Under normal circumstances, renting out a property in Katy, Texas is relatively easy considering the greater Houston area has seen steady growth for years. People love moving to Katy for the reputable schools, good neighborhoods, job opportunities, strong local economy, and affordability. However, ever since the coronavirus pandemic started, things have been a little shaky.
Whether you’re facing the current COVID-19 pandemic or any other economic uncertainty, you might be apprehensive about trying to rent your property. Many people have lost their jobs and with a federal eviction moratorium in place for a while, you don’t want to rent to someone who might lose their job right after moving in.
To keep your investment property generating income, here’s what you need to do.
1. Verify all applicants’ employment details
It’s important to verify employment in general, but the details matter. In the past, you may not have bothered to verify an applicant’s employment details like salary and job title, however, in uncertain times it’s not something you want to skip. Some applicants who know they’re being laid off might lie about their title or salary to try to get into a house quickly before they officially lose their job. Even something as simple as claiming to have been a supervisor or manager when they were only a shift lead could be a bad sign.
You don’t want to find the perfect applicant who meets all of your requirements only to find out they’ve been laid off a week after moving in. Worse, you don’t want to rent to an applicant who knew they were getting laid off.
Unfortunately, you can’t foresee these situations, but you can mitigate these potentials by being strict about verifying an applicant’s information.
Just remember that you can’t legally deny an applicant based on their job title, but you can deny someone for providing false information on their application. Discrepancies found should only be used to help you make a decision between multiple qualifying applicants. For example, if you have four qualified applicants and one misrepresented their job title on their application, you may want to choose a different, yet equally qualified applicant.
2. Raise your income requirements (if you can)
Some landlords don’t have strict income requirements because they’ve never had a problem collecting rent from their tenants. This is especially true in Katy where money tends to go a little further than in other metropolitan areas.
The rules of the game are a little different in uncertain times. The purpose of requiring higher levels of income is to reduce the potential for unpaid or late rent. Often, tenants who can’t afford to pay all of their bills will put rent on the back burner. When a tenant has a higher income, it’s less likely for them to be living paycheck-to-paycheck, which means they will have money to cover the rent even if they miss a paycheck.
Most Katy landlords require tenants to earn three times the monthly rent. For example, if the monthly rent is $1,500, then a tenant must earn $4,500 per month to qualify. It’s uncommon to require tenants to earn more than three times the rent, and in some cases it’s not legal. Before you raise your income requirements, check with a lawyer to make sure you’re following all current Houston and Texas landlord-tenant laws.
3. Advertise via word of mouth
If you’re worried about renting your property to someone who could lose their job, try marketing through word of mouth rather than placing ads everywhere. While getting personal referrals from friends and family members won’t guarantee you’ll get a better renter, connecting with individuals on a casual level will give you an advantage over processing faceless paper applications.
When you tell people you’re looking to rent your property, let them know you only want referrals from people with a track record of having stable income.
4. Be lenient with your pet terms
Have you always made it your policy to prohibit pets of any kind? Whatever terms you normally require tenants to agree to, consider being more lenient with those terms.
In uncertain times, you might have a hard time finding a renter that meets your income qualifications who is pet-free. If you can find a tenant with great credit, high income, and superb rental history, don’t think twice about making an exception for their pets.
If you do allow pets, don’t charge pet rent. Just collect a standard pet deposit along with the regular security deposit. Make it easy for your new tenant to move in without the added stress of having to worry about their beloved pet.
5. Be lenient with occupancy restrictions
Do you have strict occupancy limits that fall below what the state of Texas allows?
While you can create rules that are stricter than the state standard for occupancy, you may want to reconsider during times of economic uncertainty. Having more people in the home could make the difference between collecting full rent vs. having an unoccupied home. For instance, allowing more people could make it possible for a family of five to move in where all five people are working and contributing to the rent.
If your lease for your 2-bedroom house limits occupancy to three people, consider raising that limit to the state’s limit of six. In Texas, the maximum occupancy for any home is three times the number of bedrooms. In uncertain times, you might not have any other choice.
6. Hire a property management company
In uncertain times, you don’t need the added stress of having to worry about renting your Katy property to the right people. If you’re a new landlord, a property management company will handle all of your landlord duties so you have less to worry about.
At Green Residential, we’re here to help Katy landlords rent and manage their properties during uncertain times. We perform every landlord duty from tenant screening and maintenance to rent collection and evictions.
If you need help, contact us today for a free Katy property management rental analysis to find out exactly how we can be of service.