Demand for rental properties is as high as it has ever been, but that doesn’t mean that finding great tenants is a complete breeze now. Property owners and managers still have to use solid judgment and do the things that attract responsible, reliable renters.
Looking at the ScorecardYou want tenants who will pay on time, get along with their neighbors and treat the property well. Unless you happen to be psychic, you’re going to need to look at an applicant’s track record. You’ve got to make sure you have as thorough a method of advance screening as possible. Find out applicants’ criminal history and whether they appear on sex-offender registries. Learn their credit score, how long they’ve been in their job and what their references say about them. (Assuming you can reach those references, which can be a clue itself.)
Usually, you can paint a pretty good picture, because those are all points on a scorecard.
The 3:1 RuleGet third-party verification of the applicant’s income to make sure they can afford the monthly payments. Our company uses a 3:1 ratio, meaning the tenant needs to bring home at least three times what the monthly rent costs. Often, the price point of a property is a kind of screening tool itself. An $1,800 rental is going to attract a different kind of tenant than a $600-a-month property.
What if an applicant has a good income and a stable work history—but a blemished credit record?
In some cases, you might consider working with them anyway. Maybe that person is getting over a foreclosure or survived a War of the Roses-style divorce. He or she could still end up being a very reliable tenant. You may be able to protect yourself by requiring a larger security deposit than normal. Different states have their own rules on this, so make sure you’re in line with the regulations where you operate.
Can you Picture it?When you advertise a property, pictures can be one of your best tools. Just think about the example of two people selling the same used car on Craigslist. If one of them posts eight pictures with their ad, and the other only has one, the person with eight photos is going to generate more calls and emails.
While more pictures are better, be careful about quality. Don’t include anything that’s out of focus. Leave out photos where your thumb or the camera’s strap accidentally covered part of the lens.
You’ll obviously include basic information about the property itself—number of bedrooms and baths, square footage, laundry facilities—but don’t forget to tout nearby amenities that might attract tenants, such as swimming pools, parks and hiking trails.
And unless neighborhood rules forbid it, be sure to put a “For Rent” sign in the property’s front yard. That’s a free opportunity to advertise your property.
Remember the BasicsFinally, remember the basic “blocking and tackling” of property management. If a potential renter calls with questions about a property, get back to them in a timely fashion, before they move on to a different company. Having a smooth-running operation can be a big help as you attract—and, with any luck, retain—great tenants.
Originally published in Community Investor Jan/Feb 2014