Congratulations on purchasing your first real estate property and looking towards finding your first steady tenant. Many landlords feel both excitement and anxiety when they think about how they are going to actually screen tenants in practice. And since the majority of newbie landlords do not tap outside property management companies, especially when they only own a single property, they quickly find that they need to learn on the job. Picking a good tenant goes well beyond showing rental properties and collecting contact information. If you want to purchase additional real estate investment properties and attain more tenants, you need to come up with a great screening process. Here’s how to find your first ideal tenant.
Learn About Who’s Showing an Interest in Your Rental Property
Generally speaking, rental properties are listed as being available and landlords wait until they start receiving bites. A lot of properties end up being advertised online, but newspaper ads, fliers posted on grocery store bulletin boards, and even ‘for rent’ signs posted in front windows work well. Beyond speaking to interested parties, you should note who they are, how they found out about your property, and other basic information. For instance, you might find that your rental is popular with young couples or single working people as opposed to families and elderly people. This can help you to accurately price and advertise your listing, leading to less time spent screening tenants when you eventually have another vacancy.
Require an Application Fee
One of the most critical things you can do as a serious landlord is require all prospective tenants to fill out an application and pay an application fee. This step will help you to whittle down your list of prospective tenants and find out which ones were serious about signing a lease to begin with. Interestingly enough, there are some people who simply enjoy going to opening houses and apartment tours as a sort of pastime. They can be convincing, asking all of the right questions and take up loads of time with emails and texts, and on the outside, you can’t tell them apart from those who truly need a place to live.
Set the Security Deposit at a Reasonable Amount
Another factor that new landlords have to figure out is what to charge for the security deposit fee. Of course, local and state laws will determine the maximum amount you can charge, but it can also be helpful to be somewhat flexible. If you know someone who is interested in renting a unit from you, but they will be a couple of hundred dollars short until their next payday, you might even want to simply charge them a non-refundable deposit to hold their spot.
Observe Prospective Tenants While Showing Units
In order to be an effective landlord and turn a profit, you have to learn to separate emotion from logical thinking. On the other hand, there are parts of human nature that will have an impact on your final decision. It can be easy to turn down a prospective tenant because they have a history of evictions, but what about someone who behaves in an alarming way? Pay close attention to how prospective tenants treat your property while you are showing them. If they toss out trash on the street as they get out of the car or otherwise cause damage before they even take possession, you know you have a potential issue on your hands.
Be Knowledgeable of Fair Housing Laws
While landlords are able to use almost any criteria to approve a person to rent from them, they cannot be discriminatory if they deny a prospective tenant. There are laws that protect landlords, tenants, and the public from using unfair biases when making rental decisions. To ensure that you don’t accidentally discriminate against someone, become very well acquainted with federal housing laws and requirements.
Rent a Spare Room
Some people just decide to let out a spare room to earn a bit if extra cash. That’s OK but you need to check the person you plan on sharing your house with.
You can find residence history and find out important information on people by using the right online tools. Know whether a person has ever been involved with any criminal activity or other unsavory behavior by performing a simple residence history check. This can be a lot more valuable than simply looking up court records. Use Public Records Reviews to look at the residence history so that an informed decision can be made.
As a novice landlord, you are probably going to see it all. If you make smart decisions, you will eventually gain tenants who provide a steady source of income. What’s more is the fact that you will build relationships and bonds with your tenants, which will inevitably make it easier for you to continue to do business.