply don’t always have the time needed to foster relationships, as they have more important matters to attend to like their career and family life. Property management companies like Highgate know how to build relationships that will allow them to identify potential problems with tenants down the road, and know how to proceed with the Landlord and Tenant Board as well as other legal avenues should any issues grow to become unmanageable. Filing notices of missed payments with the LTB is something that a busy property owner may not have the time to do, or may think isn’t needed – it’s something we take the time to do as we know it can help speed the eviction process if it comes to that.

For more information about how the property management services offered by Highgate Properties can make your life easier through experienced and knowledgeable management and relationship building, visit our website or contact us today.

By |2018-06-05T15:56:28+00:00March 29th, 2018|Buyers, Rental Market, Residential property, Toronto Tenant/Landlord Relations|Comments Off on Bad Tenants and the Role of Property Management: A Cautionary Tale
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