Real estate investment can be tricky. We’ve all heard horror stories about renters who don’t pay on time, or damage property. So how do you find good tenants for your rental property and ensure your tenants will keep your investment secure? Avoiding potential damage to your rental property can be as simple as taking the proper steps to make sure your renters are responsible and realistic about their limitations.
It’s a good idea to start by considering what renters look for in a landlord. Renters value good, clear communication and minimal interaction with a property manager or owner. They seek a low-maintenance property to use that fits their particular needs. Like you, when problems do arise, they look for landlords who are readily available to give them direction and answer their questions.
If you are an investor looking to rent a property, it’s worth taking the time to understand the needs of your potential renters. It’s also important to develop a method for finding tenants who are reliable and self-motivated. Satisfied, responsible tenants will treat your property as if it were their own, which means long term security in your investment for you. Below, we’ll explore some ways to seek out and communicate with potential tenants for your rental property.
Knowing your tenants are taking care of your rental property and will be paying rent on time can bring true peace of mind when it comes to your investment. Finding good tenants for your rental property can be challenging, but keeping these tips in mind will make the process easier and add value to your experience, and your cash flow, as an investor.
Housing Regulations for a Rental Property
Finding good tenants for your rental property begins with knowing the law. As the property owner, you are responsible for understanding federal and state housing laws. Take the time to read and learn about fair housing regulations. You can begin to become familiar with the Fair Housing Act here.
Remember that renters, too, will know their rights. Avoid discrimination in every way possible in your speech and in your writing. Develop clear advertisements that comply with federal and state laws about housing. And don’t forget to promote your property in places that target your specific market. For example, if you hope to attract young families, use church bulletins, newspaper classified ads, and craigslist. Word your advertisements clearly, in language that appeals to these potential renters and make sure your advertising complies with housing regulations.
Meet Potential Tenants in Person
Much can be learned from personal observation. It’s a good idea to arrange a meeting in person. Ask yourself if you have good rapport with your potential renters. Would they make good tenants for your rental property? Notice if they are on time, motivated to rent, and have all their paperwork in order.
Do they seem organized, and know what they are looking for? Do they ask questions and seem engaged in the process? Also important: do they appear clean and neat? Don’t overlook friendliness and ease of communication, either. A good tenant for your rental property will be all of these things.
Perform a Background Check on Potential Tenants
A good method in performing a background check begins with information gathering. Download and print a rental application form here and have your potential tenants fill it out. Use this application to learn more about their employment, current and past housing, and financial situation. You can also learn about the potential renter’s lifestyle through your application. Who else will use the property? Do they have pets? Will they be home often?
Once you have received the application, take the time to check references and make phone calls. You can check your potential tenant’s credit here. This can be a valuable resource to help you make your final decision.
Collect a Deposit from your Tenants
You will then want to receive a deposit from your renters to cover incidentals and damage that may occur while the property is in their care. Determine ahead of time to be clear about what you expect to see when they leave the property.
Make sure the deposit is more than the rent to avoid confusion about whether it will cover their last month’s rent. Also be clear about what the money will be used for, and how your tenants can get it back. Write special considerations directly into the lease.
One last thing to keep in mind is to see the potential tenant’s deposit check has cleared before you stop showing the property.
Encourage Contact with your Tenants
Once you have selected your tenants, perform a thorough cleanup and meet in person again at move-in time if possible. Send your property manager in your place if needed and meet at the property. Take the time to walk through and note anything that might cause you, or the renter, concern. Make notes to fix anything that warrants addressing and have your renter sign off on the rest. Before you leave, be specific about what you expect to be contacted about.
Leave contact information for yourself or your property management company in an obvious location. Many landlords use laminated cards hanging near a light switch or on a refrigerator to encourage renters to call, text, or email with any questions or relevant information. Ensuring communication helps with the longevity of your property.
Use All Available Resources to Find Good Tenants for your Rental Property
Finding good tenants for your rental property, keeping these tips in mind, can help you avoid common pitfalls in real estate investing. Successfully finding good renters is the key to helping you gain valuable experience as an investor while still maintaining a dependable source of income. Using available tools, like our free downloadable rental property cash flow analysis spreadsheet, can also help landlords to develop a systematic means of ensuring success in real estate investing.