|Kevin Odibeli – April 2019|
Getting the elusive “right tenant” often seems like the search for the Holy Grail. Sometimes, the search gives as much grey hair as the tenants themselves. Lost income, lawsuits, criminal investigations, damage, even being dropped by insurance companies due to an excessive number of claims are experiences no one wants to deal with.
The Screening Process
Due diligence is the name of the game. A little effort now prevents a lot of trouble later. Below are things that can be done to ensure you have good people in your property:
1. Meet them in person – It pays to meet people in person. Behavioral cues like temperament, edginess, paranoia, evasiveness including others like intoxication can indicate personal troubles which you may have to deal with in future. Trust your instincts even when every other thing seems good on paper. A clean paper profile doesn’t always mean that all is well.
2. Check their references – It’s quite standard to include the details of a past landlord and personal references. The provision of false information or the failure to provide this information alone can be a cause for concern. Though the information you receive from referees tends to be limited, you can sometimes glean enough to decide between multiple prospects if you pay close enough attention.
3. Do some checking – Although the absence of a criminal record doesn’t always amount to a problem-free tenant, it can warn you about some of the more obvious potential problems. A person previously convicted for operating a drug lab may not be your best choice. On the other hand, a speeding ticket may not be the best reason to pass up an otherwise ideal tenant. Also, a person that has been involved in several personal liability suits may have a higher chance of being trouble down the road.
4. Ensure they can afford it – The ideal practice is that a tenant earns 3 times the monthly rental income. Tenants that can’t comfortably afford their rent are at risk of default especially during periods of financial difficulty. Of course, the income stated will need to be verified.
5. Run credit checks – A poor credit history may mean that the tenant’s disposable income is insufficient due to substantial monthly credit payments.
6. Properly worded contracts and documentation – The saying “Good fences make good neighbors” applies to setting proper boundaries with tenants which mitigate default, damage or high-risk activity.
7. Follow the law – Bending laws on overcrowding, facility quality, health and safety standards, etc can either attract tenants with a tendency towards breaking the laws themselves or can give them the desire to be difficult knowing that you may be hesitant to take action against them.
Attracting Good Tenants
Like most endeavors in life, “it all begins with you”. The more common strategy for renting is to make the property as appealing to as many people as possible. However, certain practices can attract the type of tenants you really want, like:
1. Purchase the kind of property that your ideal tenants will prefer – Would you rather have 4 condos or a large Townhouse in a higher value location? The condos may provide more income but may end up taking up more of your time.
2. Put yourself in the tenant’s shoes – Making provisions (even little ones) can appeal to the tenant. A property was once rented out quite quickly just because of the kind of a soap holder that was installed.
3. Manage your online presence – Having an online presence can work for or against you as trolls can be bad for any business. However, if you are going to have information about you out there, it might as well be good. More people are developing the habit of running searches about properties and their owners. It may help to encourage those with positive experiences to register their opinions. It also helps to include positive qualities of the place in reviews like connections to famous people, nearby landmarks, train stations, lawn/backyard size etc.
4. Pricing – Though there is a tendency to price for higher income tenants, it’s important to keep the actual market value in mind. Pricing a property too high may cost you good tenants who also happen to be price savvy.
5. Presentation pays – Keeping places tidy and organized will always pay. No one wants a place that looks unkempt. If you don’t take pride in your property, people won’t either. That’s why the cookie baking trick often gives positive points for a realtor’s sales presentation despite becoming cliché long ago. Inexpensive touches like well placed Christmas lights can also help set a “homely” mood.
There are several options when it comes to finding the help you need with your property which depends on the degree of assistance required and your understanding of tenancy laws and practices.
Most self-managed landlords use newspaper, signage, and internet classified ads to provide exposure for their properties. Though this is an effective way to communicate vacancies, the property owner’s inexperience may affect how well details are communicated.
2. Personal References
The benefit of this method is the ability to obtain a greater degree of personality and historical details about the prospective tenant if the person connecting you is honest. The challenge here is the slow process involved as you are limited to your circle and how quickly they “spread the word”.
3. Property Managers
They have the advantage of not only knowing how to advertise properties effectively, but they are also able to provide services that ease the strain of property management. They are often able to review your property and advise on how best to attract good tenants. You can opt for lease-only agreements for just leasing the property or have them handle the day-to-day burden which will include tasks like inspections, negotiations, notices, maintenance, communications, evictions, insurance referral, documentation, and even the monitoring of market trends.
Disclaimer: Any information contained herein is intended solely for information purposes and is not to be considered legal advice. The user of the information is solely responsible for implementation and results. It is recommended that any person(s) acting on the basis of information provided in this article familiarize themselves with the applicable laws of their appropriate jurisdiction(s) Any views or comment expressed in response to this article will remain the sole responsibility of the person providing any such view or comment.