Bad Tenants: A Costly Mistake

Choosing the right tenants is a crucial step that can make or break your landlord experience. For property owners, the dream of finding the “perfect tenant” can often be overshadowed by the reality of bad tenants who can cause significant headaches and financial losses.

So, what exactly makes a tenant “bad”?

A bad tenant can be defined as someone who causes problems, whether financial, material, or social, to the landlord and/or other residents. Some characteristics that might be mentioned include:

• Non-payment: Fails to pay rent on time, accumulates late payments, or stops paying altogether.
• Property damage: Causes significant damage to the property through negligence or vandalism (e.g., holes in the walls, destroyed appliances).
• Disturbance of neighbors: Exhibits disruptive behaviors such as excessive noise, frequent disputes, or illegal activities, creating an uncomfortable environment for other residents.
• Non-compliance with lease terms: Conducts unauthorized subletting, exceeds the permitted number of occupants, or refuses to comply with other lease terms (e.g., no pets).
• Poor communication: Does not respond to the landlord’s attempts to contact them to resolve problems or act in emergencies. May also be hostile or aggressive in their interactions.
• Lack of cleanliness and maintenance: Neglects basic maintenance and cleanliness of the unit, which can lead to infestations or health problems.
• Illegal activities: Engages in criminal activities such as drug trafficking or vandalism, endangering the safety of the property and other tenants.

Costs to Landlords

Unpaid Rent

The amount of unpaid rent depends on how long the tenant hasn’t paid and the monthly rent amount. For example, if the rent is $1,000 per month and the tenant hasn’t paid for three months, the direct loss is $3,000. Collecting unpaid rent might require additional steps. You might need to hire a collection agency, and their fees vary based on the complexity and amount to be collected.

Legal and Administrative Fees

Filing a claim for unpaid rent with the TAL costs $87. If you hire a lawyer, legal fees can range from $100 to $400 per hour.

Repair Costs

The cost of repairs can vary greatly, but it’s not uncommon for landlords to spend between $1,000 and $5,000 to repair tenant-caused damage. In extreme cases, the costs can be much higher, depending on the extent of the damage.

Lost Income Due to Vacancy

The time it takes to make repairs and find new tenants results in lost rent. If it takes a month to get the unit ready and sign a new lease, that’s a month of lost rent.

Stress and Lost Time

It’s hard to put a price on time and stress, but they’re significant costs. The time spent on administrative tasks, phone calls, and meetings with professionals (lawyers, contractors) also represents a loss of productivity and peace of mind for the landlord.

Reputation

Problems with bad tenants can damage the building’s reputation, especially if complaints have been filed or other tenants have witnessed conflicts. This can make it harder to rent the unit in the future.

Costs Associated with Enforcing Judgments

Even after winning an eviction judgment at the Residential Tenancy Board, you might need to involve the authorities (bailiffs) to enforce the eviction. The costs for this service can vary but are generally a few hundred dollars.

Insurance

If a bad tenant causes significant damage, it can lead to insurance claims. In the long run, insurance companies might increase premiums in response to previous claims.

Example of Costs

Losses can vary, but here are some possible costs over a few months:

• Unpaid rent: $3,000 (for three months of unpaid rent at $1,000 per month)
• Legal fees: $500 (variable depending on complexity)
• Repairs: $2,500 (average estimate)
• Vacancy (1 month): $1,000

Preventing problems before they arise is a key skill for any savvy landlord, and understanding warning signs can make a big difference. Therefore, it’s essential to choose your tenants carefully. One of the most useful tools for this is a pre-rental inquiry, which allows you to learn a lot about your applicants’ situations and backgrounds, helping you make an informed decision.