Finding and Screening Tenants for Your Rental Property
You've purchased a rental property and it's currently vacant. What do you do now? It's getting harder and harder to make ends meet and you've got to rent out that property just to pay the mortgage. You've found a person that is willing to move in immediately, but don't bother with credit checks or reference checks- the person seems honest so you decide to rent to them.
What could go wrong? This lovely new tenant could be unstable and pull a knife on her roommate. Yes - it happened to us at 3am on a Wednesday night several years ago. We had to call the police and have them separate the two tenants. The innocent roommate moved out the next morning and we were left with the knife wielding tenant who then stopped paying rent and refused to move out. It took us three months to evict her. We had to send a collection agency after her for the rent money. We never received a dime.
As you can imagine, we've taken great pains to find good tenants ever since. Here's the overall process:
- Step 1: Prepare the unit for showing
- Step 2: Get your paperwork in order
- Step 3: Research the market rents and place your ad
- Step 4: Show your space
- Step 5: Choose your new tenant.
Step 1: Prepare the property for viewing by prospective tenants
Nice people like to live in nice places. A good renter can afford to be little choosy, so you want to make sure they choose yours by making it look as inviting as possible.
Easy fixes for your property include:
- fill any holes and put a fresh coat of paint over the walls
- make sure everything in the house is in good working order, including doorknobs, appliances, light bulbs and electrical sockets
- create a checklist to use when the tenant moves in and out. Inventory everything and their condition- doors, windows, drapes/blinds/shutters, plugs and light switches, shelving, appliances etc. from every room
- don't allow objectionable odors to scare away good tenants. Get rid of the smells by opening all the doors and windows.
Step 2: Make sure you have your paperwork ready
To attract a good tenant, you will need to be a professional landlord and have the right paperwork on hand. Contact the local residential housing branch of your government or go online and do a search for landlord forms to find the following:
- tenant application forms
- rental/lease agreement forms
- eviction notices and similar forms that you may need in the future. It's best to have them right away so you don't have to scramble to get them in the future if you really need them.
Each state or province has different requirements, so ensure you've got documents that are legal for your area.
Step 3: Set your price and start advertising
Price it right!
The perfect price is actually one that is a little bit below market value. This will attract more prospective tenants, ensures your property rents faster, and you will have a much better chance of keeping tenants for a longer period of time. To find the "perfect price", research similar units in the newspapers and using online rental databases.
Get the word out! We've found tenants through all of these methods:
- tell all your friends and family and even coworkers about the unit you have available for rent, as you never know where your next tenant could come from. Using e-mail is a good way to do this, as it allows you to attach pictures of the unit
- advertise online
- in a readily seen spot on the property (on the lawn or in a window) put up a sign with a phone number
- local newspapers can be a fairly inexpensive way to advertise. Ask the classifieds agent what day is the best for advertising to ensure that you have the most eyeballs seeing your ad
- university Housing Boards.
Step 4: How to show the space
The most efficient way to show your space is to have an open house. Pick a time to show the space for a two hour period one evening or during the weekend. Then have a back up time. When a tenant calls about seeing the unit, tell them that you will have a showing for all interested tenants in the first time slot, and if it's still available, there will be a second showing at the second selected time.
For a showing you should dress business casual and always make sure you have tenant application forms when you greet possible tenants.
Encourage people to fill out application forms during the open house, as this will help to make your property seem very in demand. It will also help you to keep the applicants straight in your mind, as you can record your impressions of the people directly on their application form.
Step 5: Choosing your new tenant
- review the applications. Look for gaps where a place of residence is not indicated, or look for conflicting information
- run a credit check. It's no longer enough just to trust a handshake and somebody's word; you have to run that credit check. If they didn't pay their bills in the past, then they are probably not going to pay you either
- reference checks. Be diligent when doing reference checks, asking questions like "Would you rent to them again?", "What is your current relationship with them?" and "How long have you known them?"
- listen to your gut. Do you have a good feeling about them? Despite everything else looking great for a tenant, you can usually trust your gut to indicate if you feel that something is wrong. If nothing feels wrong then you might have found your new tenant.
Now that you've chosen your new tenant and they have paid you, make all the other possible tenants aware that the unit is no longer for rent. If they ask you why they weren't selected, it's best to just say "the other tenant had a very strong application". Never say that they were not selected based on factors such as age, race, religion or whether or not they have pets or children. This will help avoid bad feelings (and possibly even a lawsuit). - 23311
What could go wrong? This lovely new tenant could be unstable and pull a knife on her roommate. Yes - it happened to us at 3am on a Wednesday night several years ago. We had to call the police and have them separate the two tenants. The innocent roommate moved out the next morning and we were left with the knife wielding tenant who then stopped paying rent and refused to move out. It took us three months to evict her. We had to send a collection agency after her for the rent money. We never received a dime.
As you can imagine, we've taken great pains to find good tenants ever since. Here's the overall process:
- Step 1: Prepare the unit for showing
- Step 2: Get your paperwork in order
- Step 3: Research the market rents and place your ad
- Step 4: Show your space
- Step 5: Choose your new tenant.
Step 1: Prepare the property for viewing by prospective tenants
Nice people like to live in nice places. A good renter can afford to be little choosy, so you want to make sure they choose yours by making it look as inviting as possible.
Easy fixes for your property include:
- fill any holes and put a fresh coat of paint over the walls
- make sure everything in the house is in good working order, including doorknobs, appliances, light bulbs and electrical sockets
- create a checklist to use when the tenant moves in and out. Inventory everything and their condition- doors, windows, drapes/blinds/shutters, plugs and light switches, shelving, appliances etc. from every room
- don't allow objectionable odors to scare away good tenants. Get rid of the smells by opening all the doors and windows.
Step 2: Make sure you have your paperwork ready
To attract a good tenant, you will need to be a professional landlord and have the right paperwork on hand. Contact the local residential housing branch of your government or go online and do a search for landlord forms to find the following:
- tenant application forms
- rental/lease agreement forms
- eviction notices and similar forms that you may need in the future. It's best to have them right away so you don't have to scramble to get them in the future if you really need them.
Each state or province has different requirements, so ensure you've got documents that are legal for your area.
Step 3: Set your price and start advertising
Price it right!
The perfect price is actually one that is a little bit below market value. This will attract more prospective tenants, ensures your property rents faster, and you will have a much better chance of keeping tenants for a longer period of time. To find the "perfect price", research similar units in the newspapers and using online rental databases.
Get the word out! We've found tenants through all of these methods:
- tell all your friends and family and even coworkers about the unit you have available for rent, as you never know where your next tenant could come from. Using e-mail is a good way to do this, as it allows you to attach pictures of the unit
- advertise online
- in a readily seen spot on the property (on the lawn or in a window) put up a sign with a phone number
- local newspapers can be a fairly inexpensive way to advertise. Ask the classifieds agent what day is the best for advertising to ensure that you have the most eyeballs seeing your ad
- university Housing Boards.
Step 4: How to show the space
The most efficient way to show your space is to have an open house. Pick a time to show the space for a two hour period one evening or during the weekend. Then have a back up time. When a tenant calls about seeing the unit, tell them that you will have a showing for all interested tenants in the first time slot, and if it's still available, there will be a second showing at the second selected time.
For a showing you should dress business casual and always make sure you have tenant application forms when you greet possible tenants.
Encourage people to fill out application forms during the open house, as this will help to make your property seem very in demand. It will also help you to keep the applicants straight in your mind, as you can record your impressions of the people directly on their application form.
Step 5: Choosing your new tenant
- review the applications. Look for gaps where a place of residence is not indicated, or look for conflicting information
- run a credit check. It's no longer enough just to trust a handshake and somebody's word; you have to run that credit check. If they didn't pay their bills in the past, then they are probably not going to pay you either
- reference checks. Be diligent when doing reference checks, asking questions like "Would you rent to them again?", "What is your current relationship with them?" and "How long have you known them?"
- listen to your gut. Do you have a good feeling about them? Despite everything else looking great for a tenant, you can usually trust your gut to indicate if you feel that something is wrong. If nothing feels wrong then you might have found your new tenant.
Now that you've chosen your new tenant and they have paid you, make all the other possible tenants aware that the unit is no longer for rent. If they ask you why they weren't selected, it's best to just say "the other tenant had a very strong application". Never say that they were not selected based on factors such as age, race, religion or whether or not they have pets or children. This will help avoid bad feelings (and possibly even a lawsuit). - 23311
About the Author:
Learn How to Retire with Real Estate with Dave's free Real Estate Investing Starter Tips Guide. Learn how to find money for real estate purchases, create financial freedom, positive cashflow and massive wealth with tips like: How to find quality investment properties, find good tenants and keep them, and easy ways to make more money with real estate.
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