The Problem with Professional Tenants and What You Can Do About Them

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Purchasing an investment property is a major decision because it could set you up for retirement. This property could also become an additional preretirement income source that helps you reach your financial goals.

Selecting the right renters is essential to the residential real estate investment process. Failing to secure renters who pay on time and keep your property in good shape will bring additional expenses that could quickly turn your situation into a nightmare. 

It’s important to be aware of issues with professional tenants, also called professional renters, because they have ways of making your life miserable. This guide will explain what professional tenants are and provide tips on spotting them before you sign a rental agreement and let anyone move into your rental property.

What Is a Professional Tenant?

Professional tenants are individuals who use legal loopholes to their advantage to game the system. These people are notorious for figuring out ways to withhold rent and typically stall the eviction process as long as possible before seeking a new victim.

A professional renter often looks for tiny issues soon after moving into a property to justify not paying their rent and then forces the landlord to jump through all kinds of legal hoops before finally securing an eviction. These situations are stressful for a landlord, so learning about these tactics is advisable for any property owner.

Common Professional Tenant Tricks

Learning some professional tenant tricks can help you determine if you have a problem renter on your hands. These occurrences don’t necessarily mean you have a professional renter in your home, but you should monitor the situation closely if you notice them. Common tricks they’ll use include:

Paying in Cash

Professional renters like paying in cash because it’s impossible to track. Using cash allows them to claim they’ve submitted a payment when they haven’t, and it doesn’t give the landlord any proof of nonpayment if the situation ends up in court. Some tenants even create fake receipts after claiming they’ve sent a cash payment. 

Giving Partial Rent

A common trick professional tenants use to scam landlords is submitting only part of their monthly rent. The landlord is then responsible for providing a receipt showing the amount due after accepting partial payment. The tenant can sometimes get away with halting an eviction in Washington, D.C., for example, under these circumstances if this receipt isn’t provided.

Leveraging Late Fees

Many lease agreements have a grace period giving the tenant five days after the first of the month to pay rent. Professional tenants sometimes take more than five days and ignore the late fee, knowing landlords are unlikely to chase down this money. The landlord can’t evict them for neglecting the late fee as long as the tenant eventually pays their rent. 

Claiming the Unit Is Uninhabitable

Some professional tenants make frequent maintenance requests or claim the home is uninhabitable as a reason to withhold rent. These individuals might even damage the property to ensure maintenance is always necessary. 

Knowing how much financial duress professional tenants could create for you is reason enough to put some effort into avoiding them. Taking time to carefully select adequate renters is perhaps the best way to care for your rental property. 

Five Ways to Spot Professional Renters

Understanding the damage these problem renters can do is only part of the equation. You must also learn how to identify professional tenants before signing any agreements. Some warning signs to watch for include the following:

1. A History of Evictions

Any renter with an extensive history of evictions, delinquency, or litigation with previous landlords should be avoided. These are all red flags that a renter is likely to cause you problems in the future.

2. Poor Financial Records

Some people get into financial trouble because of unforeseen circumstances. Problem renters tend to have poor financial records, though, because they’re constantly being sent to collections and could have past bankruptcies or bad credit. Doing a credit check before accepting a rental application is a good idea because it can uncover this information. 

3. A Gap in Rental History

A renter with an unexplained gap in rental history could have a past they’re trying to cover up. This scenario could mean the tenant left their last place under less-than-ideal circumstances and doesn’t want to include the experience on their rental application. It’s worth asking why there’s no rental history available before deciding on a tenant. 

4. No References

Any tenant who can’t provide references could be a professional renter. The same goes for situations where the references don’t check out when you call them or don’t seem to know much about the renter. A lack of references or fake references could mean the tenant is trying to hide a past experience from you. 

5. Extensive Legal Knowledge

Renters who boast about their extensive knowledge of tenant-landlord law might have pursued legal action against a landlord in the past. There’s nothing wrong with tenants protecting themselves, but those fully aware of all the loopholes at their disposal are more likely to use them and could make your life difficult. 

Many of these warning signs are common sense, as renters who don’t provide the information you require on their application could be hiding something. There are plenty of quality renters out there, so don’t settle on the first applicant that comes along if you’re not sure they’re a good, reliable fit. Your rental property is a vital part of your long-term financial plan, and you should do what you can to protect it.

Get the Property Management Help You Need

Rental properties can take significant work, especially when you factor in the process of seeking and vetting renters and maintaining your relationship with them. You might not have time to handle all these jobs alone, but a property management firm can help.

Nomadic Real Estate provides property management services in the Greater Washington, D.C., area. Our team knows how to identify common professional tenant tricks and will use our experience to help ensure your renters don’t cause you any problems. Contact Nomadic Real Estate for more information on your property management needs.

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Enhanced Reporting

Your portal includes a selection of extremely useful reports. Reports are available in the “Reports” section, and are distinct from the financial statements. Unlike financial statements which are static records, Reports are dynamic real-time records that will update with current data every time you view them. 

Scroll down to learn more about Reports:

Navigate to the "Reports" module in your portal:

  • Keep in mind, these reports are dynamic records. They will refresh to display current information every time you view them. 

Enhanced Rent Roll Report:

  • The Enhanced Rent Roll Report will show the rent amount, last payment date, move-in date, lease expiration date, and security deposit amount for each of your tenants. 
  • It will also show a portfolio summary with occupancy percentage, vacancy loss, and more!

Unit Comparison Report:

  • If you own multiple units (or buildings) with Nomadic, you’ll get access to the Unit Comparison Report. 
  • This report enables you to quickly compare financial performance between your units at a glance without toggling between individual reports. 

Income Statement Month-Over-Month:

  • The Income Statement Detail – Monthly Report serves as a month-over-month record of portfolio performance. You’ll see itemized income and expense categories and can track monthly. This report will update with fresh data every time you view it. 

Financial Statements

Financial statements will be published to your portal on a monthly basis. The statements are found in your Documents library, and provide a historical record of all financial performance. The statements serve as a snapshot of financial performance over a given period, and are static documents (unlike Reports, the statements do not update/change in real-time). 

Scroll down for more info about the Financial Statements in your Documents library:

The Documents area contains monthly financial statements:

  • The statements in the Documents are are static documents. They are posted to the portal once a month to serve as a historical record of financial performance. 

Download a statement to see month and YTD financials:

You'll also find a month-over-month operating statement:

Portal Communication Tool

You can use your owner portal to communicate with our team. Any messages you send through the portal will go straight to your Account Manager. When we reply, you’ll get an email notification and you’ll also see the message in your portal next time you log in. 

Here’s an overview of using the communication platform:

Click "Communications" and navigate to "Conversations":

  • The communications module will contain a record of all messages that you create through the portal. 

Click the "New Message" button and send your message:

Responses will show up in the conversation ticket:

  • You’ll get an email notification whenever you get a response, and you’ll also see the message in your portal next time you log in. 

You can reply in-line using the comment box:

Each conversation will be logged in its entirety:

Understanding the Ledger

Your portal includes a ledger with all transactions. The ledger is populated with data in real-time as transactions flow through our accounting software. Much of this information is also available in the Reports area, as well as the Statements in your Documents library, but the ledger is the most comprehensive resource for diving into the details. 

Please scroll through the sections below to get a better understanding of how to interpret the ledger. 

By default, transactions are sorted chronologically:

  • The date reflected in the lefthand column is the actual transaction date, not the “bill date”. This is the date the transaction was actually processed. 

If you have multiple properties with Nomadic, you'll see the address for each transaction in the "Location" column:

  • You can filter the ledger to look at just one property, all properties, or specific sets of properties. 
  • If you only have one property with us, you’ll just see the ledger for that property. 

The Description column displays the transaction type:

  • BILL: this is an expense transaction, such as for repair costs or management fees.
  • CHARGE: this is a transaction  billed to the tenant, most typically a rent payment. 
  • NACHA EXPORT: this is a credit we processed to your distribution account. This type of transaction is how you get paid! 

The Amount column shows the dollar value of each transaction:

  • Positive Amounts: if an amount is positive, it reflects a transaction that is payable to you. Typically, this will be a rent payment that we collected from your tenants. On occasion, a positive number could also signify a journal entry or credit adjustment. 
  • Negative Amounts:  if an amount is negative, this is a transaction that is either payable to Nomadic or is an amount that has already been paid to you. Typically this will be for repair costs or management/leasing fees. Owner draws (net distributions into your checking/savings account) also reflect as negative amounts, since they have already been paid to you. 

The Account Balance column shows a sum of positive/negative transactions at a given point in time:

  • Account Balance should always equal zero after a net distribution has been processed. When the balance is zero, this means that all expenses have been paid and you’ve received the remainder as net operating income, leaving a balance of zero (meaning: no one is due any money, as all funds have been distributed appropriately). 

Navigating the Propertyware Owner Portal

Your portal includes some extremely useful features that help you understand your property’s financial performance at a new level, with real-time transparency into every transaction.

Scroll through the snapshots below for an overview of portal navigation! If you need more help or have specific questions about using the portal, you can reach out to your Account Manager any time for a screen share. 

You can filter all info by date range or property:

View a snapshot of income and expenses on your dashboard:

See every transaction in real-time on your ledger:

Statements and forms will be posted to your documents library:

View a suite of real-time financial reports:

See a running list of all bills, and drill down for more detail:

Under Bill Details, you'll find dates/descriptions/amounts and more:

You can also communicate with your Account Manager through the portal:

How do net distributions work?

Net distributions keep your accounting clean and simple. Each month we’ll collect rent from the tenants, deduct any repair expenses for the previous month and any management/leasing fees for the current month, and credit the remaining net operating income to your account. 

You’ll receive a statement via email each time a net distribution is processed, and can view all transaction details in your Propertyware owner portal.