Terry Sprouse

On my Friday interview on the David Sutton radio show (KRSN AM 1490, Los Alamos, NM), David’s co-host Nancy asked me about one of the common fears of people who would like to own rental houses.

Can’t Get Rid of Tenants? 

She said,

“Once you have tenants in your rental house, even if you want to, you can’t get rid of them for at least one year.”

My response was,

“That’s not exactly right. The tenants may have signed a lease for one year, but that doesn’t give them a free pass to do anything they want to in your property. If they violate the contract (by not paying the rent, disturbing the neighbors, doing auto mechanics in the front yard, etc.), then regardless of how long the lease is for, you can remove them.

The bad news is, they can fight you in court if they don’t agree that they violated the contract.”

Month-to-Month Lease -The Bain of Bad Tenants 

The approach that my wife and I take to avoid extended, and costly, legal fights, is to have all of our tenants on a month-to-month lease. This allows us to scrape off bad tenants like barnacles. All we have to do is to notify them that we are canceling the lease, and they have to be out in 30 days. There’s no fuss, no going to court, easy as pie.

I thought that tenants might balk at having to sign a month-to-month lease, rather than having a long-term one, but every one just accepts it as normal. I explain to them that the advantage for a month-to-month is that it protects both the tenant and the landlord. If they are not happy in our rental house, we prefer that they leave.

We Remove a Bad Tenant 

My wife and I have only had to evict tenants once in our 12 years in this business.

The police informed us that they had the people in one of our rental house under surveillance for drugs because a lot of people were coming and going at odd hours. That was the final straw, since they weren’t model tenants anyway. We canceled their month-to-month contract and they left without any objection.

As we do with all tenants, we gave them a “Move Out Information Letter” describing the steps of the moving out process, which they followed.

Our Fondest Desire: Long Term Tenants 

Of course, our objective is to keep good tenants in our properties into eternity. (We’re exploring options to keep them as tenants, even in the afterlife!)

We don’t want them to ever leave, and we will bend over backwards to keep them happy. That’s how money is made in this business, by having good long term tenants.

We lose money when we have a lot of tenants move in and out, and the unvarnished truth is, we  do like to turn a profit.