Finding Great Tenants is an Art
Here's some general principles
Tenant selection is by far and away the most important factor in successful property management. Locating and then screening tenants is a labour intensive process that requires persistence, intuition, common sense, and an ability to size people up. You have to be aware of shifting rental market conditions and act swiftly when you find that perfect person for your property. Tenant selection is no doubt an art. If you haven’t yet mastered this art, here are some general principles that can help you find your next great tenant:
Advertise your rental well
Rental advertisements advertise both the property and the landlord, which is why I’m surprised by the number of ads that have have typos, unflattering images, and poor descriptions. The message that this sends to prospective tenants is that landlord does not care – not a great message to send to anyone looking at your property as their next home. So when you are crafting your ad, take great pictures of your rental in a clean and tidy state and include concise and accurate descriptions that answer the four basic questions: what the property is, where it is located, how much is rent, and when it is available.
Pricing your rental unit appropriately and strategically
Pricing depends on rental market conditions. In general, price your rental at or slightly below market rates. It’s unwise to advertise a price well above other comparables, as it turns away prospective tenants and your listing can quickly become stale. Even if you secure a tenant at a high rate, that tenant has incentive to leave and will likely bother you with even the slightest problems. I’m also a big proponent of using pricing as a tool to secure the best possible tenant. One way to do this is to offer a slight reduction in rent to a tenant with great credentials. This reduction can be offered under conditions that lessen your responsibilities. For example, you can ask that the tenant do routine maintenance or lawn mowing. It’s a win-win for everybody and the landlord/tenant relationship starts off collaboratively.
Does the property make sense for the tenant?
Use common sense when screening your tenants. Does the location make sense for the tenant? You should inquire about the tenant’s place of work and, if there are children, the location of schools. What are the commuting times for your tenant? How many cars are used and how many designated parking spots are needed? Also, be sure to get a sense of how rent will be paid. Who is the income earner? Is the income based on a steady salary or irregular commissions? Can the tenants reasonably afford your rental? If anything seems suspicious or implausible, move on.
Listen and follow up with the tenant references
If the tenant complains about past landlords and makes reference to local tenancy laws, it is likely that the tenant has a poor attitude about landlords and has been involved in past tenancy disputes. These types of tenants generally find anything to complain about and are likely to cause you grief down the road. When following up with tenant references, ask specific, quantifiable questions.
Some good questions for past landlords:
- How long was the previous tenancy?
- How much was the monthly rent?
- Did the tenant pay rent on time?
- Did the tenant maintain the property well? Was there any damage or maintenance issues?
- Were there complaints from other neighbours or tenants?
- Why did the tenant leave?
- Would you rent to the tenant again?
Some good questions for past employers:
- What was the tenant’s monthly salary?
- What are the terms of employment? Is there a probation period?
- Does the tenant come to work on time?
- How do you like working with the tenant?
- Has the tenant ever been reprimanded at work?
Some good questions for family and friends:
- How do you know the tenant? How long?
- Does the tenant smoke?
- Does the tenant have pets?
- What is the tenant’s marital status?
- How does the tenant spend his/her spare time?
You should set up an open house and advertise to all prospective tenants. At the open house, have application forms ready for tenants to fill out. I would recommend against setting up individual appointments, as tenants often fail to show up and it can be a huge waste of time.
Finding great tenants sometimes just boils down to luck, but there are plenty of things that can be done to tilt that luck in your favour. If you want to make it even easier, check out Happipad’s new rental platform, the first to have fully authenticated landlords and tenants.
This post was written by Happipad