How to find good tenants
Congratulations on purchasing your first rental property! The papers are signed, the taxes paid. You’ve even had the walls repainted and the carpet steam-cleaned. It’s all ready for someone to move in and start making that cash flow.
But hold on just a second. Even if they do pay on time, a bad tenant can make your landlording experience a nightmare, whether it’s through being a nuisance about fixes and conditions, indifference or damage to the property, or even police calls and legal issues.
But what can you do to increase your odds of finding a decent tenant? We turned to some online experts for help.
Clarkhoward.com has a handy, short article that cuts to the chase. Obviously you’ll want to perform a background check, but two pieces of advice stood out.
First, be sure you – the owner, not a property manager – meet the prospect in person. From the article:
Seeing your prospective renter in person can give you some important indicators as to whether or not they will respectfully inhabit your home. You’ll get a sense of their cleanliness by seeing what they drive and the gut feeling you get about them is priceless. It takes very little time to conduct a walk through so make sure you don’t miss this.
Second: Make money a (slight) barrier by taking a high deposit.
One key tip is to never make the deposit the same as their monthly rent obligation. For instance, if the rent is $1,000 you should ask for $1,200 as a deposit. If you ask for the same deposit as the rent amount your tenant will likely assume that it covers their last month’s rent. You don’t want that.
A high deposit also separates the wheat from the financial chaff. If they have trouble coming up with something close to the monthly rent upfront, when they should be actively trying to impress you, there’s a good chance it’s going to happen again down the line.
Forbes has another good article. This one wisely opens with the idea of creative, appropriate marketing, which includes targeting the type of tenant you’ll want.
Real estate writer Ilyce R. Glink offers this advice:
Know of a rental building known for great tenants? Slip your marketing materials into the lobby, Glink suggested. Or, even better, if your current tenants are great, they may have some great friends.
“Offer a cash bonus if the departing tenants find you a new tenant,” Glink said.
Another sage bit of advice from the Forbes article: don’t always make it all about money. Just because two twentysomethings offer a larger deposit or higher monthly rate doesn’t mean they’re going to be better tenants. A nice, young family who may need to pay a little less per month could wind up paying off big time at the end in the form of a lack of repairs and neighbors who still like you.