If you’re a landlord, you’re almost always searching for good tenants. They keep your business running and make life so much easier.
Good tenants pay on time and respect your property, while bad tenants cause problems and may even necessitate a costly eviction. So how do you find the good ones?
In this post, we’ll cover seven proven steps to find high-quality tenants wherever you are.
1. Prepare the property
The first step to finding a good tenant is to offer an attractive property. If you build it, they will come, as they say.
So keep your structures and spaces in excellent shape by making any necessary repairs and renovations. Your property should also comply with the Fair Housing Act, the US Department of Housing and Urban Development (HUD), and all local housing regulations.
Once your place is in order, check the fair market standard for rent on similar properties in the region. Then set a competitive price to attract high-quality tenants. If you’re in a landlord’s market, you might even be able to set your rents a little higher than market value.
2. Create a detailed rental application
At this point, you’ll need a rental application. There are plenty of free templates online with which you can start.
Ask applicants for some basic contact information, such as name, email, and phone number(s). Then ask about other occupants, vehicles, pets, smoking habits, and so on to make sure the person qualifies for your rental.
3. Advertise the property
Establish a budget for advertising your rental. Advertising doesn’t have to cost a lot. You could easily post a “for rent” sign in the window of the property or on the lawn outside that passersby will see.
These days, though, most landlords also advertise rentals online. There are any number of listing sites you can use, for example Rentler, Trulia, Radpad, and even Craigslist and Facebook Marketplace. Some are free while others may demand a small fee.
Before you list your rental, take some high-quality photos of the unit and write a compelling description for the listing. You could even create a virtual tour that will enable people to get a better feel for the property from afar.
If you do this, you should be able to schedule fewer open houses and viewings. Make sure to highlight any unique features and be honest about any drawbacks. You’re more likely to attract only the most qualified leads.
Ask family, friends, and past tenants for referrals. You might even offer them a referral bonus if they put you in touch with a good prospect.
Finally, try sharing the rental listing on social media to give it more reach. You might be surprised by how much response you receive.
4. Be responsive
Once you’ve advertised your rental, be responsive to inquiries. If you respond in a timely manner, you’ll pull in a broader net of qualified leads.
Don’t forget that many of them will probably be looking at multiple properties. If they can’t get through to you, they’ll move on, and you wouldn’t want anyone good to slip through your fingers.
When anyone contacts you, send them the rental application and tell them how to get it back to you via your email address.
5. Perform a full tenant screening
Review the applications and keep the ones that look promising. You’ll want to contact them and request a full tenant screening.
You can hire a third-party service to do this or gather the information yourself. Here’s what it involves:
- Run a credit check—A person’s credit score will tell you a lot about their ability to pay rent on time. It will also reveal their income-to-debt ratio. The higher the ratio, the higher risk they pose. Set a threshold – say 600 – as the minimum score you want your tenants to have.
- Check eviction history—People who have been evicted in the past are more likely to earn an eviction in the future. The process usually takes three to four weeks and costs an average of $3,500. You want to avoid it if at all possible.
- Do a criminal background check—Having a criminal history in itself isn’t grounds to deny a tenant. However, you should look at their background closely to make sure the tenant is unlikely to pose a threat to other tenants or your property. Check federal, state, and county records.
- Verify income—Another reliable indicator that a tenant will dependably pay rent is a steady income. As a rule, their income should be about 3 times their rent. It’s best if they can show two years’ worth of employment history.
- Verify identity—Though it might seem redundant, you ought to verify the applicant’s identity by asking for a copy of his or her driver’s license or similar ID. There’s a risk that an applicant might give you someone else’s personal information.
- Ask for references—Finally, you should ask the applicant for references from previous landlords. Past landlords can provide an honest assessment of the applicant and tell you whether the person paid on time and treated the property well.
6. Sign the lease agreement
If an applicant can pass the tenant screening process, you’re ready to offer them a contract. Don’t forget that you mustn’t discriminate against applicants based on any of the protected classes: race or color, national origin, religion, sex, familial status. Otherwise, you risk violation of the Fair Housing Act and face stiff fines and penalties.
Make sure the lease agreement details the occupancy limit, lease term, rent price, deposit and fee requirements, responsibilities for maintenance and repairs, and any other restrictions with regard to pets, guests, smoking, and so on.
When everything looks good to both parties, you sign and date the lease agreement to make it legally binding.
7. Maintain a good relationship
You did it: You found a good tenant. Now it’s your duty to keep them happy by treating them well.
Do your part by keeping up with maintenance and repairs and providing good customer service and clear communication. If you can do this, your good tenants are more likely to renew the contract when it expires. Then you’ll continue to benefit from their good tenancy and avoid costly vacancies.
You can also let people know about any other rental properties you own in case they desire a change or an upgrade in the future. This will enable you to keep good tenants longer.
Finding good tenants can be time consuming and difficult. But if you are patient and diligent, you’ll turn up excellent ones and build a steady rental income.
Remember, selecting a tenant is a business decision. Try to stay objective by keeping your emotions in check.
Ask a lot of questions and don’t settle until you’ve found a solid match. Otherwise, you could get a subpar or poor tenant and have to deal with late payments, noise complaints, damage to your property, evictions, and maybe worse.
If you don’t have the time or resources to find good tenants on your own, consider partnering with Green Residential. Our experts can help you find the best renters in your area, no problem. Feel free to reach out today and get started.