Real Estate

How to Find Great Tenants for Your Rental Property (3 Steps)

Choosing the right tenants is critical to your success as a landlord. Bad tenants often complain, damage the property, or fail to pay rent on time, leading to expensive repairs and frustrating legal battles for eviction.

Before filling your next vacancy, carefully screen applicants to make sure you choose someone who is responsible and reliable. Understanding how to find great tenants will help reduce headaches and ensure your properties are successful.

Defining your ideal tenant

Taking the time to identify these attributes in a tenant will help you choose the right person or family. Be sure to write down the criteria you come up with so you remember it the next time you’re considering applicants.

While this will be different for every homeowner, some common things to look for include:

  • Reliable payment history
  • Respectful and polite
  • A stable income
  • No early eviction.
  • Passes background check.

Watching for red flags can also help you identify applicants who might not be a good fit. Just as it’s a good idea to write down your ideal tenant criteria, it can also be helpful to write down red flags.

Possible red flags to look for include:

  • Excessive debt relative to income
  • To move repeatedly
  • An incomplete application
  • Reluctance to provide information
  • Strange behavior
  • Previous legal problems with landlords

Before beginning the tenant selection process, be sure to review state and local fair housing laws to ensure you comply. These laws prohibit discrimination based on race, religion, national origin, sex, disability and other factors. The same screening process should be used for all applicants, and reasonable accommodations should be made to individuals with disabilities such as allowing service animals.

Creating an attractive rental listing

Attracting your ideal tenant starts with how you write your rental listing. The right marketing strategy will help you reach quality tenants while minimizing applicants who may not be a good fit.

Your rental listing should set out the tenant’s expectations. It should begin with basic property information including address, property type (eg, apartment, house, condo, etc.), monthly rent, and security deposit requirements. He should then provide a detailed description of the property including the number of rooms, square footage and amenities. High-quality photos, lease terms, availability dates, pet policy, and whether any utilities are included should also be mentioned.

When listing your property, avoid using language that could be interpreted as discriminatory, such as “ideal for a professional” or “no children”. Be sure to use inclusive language that does not favor or exclude any particular group.

Effectively advertise your rental property

After creating a compelling list, you’ll then want to get the word out to attract as many quality applicants as possible. The more applicants you have, the more selective you can be. You can increase your reach by using several marketing strategies.

Although we now live in the information age, traditional methods of marketing your rental property are still effective. If your rental is located near a high-traffic road, consider placing a “For Rent” sign on your property with clear contact information.

Many people look for a place for rent by checking online platforms. Make sure you add your listing to the most popular platforms, like Craigslist, local Facebook groups, and popular rental websites like Apartments.com and Rent.com.

Before showing your property, make sure it is clean and presentable. If you are in a hurry and show a dirty property, applicants may be turned off. If possible, staging your property can help make it more attractive.

Finally, make sure you respond to inquiries promptly, especially if the market is competitive. If you delay getting back to people, they may lose interest and go with another property.

3 Steps to Finding Great Tenants

Finding great tenants isn’t complicated. If you follow a simple three-step process, you can quickly narrow your search to those who meet your criteria.

1. Make sure they earn enough to afford to live in your property.

You don’t want tenants who are too financially strapped. The more bills they have, the more likely they are to miss rent payments. You want to make sure that any tenant you hire earns enough to comfortably cover their monthly expenses.

Many landlords prefer tenants who earn at least three times the monthly rent. If your rent is $1,000 per month, for example, you can look for tenants who earn at least $3,000 per month. Whether you go by their gross income or net income (after tax deductions) is up to you. This is not a rule written in stone, and you are free to consider other factors.

Tenant’s income need not be from employment. Many great tenants get subsidies, which is fine. What matters is that whatever income they earn — from whatever source — is sufficient to cover their monthly expenses.

You can verify applicants’ income with printed copies of their pay stubs or their direct deposits. You don’t want to take their word for it. Another option is to accept letters from employers confirming income. Don’t forget to call and verify the authenticity of the letters and make sure the information is correct.

2. Assess how well they are meeting their other financial obligations.

If applicants pay their monthly bills on time, this can be a good indicator of how well they will pay their monthly rent. Pull copies of applicants’ credit reports. This will tell you if they make their car payments, utilities, cable TV, cell phone and other monthly payments on time.

When you review a credit report, be sure to go through it line by line to look for late or missed payments. Although evictions don’t show up on credit reports, unpaid rent payments can show up if the landlord goes into debt collection.

The minimum credit score you will accept is up to you and your local market and tolerance for risk. If there is stiff competition for rent in your area, you may want to consider accepting tenants with a decent credit score. If you have multiple applicants, you may want to prioritize a strong score to improve your chances of finding someone who will always pay on time.

Negative information stays on credit reports for up to seven years. Credit reports aren’t perfect either. Sometimes they include things that are not correct. That’s why many people successfully dispute reporting errors and have false information removed.

Some people also change their financial habits over time. If you see something minor on a report from six years ago but nothing negative since then, it may be worth ignoring it and focusing on the most recent payment history.

3. Determine who potential tenants are communicating with.

The third step in finding great tenants is to evaluate their character. You want to know if they will respect your property as if it were their home and be courteous to their neighbors.

The best way to do this is to check the tenant’s personal references. You should get at least two. References should be from employers, past employers, professors or teachers, clergy, or trusted individuals in the community. Referrals from family members or close friends should not be accepted.

When calling references, be sure to ask questions that will help you understand the applicant’s character, dependencies and financial responsibility. Also, be sure to ask how they know the applicant. Someone might claim that the reference you’re calling is a previous landlord, for example, when that person is actually a friend.

Before ending the call, ask if there is anything else they think you should know about the applicant’s suitability as a tenant. An open-ended question like this can reveal some important information that you might not have thought to ask.

The importance of thorough tenant screening

There are many factors involved in successful rental property management, but perhaps the most important is making sure you have good tenants. The tenants you choose can make or break you as a landlord. That’s why choosing a tenant is something that shouldn’t be rushed, even if you need to fill a vacant property immediately.

As a landlord, you own a business. That’s why it’s so important to fill your rental with people who pay their rent on time and respect your property and other people. This helps ensure that your cash flow is optimized and that your valuable time is not wasted taking care of problems that could have been prevented with careful tenant screening.

It’s important to keep in mind that tenant screening does not guarantee that you will never have any problems. All businesses have to deal with a certain degree of uncertainty. But it will help minimize potential problems, saving you time and money.

Final thoughts

Tenant screening is critical to the long-term success of your rental business. That’s why you should regularly review your tenant screening process to make sure you’re not missing anything. Also, be sure to review local fair housing laws periodically to keep up with changes.

It is also important to communicate with applicants so that they have a clear understanding of expectations. Be sure to answer any of their questions. Not only are you choosing a new tenant, but applicants are also vetting you as a potential landlord. Being open and honest will help you build a positive relationship.

Save time and money with this refreshing guide to managing your properties..

I Self managing landlordAmelia McGee and Grace Gudenkauf share the secrets to effective property management, tenant screening and onboarding, and scaling your business—all to help you break free from the 9-to-5 grind and build lasting wealth through real estate. To help make.

Note via BiggerPockets: These are the opinions expressed by the author and do not necessarily represent the opinions of BiggerPockets.


Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button