5 Tips for Finding the Best Tenant
Great tenants are the heart of real estate investing. As a property manager in the metro Atlanta market, I meet landlords every week and their feeling about their investment property can vary dramatically. Inevitably, the reason can be traced back to a bad tenant experience. While there is no foolproof system to guarantee your next tenant will be perfect, we can control many factors that lead to selecting an outstanding tenant. So, let’s take a look at how to locate the best tenants possible.
Get it in Shape
All good property managers know that there is a one-to-one ratio between the condition of your rental home and your tenant. The best tenants want fresh paint, clean carpet, a landscaped yard, in short, they want a home that is in great condition. The very best tenants might even hold out for an updated kitchen and bathroom. I can’t overstate this one. Get your rental property home in great shape. It should be the envy of the neighborhood. Over the years the properties that really perform, the ones that demand higher rent than other landlords can get in the same neighborhood are the ones in excellent condition. There is a balance between overspending and putting your money in the areas of the home that produce the biggest return. I’ll address those specifics in another blog.
Price it Right
There is a myth that floats around the real estate investment community. It goes something like this, “Great tenants should be able to pay more for my house because they make more money”. Unfortunately, it’s exactly the opposite. The very best tenants are looking for the best deals. Think about it, they know they are going to move into your home and make all the payments on time and take care of the house like it is theirs. They have leverage. Tell yourself the truth about your property, if you can’t afford all the updates and fresh paint you need to be highly competitive on price. Pull the comps, determine the fair market value of our rental and put your best price on it, this will attract great tenants and reduce your vacancy costs.
The classic first-time investors’ mistake is to accept the first tenant that offers a security deposit. Most of us only have to learn this lesson one time. It’s an expensive one. A thorough background check should reveal their credit score, rental history, criminal history as well as their current income. These are the core factors in determining if they can afford your rental home and what the likelihood is that they will be great tenants. A professional property management company can save you from making a huge mistake when choosing a tenant. As a note, be careful to follow all Fair Housing Laws when selecting tenants.
You need to respond when you receive an inquiry for your rental home. There are so many resources available today for the real estate investor to market his/her rental home. You will definitely get many inquiries in today’s market. The problem is the average tenant is making multiple inquiries every day. In our drive-through culture, they do not want to wait hours on a response. Make a commitment to respond to each inquiry quickly so you don’t miss out on the great tenant that doesn’t want to wait.
Treat Them Right
Your best bet in locating the five star no brainer tenant is a referral. Just like so many other areas of life you will find that great tenants know and hang out with other great tenants. When you are a really good landlord, meaning you respond in a timely manner and treat your tenant like the key piece to your rental puzzle that they are, your tenant will tell others.
Over the years I have moved many tenants out, only to move their friend or relative in right behind them. Think of it as your small business, because it is. Your tenant is your customer and they will tell others about their experience, good or bad. As a bonus, when your tenant loves the home they live in and recognizes you as an outstanding landlord they will stay longer, and you won’t have to worry about replacing them very often.