The popularity of the TV show “Breaking Bad” (the grammatical incorrectness of this series title annoys me to no end) highlights a potential problem that all landlords of rental investment property could have: the criminal bad tenant. I’ve previously written here about what happens when overzealous prosecutors go after commercial landlords for criminal activities of their tenants, and how asinine this approach to crime prevention truly can be. After all, how can you possibly be held accountable as a landlord when you don’t know the actions of your tenants? Am I my tenants’ keeper?
Having said that, as a landlord, you still have an obligation to know a little about what’s going on around your tenant’s building or unit. Continuing to look the other way just sets yourself up for danger. Using the Breaking Bad analogy, and given the tenor of our times and how many methamphetamine dealers and producers of these and other illicit and illegal drugs are being targeted and found by law enforcement these days, you have to also be wary of what tenants you put into your unit just to protect yourself. No standard form lease, and nothing in general tenant law will allow you as a landlord to simply enter the tenant premises without their permission. Usually only in emergencies can you enter their domicile. Or, certainly, you can enter if they ask for repairs. Other than that, you cannot search their premises even though you own the rental investment property.
In the news…
If you have a reasonable suspicion that something bad is happening, then you can turn that into an “emergency.” Either that or calling the local police will get you entrance, if you truly suspect crimes are taking place. Let’s face it, methamphetamine production is getting a lot of attention in the news headlines these days. A day doesn’t go by without reading about another local meth manufacturing drug bust. In addition, it’s hard not to also hear about your local drugstore being robbed of meth-producing ingredients. Besides popular culture blaring about it (like Breaking Bad), or the ease of obtaining the ingredients, coupled with the ease of acquiring the production know-how on-line, it’s no wonder there has been a spike in meth-related crime.
The ultimate cost to you
Unfortunately for landlords, the residual effects of this occurring in your own investment property, and discovering that your tenants are producers of illegal substances there, can have disastrous effects on your bottom line. It’s not simply turning them over to the police that can be your problem. It’s your cleanup afterwards. You’ll be left stuck with this cleanup of the unit or units where the production occurred, especially if it was methamphetamine. And since these are considered hazardous waste materials, the cleanup will be extensive, and incredibly expensive. It would certainly not be something you would be planning for in your “contingencies” line on your rental investment property income statement. And on top of this, consider what other tenants in your building will want to do when they find out their upstairs neighbor’s unit was a meth-production lab? Will they stick around for the clean-up? Take a guess…Not very likely, right? And what will that do to your cash flow on the property?
An ounce of prevention…
So how do you best protect yourself? The first line defense, of course, is to not put in a bad tenant. Like I’ve written before about tenant selection and the process involved in choosing the best tenants, you’ll certainly want to run a credit check on them. You’ll also want to do a reference check too. And these days it’s getting very commonplace to do criminal background checks as well. Then there’s the use of common sense. Just use your own simple common sense to know if your prospective tenants look okay. Most often than not methamphetamine producers are also methamphetamine users. That prospective tenant that you meet that is wan and gaunt-looking may not necessarily be on a diet. Use your intuition and common sense to help you root out potentially dangerous tenants. Like, oh…do they simply appear physically healthy? I’m not saying you should become an expert on drug addiction…but it would be helpful.
The vetting process
Using simple common sense when interviewing a prospective tenant is the best way to avoid landing a bad, or criminal, tenant. And you should be able to avoid the worst-case scenarios. You really don’t want to get stuck with a bad tenant. But you really, really don’t want to get stuck with a criminal tenant. One that could cost you a tremendous amount of money to repair the damage that they may cause. Be sure to choose your tenants properly by vetting them before signing them up. In this way you can best protect your rental investment property.
photos courtesy of tv.graffittiwithpunctuation.net, hdwallpaperart.com, thegreatestrealestateblog.com, paradigmmalibu.blogspot.com, dvafoto.com, teens.drugabuse.gov, lets4u.net