Okay, so Liz and I bought our rental property at the end of November. We’re starting to see the light at the end of the tunnel for the renovations, so what should we be thinking about next? Getting some bodies into that house that will actually make the monthly rental payments! We want to attract the best tenants possible…
I have quite a few friends that have tried to be landlords, but somehow they kept getting crappy tenants that trashed the home and couldn’t keep up with the rent payments. These are definitely NOT the tenants I want living in our nicely remodeled house.
After getting the lowdown on their experiences, I realized that they were doing many things wrong in the land-lording department. Basically, they were so excited to get a renter in their home that they just picked the first applicant that walked in off the street! Inevitably, they turned out to be terrible and my friends evicted them, but then simply picked the next warm body that showed interest in the rental. This is most certainly not how to attract the best tenants for a rental property.
How to Attract the Best Tenants for a Rental Property
The last thing I want to do is waste my time catering to a bad tenant that fails to pay and destroys our house during their stay. So how can I attract the best tenants for a rental property? I’ve done my homework on this one and have come up with the following methods. Feel free to use them in finding your own quality tenants!
#1. Decide Who Your Ideal Tenant Is
This is the most important step to attract the best tenants for a rental property. After all, if you don’t have an ideal tenant in mind, how will you know if your applicant will be any good?
Our rental is located across from a fantastic park and is two blocks away from a very popular charter school, which makes it an ideal home for a young family with one or two kids. Ideally, the parents should be earning an after-tax income of $3,500 a month (roughly 3x what we’ll be asking for rent).
This house is also located about 7 blocks from a popular college in the area, so we might be interested in having some college students rent out the house as well. This isn’t our most desired scenario, but if we get a quality applicants that prove they can handle the rent, then this would be perfectly acceptable as well.
#2. Market to Your Ideal Tenant
Once you decide who your ideal tenant is, put on your marketing hat and find a way to round up only those people for your house showing. One landlord I spoke with liked to have his house rented out by local female nursing students – so where do you think he advertised? At the college of course!
He teamed up with the housing coordinator at the college and had her mention his place when the nursing students would inquire about housing. Remember, it’s illegal to discriminate against applicants, but that doesn’t mean you can’t market specifically to your dream tenants!
Since our ideal tenant scenario is a young family, marketing is a little trickier. Our options are to:
- reach out through our social network for quality tenants
- post advertisements near parks or within parent/child activity venues
- advertise through Zillow, Trulia, and Craigslist
- advertise through my company’s online classifieds
#3. Give All the Details Up Front
Less is definitely not more when advertising your property for rent. People don’t want to take the time to call you for clarification, so if you don’t mention that your property has air conditioning, they’re going to assume that your place doesn’t have it.
Here are some important items to put in your listing if you want to attract the best tenants for a rental property:
- location with specific address
- # of bedrooms
- # of bathrooms
- monthly rent price
- cable/internet included?
- application fee
- deposit amount
- new renovations
- when is your property available
- mention that you’ll be requiring recommendations with the application
#4. Show the House as if You Were Selling It
For whatever reason, many landlords assume that renters are just going to trash their house anyway, so they fail to fix it up enough to attract the best tenants in the first place.
If you want great renters that wish to live in your place for two years or more, then you’re going to have to show your house as if you’re trying to sell it – and for a hefty price tag as well.
Curb appeal is important. A few simple bushes and flowers could really turn your bland house into a looker. And, when they walk in the front door, make sure that that smile stays on their face – especially with the kitchen! Kitchens make or break home sales, and the same is true for rental properties. Don’t spend thousands of dollars to update your kitchen, but at least make sure it’s clean, neat, and functional.
If your marketing techniques pay off, hopefully you’ll have multiple tenants that are interested in your place. Instead of meeting them all individually, hold an open house. This will do two things:
- Make them realize that if they want the house, they’ll have to fill out an application – and FAST!
- Save yourself tons of time and travel
#5. Show Yourself Well
Many landlords use the first meet and greet to gauge the caliber of their potential renters. What many don’t realize is that the quality tenants are actually sizing up the landlord as well! If you want to attract the best tenants for a rental property, be sure to dress well and be on your best behavior.
#6. Charge an Application Fee
In order to attract the best tenants (and not just every single person that has a vague interest in renting the property), it makes a heck of a lot of sense to charge an application fee. The purpose of the fee is mainly to cover the costs of pulling their credit history, but it will also save you a ton of time by weeding out those that know they probably won’t qualify and therefore really don’t want to spend money to confirm it.
An appropriate amount for an application fee is $25. It’s not so much that it will scare everyone away, but it’s probably not quite enough to cover the expense of the various background checks and your time, but that’s just how it is with this one. A standard rental application can be found here.
#7. Create Your Contract With Your Perfect Tenant in Mind
If you want a non-smoking tenant that has absolutely no pets, then put that in your contract. State that pets are absolutely not allowed on the property and if they wish to smoke, they must do so outside of the house. When you’re forming your contract, do so with your dream tenant in mind. Want an example of a standard rental agreement? You can find it here. Props to BiggerPockets.com for providing many free resources for new landlords like myself.
#8. Perform Background and Credit Checks
If you want to attract the best tenant for your rental property, then you’ll definitely want to perform background and credit checks before handing over the keys.
First, start with their rental history. Don’t bother calling their current landlord (as he might lie about their history to get them out of his rental!), call the prior landlord instead. Ask about how well they kept up the place and how often they paid on time. If everything checks out, move on to verify their income.
It’s very important that your potential tenants actually have enough income to afford the property. As a rule of thumb, your tenants should be bringing home 3 times the amount of your rent each month (after tax) to cover all other debts and living expenses. To check this, simply call the manager that they listed on their application fee, state who you are and what your purpose is for calling (hopefully the tenant told them this was coming), and verify their earnings amount.
Once they pass the first two tests, it’s now time to pull the actual background and credit checks. There are some freebie sites out there, but they might not show all the detail that you’d like to know. Instead of being cheap here and ending up with a poor tenant because you didn’t have visibility to some important information, I’d suggest splurging a bit and learning all there is to know before you hand the keys over and let complete strangers stay in your house.
(For my prospective tenants, we ended up using TransUnion SmartMove. Their prices were reasonable and it was super easy to use and understand.)
#9. Keep Your End of the Bargain
You’ve done your due diligence to attract the best tenant for your rental property. Now you’ve got to continue doing your job well to keep them there! Keep your phone on you at all times to respond to matters quickly. Calls may be plentiful at first since there may be some quirks that need correcting in the house, but they will likely die down as the months pass.
Beyond just being responsive, be sure to perform proper maintenance on the house each year. Study the roof, the windows, and the general upkeep of the entire place. Your tenants will appreciate the maintenance work and it will save you a lot of time and hassle for when they finally do move out.
#10. Offer an Incentive for On-Time Payments
Another way to attract the best tenants for a rental property – and ultimately to keep them around – is to provide some incentive for all of their on-time payments. Heck, I would put it in the contract!
“With 12 consecutive, on-time payments, the tenant will be awarded a 32″ flat screen TV.”
The flat screen will probably cost you $200, but with $12,000 worth of on-time payments, it’s probably worth it! If you’re renting out a place and are looking to attract the best tenants for the property, this is often a great way to get them excited about staying with you!
Are you looking to attract the best tenants for a rental property? What else would you consider doing?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.