If you own a rental property, you've undoubtedly encountered challenges when locating renters that are true to their word. The right tenants will help you in countless ways with your bottom line, mitigating risk, and preserving your property’s value. The wrong tenants will do just the opposite. Not only will they not pay rent, they'll also tie up your money with court costs and repairs. Here are some suggestions for finding excellent tenants.
The Basics
These principles prove essential in any search. One way or another, you must address these simple ideas to make life easy on yourself. Ignore them at your peril.
Understand the Law
If you want to avoid legal trouble, you have to know what you’re getting into. When addressing potential tenants, you have to know what you can or can’t say, and what you can’t do. This step is critical; legal entanglements take considerable time and money to resolve and can hurt your reputation.
Set Your Own List of Criteria
The law requires certain things of you. But, you should also have your own standards. No one knows your property better than you do. Also, only you know those basic requirements that, if your tenants fall short in meeting them, will drive you crazy. Make a list of these things, and take your time. You’ll save yourself a ton of stress later.
Decide on a Property Manager
You may have already made this decision, per your business model. But, in case you haven’t, a property manager should handle all operations, and nothing is more critical than selecting tenants. If you're a property manager, disregard this rule. However, just remember, one way to get great tenants is to hire someone who excels at finding them.
Formal Applications
Have your prospective tenant fill out a formal application, with all relevant information. For one, some people are too lazy to fill it out, and you can weed them out right away. However, their ability to provide relevant details about themselves should speak volumes about the kind of tenant they will be. Also, their information should give you plenty of facts to check.
Ask for an Application Fee
Ask for them to put up some money for your trouble. The fee should cover the cost of any relevant background checks that you will need to make. And it will show you who is serious about living in your property. Wait for the check to clear. If it doesn’t, you know you’ve got someone who isn’t a good risk.
Get a Credit Report
Credit reports give the best picture of whether the individual pays their bills. If the credit looks solid, you are not guaranteed to have an excellent tenant. However, it gives a good indication. Also keep in mind that with a weak economy, many of your applicants may have bad credit. You should read the report carefully, and make use of other resources.
Use a Lease Agreement
You can scare away a lot of potential applicants just by requiring them to sign a lease. Make sure your lease includes all the necessary terms, and go over it with your applicant in detail.
Additional Sifting Tools
Contact Past Landlords
From the rental history on the application or a background check, you can identify where the applicant has lived. Contact those landlords, and ask them what kind of tenant they were. They should give you some valuable information.
Contact current employers.
Current employers can tell you how reliable the applicant is at work. Make sure you stay within the law though, as certain requests for information may be off limits.
Know Where to Advertise
Ask around. In most communities, you should be able to identify publications that your target demographic likes to read. The Internet can be a little more challenging, but it’s the same principle.
Clean Your Property when Showcasing
The best tenants are going to want value. If your property looks shabby, they won’t want to live there. If cleaning is not your forte, hire someone who excels at it. It’s worth the investment to find a quality tenant.
Require Renter’s Insurance
Renter’s insurance shows that you mean business. Prospective tenants need to know you are serious about preserving the integrity of the property. And, of course, it protects your bottom line.
Use Interviews Wisely
Some landlords refuse to use interviews because it can open you up to potential lawsuits. However, if you ask the right questions, it can save you considerable trouble. Some questions you might ask include:
. Why are you moving?
. Do you have references? (employer, landlord)
. Will you agree to a background check?
. What’s your monthly income?
. Who will live with you?
. Have you ever been evicted?
. Do you have pets?
. When are you moving?
. Do you ever plan to sublet?
. Are you involved in any illegal activity?
You may be surprised by the answers you get. Just make sure you stay within the law when requesting information. Some lines of questioning can be discriminatory.
Provide Quality, Well-written Articles, and Ads
Use writers that know how to write. Make sure your descriptions sound appealing. Provide well-lit, attractive photographs of your property with clean lines. If you want the best tenants, understand that you’re competing with other properties that also want them. You need to show them you have the value they are seeking.
Don’t Settle
An excellent candidate is worth waiting for. If you fill up your property with irresponsible people, your property will not make money. Take your time, and be diligent in your search.
One Month’s Rent and Security Deposit Up Front
The security deposit protects your property and can be held as rent if your tenant defaults. Most people want to get it back. Plus, a quality tenant will want to see that you can make sound business decisions. Without asking for a security deposit, they will raise an eyebrow.
Denying Applications
Whenever you deny an application, always do so in writing. Make sure that your reasons are stated and valid. Back them up with the information the applicant has provided you. Use all of the legal forms necessary for the process. If you need a certain form, most are available for free as a download. Evaluate your process from time to time to see if you need to make changes.
What About Negative Reviews?
Unfortunately, if you have some bad reviews or ratings on any online platform, your curb appeal automatically takes a tumble. It can be scary as an owner or manager to see the email notification letting you know a new review is up. Read What To Do If My Apartment Has Negative Tenant Reviews?