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How to protect against bad tenants

Renting out Your Property and Bad Tenants

More and more people are buying property with the intention of renting them out for a steady income. Bad tenants can do enormous damage to properties so much so that the rent they receive is reduced by the repair bills they have to pay for. Property should be designed to withstand rental wear and tear and care should be taken in managing how the property is rented out. Here we look at the risks of renting and how we can protect ourselves from bad tenants.

Slums are people not houses

Years ago I worked for a Gas Board in England. I was out one day with a gas meter reader. He was a jovial man and whistled as we rode our bicycles around the streets. He stopped whistling as we rolled up outside a modern brick house barely 2 years old. I could tell something was afoot when he extracted a clothes peg from his pocket. As we entered I couldn't help noticing something. Perhaps it was the sight of moisture running down the walls, maybe it was the overwhelming stench or the way my feet stuck to the vinyl floor. Every surface in this house reminded me of one of those cheap horror films where green puss oozes from everywhere. The meter man set his face in a forced smile, avoided polite conversation with the tenant, scraped the unidentifiable deposits off the face of the meter, read the dials and scarpered as quick as he could.

What I very quickly learned that day was that in fact slums are not buildings, they are people. At that time all over Britain slums were being knocked down and replaced by modern buildings, in some cases the tenants would move back in and in no time at all the houses were as bad as ever.

Bad tenants can seriously damage your property

I was reminded of this a couple of weeks ago when I met a friend from London who has recently had a serious problem with a tenant. He has had to virtually renovate his whole house and it has cost him an excruciatingly large sum of money. Any sort of renovation work In London is very expensive, even picking your nose requires a fully qualified tradesman and he will cost you 60 quid before he has even stuck his finger up your left nostril.

Bad tenants are not, of course, restricted to England. In Australia I came across cases where people had cut holes in walls or removed doors because they fancied a barbeque. Unfortunately there are some people who can do enormous damage to a house and it doesn't take them long. Thankfully bad ones are few and far between.

So here we on in Bali, an island where a large proportion of buildings are being built for holiday rental purposes. The issue of having tenants living in a property is very real and requires careful consideration.

Fortunately people come to Bali on holiday and they tend to stay for only short periods, the chances of getting a “tenant from hell” are probably considerably lower than it would be in London but it does happen. Bad tenants also are not necessarily restricted to lower socio economic groups. It is more to do with an attitude problem.

Owners look after property better than renters

Walking into any property it is very easy to tell if the property is a rental property simply by looking at it's condition. Perhaps it is something psychological that people simply don't care as much as they would if it were their property. Perhaps it is worse than that and people think that if they have rented the property that gives them the right to kick it about a bit. Even worse may be intentional damage caused by jealousy or anger.

The fact is that once you decide that you are going to rent out your property you have to accept that it's condition will start to deteriorate at a far faster rate than if you live in it yourself.

If you are considering renting your property the first question you need to ask yourself is:

Is your property designed to be rented out?

Is this property designed and built to withstand heavy wear and tear?

Look around and carefully consider the elements of your property. A while ago I inspected some very high class apartments in a prime location. They were obviously built as investments to be let on a week by week basis but a number of elements in these apartments had simply not been designed for this purpose. The most noticeable thing was one wall of the main corridor was clad in a very light coloured wood veneered thin plywood. It picked up every dirty handmark and was very easily damaged on the many corners particularly around the doorways. It might have looked good when it was new and was cheap to build but I'll bet those panels were being replaced by something more substantial during the first year.

These apartments also have extensive white palimanan stone floors. Palimanan looks beautiful when it is new but does not wear well. It picks up every coffee or red wine spill, it is fragile and can damage easily and very often comes loose. Mind you it could have celebrity value: “This is where Johnny Rotten threw up on his infamous Wanker in Paradise Tour”. Many people in desperation coat palimanan stone with a lacquer but it doesn't look the best and certainly nothing like the original raw stone. It is better to find something more practical in the first place.

Other rental risks

Statutes and ornaments in traffic areas can get knocked over or broken. Anyone with a 2 year old child finds out the hard way that they have to make their house childproof but a single toddler is nothing compared with, say, half a dozen young men up in Bali for a 2 week bender. They can wreak havoc and the only thing to protect you may be a marketing agent who is desperate to get the occupancy. It is best to make your property adult proof.

“Let's have a game of darts”
“Hm where should we put the dartboard?”
“There's a hook on the back of the door”

Have you ever seen the damage a dartboard on the back of a door can cause? Pock marks not only on the door and nearby walls but the floor as well.

There are many other more minor considerations. When that hinge drops and the door starts scraping your terrazzo floor, your renter isn't going to do something about it other than cursing and pushing the door even harder scratching the floor and straining the door.

A tile gets broken, the drip on the ceiling is not fixed and before you know it the whole of your living room gypsum ceiling has become an interesting new type of floor covering

Dogs can be a serious problem causing major damage scratching doors, biting furniture and even damaging stone and brickwork to say nothing of their extensive landscaping skills.

The list is endless and just when you think you have everything covered someone decides to spray paint his car on your front driveway.

How to protect yourself when renting out your property

Here are some steps you may consider:

  • Before buying, building or leasing property that will be used for rental purposes make sure that the property is designed to resist clumsy or uncaring people. If in doubt go and look at what the hotels do. You will find hotel rooms are designed to withstand regular wear and tear. Furniture is solid, paint is high quality so it can be washed down, carpets are expensive because they are far more durable than cheap ones.
  • Get insurance that covers damage by tenants.
  • Find a good agent who will look after your property for you. Do not lock yourself into a long term arrangement you can't get out of. Watch the agent, if they are not looking after your property change them quick.
  • Set some well thought out rules. No dogs, no dartplayers and no elephants in the house.
  • Organise regular independent inspections to check that the agent is doing his/her job. The inspections will give you regular reports and will identify problems which should be fixed as they occur. Timely inspections may also help to identify the culprits.
  • Perhaps you can find a pembantu that will have the initiative to take care of the place for you, sadly this is a rare thing and pembantus generally tend to avoid conflict with guests.
  • Getting a security guard may also be a good idea but may get expensive.
  • Make sure you budget for maintenance. Are you charging enough to cover the ongoing cost of keeping the property up to a high standard?
  • Keep on top of the maintenance. Once again see what the professionals do. The best hotels plan ahead. Many these days are continually renovating room by room so that the whole building is always in good condition rather than waiting several years until the building gets tired and requires a major expensive refurbishment.
  • Organise a bond if you can. In Western countries landlords take a bond to help to cover costs if a tenant causes damage. If the property is left in good condition and the bond is returned. If an agent pays out the bond when damage has been caused get a new agent.

Copyright © Phil Wilson July 2009
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