Google “problem tenants,” and you’ll see dozens of articles, probably written by people who have never managed property in their lives, about how to react when you have an issue with a resident.
What these articles don’t understand – that most property managers do understand – is that thinking about “problem tenants” doesn’t get you anywhere. After all, if the problem is the person, your only real recourses are eviction or non-renewal. Not ideal! You’re also left reacting to issues after they’ve become emergencies rather than focusing on a proactive, positive resident experience in the first place.
Instead, property managers across the industry are starting to redefine the issue as “problem behaviors, habits, or situations.” While they can't control what others do, expert rental property managers are absolutely in a position to influence change in behavior, habits, and situations.
Here’s how we’ve seen professional property managers approach difficult situations and turn them into wins.
Types of “problem tenants”
Success for a property manager means creating and delivering the best experiences for 1) residents, 2) investors, and 3) property managers – a Triple Win. The Triple Win means finding solutions that benefit everyone.
Typically when an experienced PM has an issue with a resident, they aim to target a problem behavior, habit, or situation that has a root cause in the person’s needs or wants. They’ll examine the issue holistically to understand what that root cause is.
So, first, it’s important to identify the problem behaviors they want to avoid and figure out how to prevent them.
What are the behaviors and habits I want to prevent?
Let’s go through the most common problems that property managers come to us with most often.
Partial or late payments
Can we get an amen? Late payment is probably the most common complaint among property managers since on-time rent payments are critical to managing your business. In aiming for a triple win, on-time payments are one of the top needs for property managers and investors.
Residents may have any number of reasons they struggle to pay rent on time. Here are some of the most common reasons we’ve heard from PMs for why residents have late rent or unpaid rent:
- The resident’s paycheck comes after the month’s rent is due. There are financial products coming to the industry that allow residents to split rent payments and pay back a third party before the month’s end for less than the cost of a late fee. Also, some PMs are providing financial literacy and education resources through partners like Operation Hope.
- Residents are stuck sending checks in the mail. Most PMs are now leveraging tech platforms that can make payments easy-breezy. The issue may be more a matter of encouraging more residents to use it.
- Some accounting platforms are tricky to use. The more convenient your accounting platform interface is, the more residents are likely to use it.
- It’s possible a resident had a large unexpected medical bill or other expense. You can set up systems to help them stay in communication with you about payments and set up payment plans for late fees if they miss. Some PMs are even allowing residents to access their security deposits and switch to a monthly alternative instead.
- It’s always possible that they simply don’t have the income to pay the rent. PMs know this is a risk, and many focus on implementing better financial tools for their resident screening process.
Another common issue is rental property damage. Most residents take care of the property — after all, it’s where they live! But we’ve all seen residents whose footprint goes beyond normal wear and tear, whether it’s due to negligence, abuse, unapproved changes, or DIY projects gone wrong.
Again, we’ve learned from innovative property managers that the best approach is to proactively create an environment where residents are motivated to take great care of the property. They ask themselves: How do we make it easier to take care of the property than not?
Think of it as putting the cookies on the bottom shelf. How do PMs get this done? Often, through a resident benefits package. A resident benefits package rewards residents for taking care of the property. A good package includes things like air filter subscriptions, credit support, and great insurance.
After all: When changing air filters is as easy as opening the front door, it gets done more often. When getting proper insurance coverage is as easy as signing the lease, it means fewer residents fall out of compliance.
Lease violations put everyone at risk. Here are a couple of examples:
- Unauthorized occupants and animals – i.e., people or pets that didn't go through the proper screening and approvals process. Unexpected roommates or pets can become liability risks or cause revenue loss if the resident should be paying pet fees, etc.
- HOA violations – i.e., breaking the agreements made with the homeowners association. Most single-family rentals are subject to some kind of HOA. Violations may relate to poor maintenance of the lawn, noise violations, or other "bad neighbor" behavior as the HOA codifies it.
Subletting may fall under HOA violations or other issues.
One particularly controversial type of subleasing is Airbnb or other short-term rentals. Some cities and districts ban these kinds of rentals. Property managers are often experts on local regulations around rentals and help communicate those local and state laws with their residents. A legal advisor also goes a long way to help build a clause in the lease agreement.
Reasonable complaints from residents help PMs stay on top of issues on their properties. Broken AC? They’ll let you know. Gas leak? You depend on them to tell you if something is amiss!
But there’s a flip side to resident complaints, too. The unreasonable complaints. These are the phone calls that wake you up in the middle of the night over something you’ve already resolved. Or the complaint about something out of your control. Or maybe just incessant contact about little things that the resident could easily address themselves.
Solutions that benefit you and your residents
Okay, so if those are the behaviors we want to change, how are professional PMs creating Triple Wins in these scenarios?
First of all, there’s plenty of great traditional wisdom out there and great advice culled from property managers over decades of experience. Here are some important pointers we’ve heard and love:
- Stay calm and be logical.
- Assess if there’s an emergency.
- Keep documented records of everything.
- Call law enforcement or an attorney when dealing with legal issues.
- Bring up the terms of the lease when necessary.
- Follow an eviction process with an eviction notice if necessary.
These are helpful tips, but I’m sure you’re all nodding along like, “Yes, but this is the bare minimum!” After all, these steps are reactive. The Triple Win mindset is proactive.
Triple Win PMs ask: How can we make the resident experience so good that they want to stay, pay, and play by the rules?
Here’s how we’ve seen innovative property managers answer that question.
How can I encourage good behaviors and habits?
One of the most practical solutions we’ve seen is providing a robust Resident Benefits Package that delivers on what your residents need.
Benefits are extremely important to residents in single-family properties. In fact, a recent study found that 22% of residents planned to move to a rental with more appealing amenities better suited to their needs than where they currently lived. PMs attract the right residents and encourage the best behaviors with amenities and benefits.
Here’s how a resident benefits package can boost the resident experience and help influence resident behavior:
- Create an incentive program that rewards residents for good habits like on-time payments.
Our resident benefits include monthly rental rewards for residents who pay their rent on time. Property managers are also able to create custom incentives to reward on-time renewal decisions, prompt survey replies, and more. It's a rewards platform for residents, but an incentive platform for PMs. This is the definition of a triple win!
- Support residents in building credit.
Credit-building tools are another incentive for residents to pay on time – but it goes even further by actively supporting residents in their financial stability. Our credit building program automatically reports on-time payments to the credit bureaus, which has increased resident scores by as much as 20-40+ points.
- Provide easy-to-use tech tools to support their experience.
An online portal can make everything easier – from paying rent on time, making timely maintenance requests, and checking important rental unit information.
- Build ease into property care tasks like air filter changes.
PMs are increasingly ensuring that things like air filters are taken care of automatically. Our resident benefits package includes regular filter shipments, which reduce heating and cooling costs by up to 15% and reduce HVAC work orders by up to 38%.
- Provide a move-in concierge.
Make your job easier with a move-in concierge service included in your resident benefits package. Residents turn four phone calls into one, and get their utilities and home services set up at their new address conveniently. When it’s that easy, it gets done more often. When there’s an experienced person helping, it also eliminates more mistakes.
- Provide failsafe insurance coverage.
The master policy included in RBP allows property managers to submit damage claims directly and immediately. And over 95% of residents choose it due to the competitive pricing, coverage, and convenience of just signing their lease. Our insurance program turns 41% lease compliance into 100% compliance.
These are just a few examples of how property managers are using benefits to encourage the best resident behavior.
In fact, at Second Nature, we built every feature based on feedback from professional PMs who have explored how to turn problems into a Triple Win experience.
How a Professional Property Manager Makes All the Difference
All of this is made possible with a professional property manager. What differentiates the pros from a “commodity property manager?"
Commodity property management is built on a belief that property management is just a basic service of collecting rent and handling maintenance – a support function. This competitive approach is resigned to differentiating on old approaches by being a little bit cheaper. It’s a zero-sum game with winners and losers. And it leaves problem behaviors from residents unaddressed until after the fact.
Professional property managers are getting proactive about building triple-win experiences – built on the belief that property management is positioned as a strategic function for creating value. It’s generative. More property managers are asking how to grow the pie, so everyone gets bigger slices, and everyone wins. By stacking aligned, experiential value over time… it creates business relationships residents, investors, and team members want to stay for.
How 1,000+ professional management companies create Triple Win experiences
In the end, even most inexperienced managers typically know what's supposed to happen – i.e., rent on time, change filters, maintain insurance, etc.
But the best property managers know not just what’s supposed to happen, they know how to make it happen. There are all kinds of exciting innovative approaches out there, and professional property managers are leading the way. We believe it will be the dedicated, passionate professionals who innovate and solve old problems in new ways. Learn more about how Second Nature partners with professional PMs on Resident Services that drive Triple Win outcomes.