When you’ve decided to become a real estate investor, finding the perfect property and collecting rent on it are only two parts of the process. In between finding a place and making rental income, you’ve got to find the perfect tenants.
What makes a good renter, though? If you find great tenants, you’ll have people living in your property who will enjoy it and take care of it. End up with bad tenants, however, and it’ll be headaches galore. From property damage to constant complaints and rent payments that show up late (or not at all), a bad tenant can turn your property into a nightmare instead of a cash-cow.
So, what makes a good renter? Here are our top tips for finding and keeping the best renters in your investment property.
Everyone wants tenants who will be quiet, responsible, and pay their rent on time. It’s tough to know if a renter will fit this criteria until they’ve actually moved in and started (or failed) to make rent payments. Credit checks and background checks can help give you a good idea of a renter’s financial status and history.
Keep in mind that it’s perfectly legal to screen tenants by running credit and criminal background checks, but you should avoid conducting interviews of potential tenants yourself. While it’s legal for you to turn down a tenant based on credit or a criminal past, it’s illegal for you to discriminate based on religion, race, gender, age, national origin, disability, or family status. Anything that smacks of discrimination based on these factors could make you liable for a suit under the Fair Housing Act.
It’s OK to have them fill out a rental application with basic information or to meet them in person to walk them through the property and get a sense for how prompt, clean, and responsible they’ll be — but avoid in-depth personal questioning.
The formula for what makes a renter isn’t a one-sided equation. To find someone who is responsible and easy to work with, you have to make your property attractive to them. Keep in mind during the vetting process that potential renters are auditioning you the whole time you’re grading their performance. The best properties and landlords attract the best tenants.
For starters, your property needs to be clean, well-maintained, and attractive to renters. If it’s not a place you’d enjoy living, why would anyone else want to live there?
Also, be professional in all of your dealings. Make sure everything is documented in writing, from the rental contract to any communication about problems that may arise. Be businesslike and appropriate in any discussions with your renters.
Make it clear that you will always be accessible and communicative should your renters have questions or problems. It also means that you stay on top of maintenance before it creates problems, as well as address any issues (leaks, faulty appliances, air conditioning repairs, etc.) in a prompt manner.
If you’ve already got enough on your plate without screening a never-ending lineup of rental candidates or becoming a full-time landlord, a property management company can be a godsend. Not only do they know what makes a good renter, they’re experienced at reaching out to find them for you. In addition to getting all of the required contracts, background checks, and documentation completed, they can manage the entire rental experience for you.
From taking care of rental payments to scheduling maintenance and repairs and handling customer service, a property management company can help free you up to live your life while benefiting from the additional income flowing in from your investment properties.