Buying property and renting it out is a great way to make money.
Not only do you earn on the property’s appreciation, but you can do so while having tenants pay for your mortgage.
If you do things right, you can even make a profit renting out your property. Not a bad deal, right?
But for this to work, you need to make sure you rent to good tenants. After all, you don’t want to spend your time chasing people down for rent payments. And you don’t want to rent to disrespectful people who are going to damage your property (and cost you money in the long run).
So, you’ve got to take the initiative to seek out responsible renters.
How do you find good tenants?
Well, here are some tips:
Be Strict About Requirements
If you think it’s going to be hard to find good tenants, you’re right.
Not everyone who inquires about your property is going to be a good fit.
So, you need to be exclusive and establish requirements. You might have age requirements, a minimum monthly income, etc. They can be whatever you want.
To set your requirements, you need to define what a perfect tenant looks like to you. How much money do they make? Are they all non-smokers, or is it okay if they smoke on their balconies?
Make these requirements clear in your rental listings and application.
If you feel strange about excluding low-income tenants, consider enforcing this requirement in the rental price. A high enough figure will ensure a certain type of tenant, although this isn’t always the case.
Of course, you need to be reasonable when setting rent. Check the local market to see what other landlords charge. You don’t want to be so strict that your place goes empty.
This is a bit of a balancing act. But over time, you’ll figure out the sweet spot that makes your property attractive to the types of renter you’re looking for.
Use a Detailed Application document
Don’t let anyone move in without having them fill out an application first. Use the application to learn about potential clients. Ask them about their income and rental history.
Also, use it to learn about who they are as people. What do they like to do in their free time? Do they frequently entertain guests?
Their answers will tell you a lot about how they’ll use the property.
For example, if they say that they like to hang out with friends and watch football, you might want to inquire further. It could mean that they’re throwing beer fests every weekend during football season.
Some other questions to ask include:
♦ Why are you moving?
♦ Have you ever broken a rental agreement?
♦ Have you ever been evicted?
♦ Do you smoke?
Pay close attention to their answers. Use the information to determine whether or not they’re a good fit for your property.
Take Background Checks Seriously
Asking people to do a background check is standard practice when screening potential tenants. It’s crucial to take these seriously.
There are two approaches here:
1. Set standards (such as a minimum credit score or a “no evictions” policy) and toss out all the applications that don’t meet your threshold.
2. Inquire further into promising tenants who don’t quite meet the requirements while also giving preference to those who do.
Sometimes, even the act of requesting background or credit checks can be enough to screen people. Those who resist or protest probably aren’t going to be great tenants.
If they do agree, take your findings seriously. Use the information to compare and contrast applicants and choose the best fit.
Consider Using a Real Estate Agency
If all of this sounds like a lot to you (which is totally sensible), consider enlisting the help of a real estate agency.
Real estate agencies specialize in marketing properties based on your vision of an ideal tenant. They also have practices already in place for screening people.
If you’re new to the process, this could be a great option. Most agencies allow you to be as involved as you want in the tenant screening process.
Always Meet Tenants in Person
Face-to-face meetings are the best way to screen tenants. Sitting down and conversing with someone can give you a real feel for who they are.
Meetings also give you the chance to ask more questions about anything unclear or confusing in their application. There might be a logical explanation for something irregular that will help you make a better decision.
Of course, with our busy schedules, it’s difficult to find time to meet with tenants, especially if you have delegated to a real estate agent. But even if you hire an agency, make sure to meet all tenants in person.
This step is 100% necessary if you’re serious about finding good renters.
Patience is a virtue, especially in real estate. It might take some time for you to find the perfect renters.
If your dream tenant doesn’t call you within minutes of listing your rental, don’t get discouraged. Just sit tight.
Eventually, the right person will come along. Follow the tips above to determine whether or not they’re the renter you’re looking for.
You’ll be thankful when the renting process is lowkey and low-stress for the duration of the time you own the property.
Daniel is the Business Manager for Aspira at Anthem. With over two years’ experience in the industry, he will make it a top priority to find you the perfect home. He takes great pride in making a community a great place to call home.
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