The Science of Finding (and Keeping) Good Tenants for Your Rental Properties

By Keith Blazek2 Comments

Finding quality tenants is one of, if not the most important aspects of being a successful landlord. Your tenants are essentially your property’s cash flow, so make sure you make as sound of an investment in whom you rent to as you do with what you rent. Good renters will pay in a timely fashion and be respectful of you, the neighbors, and the property itself.
 
In a recent Eriesense newsletter, Erie Insurance provides a guide for choosing and working with tenants.
 
Ideas for spotting quality tenants
  • Do your research, investigate, and screen. Treat your tenant screening like your investment property search. A good renter will make you money and bad ones will cost you money and stress. Check their references, especially past landlords, and drive by their previous residence. How they were in their last rental will likely be how they will be as your tenant.
  • Be proactive and advertise. Don’t just hope prospective tenants will find you. Actively target the type of tenant you are seeking, whether it’s a certain demographic, income level, or geographic area. If a quality tenant is on their way out, ask them if they know anyone who is looking for a place. It is important to build positive relationships with your tenants because referrals can make a major difference in your practice. Quality tenants are likely to refer quality tenants, especially if they had a great experience with you.
  • Remember tenants are more than rent checks. Just because someone is able to pay in a timely manner (or willing to pay a higher rate) doesn’t mean they will be worth it. A quality renter who will not cause headaches or cost you money is worth more than a surly tenant who might pay a little bit extra.
Things to tell a new renter
  • Stay safe: Clearly explain and point out all the safety equipment. Show them where the smoke and carbon monoxide detectors are, where and how to use the fire extinguisher, and teach them the alarm system. Make sure all locks and keys are up to date. You may want to consider outlining the fire escape plan as well.
  • Set expectations up front:  
  • Clearly outline your expectations for rent payments, including how much it is, when it should be paid, late penalties, where to send it, and what methods of payment are acceptable (cash, check, etc.).
  • Clearly explain your expectations for how they treat and care for the property, how they should interact with neighbors or other tenants, and rules of the property. Include your expectations for property boundaries, who is responsible for mowing the lawn or shoveling the driveway, what they are allowed to change within the property (painting, hanging shelves, etc.) and who is responsible for minor or major repairs.
  • Discuss your communication preferences. When would you like them to call you and when is an email update acceptable? Who should they contact in case of emergencies? How would you like to handle it when they report a problem or have a dispute?
Now that you know the key to finding a good tenant, think about your plan for succeeding on the profit end of the real estate deal. Did you know you could potentially reduce or eliminate the taxes you pay on your real estate investment profits? Talk to one of our Senior Account Executives about using a self-directed IRA to fund your next real estate investment and discover the potential tax benefits this strategy can provide.