Thinking of buying a property to cash-flow as a rental? Great idea! The only problem: you have to find someone to rent it from you.
At first glance, this process seems easy: put an ad in the paper or online, show the property and start collecting payments. But, as anyone who’s been a landlord can tell you, finding a responsible tenant takes either a lot of luck or some savvy know-how. Horror stories abound, from tenants who refuse to pay rent to those who trash the building and/or get arrested. Rent your place to an unreliable person, and you could face all kinds of legal fees trying to evict them, not to mention the costs of fixing up your unit afterwards.
So what should you do? How can you screen potential renters and find someone who you can count on to pay each month, along with taking good care of your property?
1. Have a good property to rent.
This sounds too obvious to mention, but, the reality is, better-quality rentals attract more responsible tenants. Have your unit in top condition when you’re ready to show it, so that it will appeal to the tenant with options. Remember: it’s not just you who is interviewing them, so to speak; the potential tenants will be getting a feel for you and your landlord style. And that’s something that matters to good tenants.
2. Price it right.
And by right, we mean that you should price it just under comparables. This attracts the largest number of applicants, so you’ll be more likely to draw tenants you’ll feel comfortable with.
3. Check credit! Call employer!
Run the tenant’s credit report and call previous landlords—not just the current one, who could be influenced by wanting to get rid of him or her. Call the listed employer and verify position/company. You may even want to ask for a copy of a pay stub for added assurance.
4. Create a lease.
If all of the checks on the candidate come out well, you’re ready to have them sign a strong lease that will protect you from any problems.
5. Be a good landlord! (because that’s how you keep good tenants)
The final piece of advice regards your behavior more than the tenant’s. When you’ve found a responsible renter, make sure you do everything you can to keep him or her! Mainly, this means being responsive and following through on what you’ve said you would do. Also, when lease renewal comes up, you could also offer incentives to entice the tenant to stay (example: rent decrease, free house cleaning, etc.)