A bad tenant costs you more than your peace and sanity. They can also cost you hundreds, if not thousands of dollars, depending on just how bad they are.
As a landlord in Oklahoma City, your goal is to create a positive cash flow rental property investment. Letting just one bad tenant sign a lease can turn that upwards curve downward in just a matter of months.
So, what is the true cost of dealing with a bad tenant in your Oklahoma City rental property?
Eviction Fees
If you decide that your tenant is so problematic that it is best to get them out of your property before the lease ends, you will begin the eviction process.
The entire eviction process can take weeks to go through and involves piles of paperwork and legal compliance to be done right. And, of course, there’s a bunch of fees too.
To just file the eviction with the court will cost a couple of hundred dollars. Then you’ll have to pay the sheriff’s fee, document processing fees, and lawyer fees if you want professional representation in court.
All of these fees can truly add up. An eviction could easily cost you $1,000’s in addition to the other costs of a bad tenant.
Lost Rent
One of the main issues landlords face with bad tenants is a lack of rent payments. At first, the rent may start showing up a little later than usual. Then eventually it doesn’t show up at all.
One month becomes two, then maybe three, and eventually, the eviction process starts. If you rent your property for $2,000 per month, you can lose $6,000 in revenue if your tenant simply doesn’t pay for three months while the eviction process proceeds.
We aren’t talking about small potatoes here!
There also is no guarantee that the tenant will pay back the rent they owe you. So, you may just have to operate at a loss for that year and hope to get a better tenant.
Damage to the Property
Some tenants can be extremely reckless with how they treat your rental property. They can leave holes in the wall, broken appliances from misuse, and cause other serious damage to your Oklahoma City investment property.
While you probably collected a security deposit when your tenant first moved in, it isn’t guaranteed to cover all of the repairs you must make when your tenant moves out.
There is also a heightened risk of damage to your property when you serve an eviction notice if your tenant becomes angry and feels the need to exact “revenge.”
Fines and Violations
During your tenant’s lease, they may violate certain city ordinances that result in fines being charged to your rental property. It could be as simple as leaving trash on the sidewalk when it isn’t trash pickup day.
No matter what it is, a bad tenant who is irresponsible could rack up hundreds of dollars in fines that are now attached to your property and must be paid.
Again, you can use the security deposit to cover these fines, but you may not have enough to pay all of these expenses.
Extended Vacancy Time
More costs are added even after your tenant leaves your property. Usually, you will have a longer vacancy period between a bad tenant and a new tenant due to extensive repairs and getting the property back in order.
When you have a vacant rental property, you’re losing thousands of dollars in rent that month. So, on top of missing rent from the tenant, cleaning and repair costs, and eviction fees, you also miss out on revenue due to the unexpected vacancy.
Legal Battles
If your tenant decides to counter you in court, a legal battle could ensue, costing you thousands of dollars in lawyers and court fees.
While this isn’t likely to happen, there is still the possibility.
To avoid legal battles, always be in compliance with your local real estate laws and eviction process.
Acquiring a New Tenant
The final cost of a bad tenant who is forced to move out before their lease term ends is the expense of finding a new tenant to replace them. Aside from the lost rent due to the vacancy, you’ll also have to shell out money for marketing the property and pay commissions to a real estate agent.
How to Avoid Losing Money on Terrible Tenants
While the majority of tenants in Oklahoma City, OK, are respectful, pay rent on time, and are a delight to work with, you’ll still find some bad apples out there. Fortunately, there are two easy ways to ensure you get good tenants and avoid dealing with the costs of a bad tenant.
1. A Thorough Tenant Screening Process
Before you allow a tenant to sign a lease with you, it’s crucial to conduct a thorough tenant screening process. Through this screening, you will collect all of the background and financial information you need to decide whether or not this tenant is trustworthy.
2. Work with a Reputable OKC Property Management Company
As an independent Oklahoma City landlord, you may not have all of the resources required to conduct business in real estate professionally. That’s where the rental management experts at Real Property Management Resources come in!
As the leading property management company in Oklahoma City and part of a nationwide network of property managers, we have advanced tools to help us better market your property and identify ideal tenants. Then, we’ll keep them happy and paying on time with respectful and prompt service, meaning you’ll get to enjoy consistent rental income with almost zero effort.
Still considering why you should work with a professional management company? You might want to read our article What Do Property Managers Do? These 7 Tasks Will Save You Time and Money next.
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