The Key to Rental Property Management – Really Good Tenants!
We’ve mentioned the importance of good tenants in other posts on Tenant screening, and property management profit growth posts. And many PM’s might agree that tenant quality is the lifeblood of most rental property investment strategies.
If you’re a new property manager managing a small handful of properties or a new landlord, it’s worth it to pay more attention to tenant marketing and selection.
The best property mangement companies put an emphasis on finding the best tenants – those who really do want to live in your rental home, pay on time, and treat your property with respect.
One landlord app in demand is tenant screening. Landlords want to check out applicants quick to save time and energy. Sure apps are helpful, yet we still need a more professional process to get the best tenants.
A Professional Level Screening Process
Maybe you’ve gotten that old advice about trusting your instincts. Yet if your instincts haven’t worked before or you’re a newbie property manager, it’s better to build a solid tenant selection strategy. Trust your screening strategy.
The reason is simple. For most PM’s, cash flow is king. In major metros, rental prices and cost of living are serious matters. When the economic cycle heads downward, it will get more serious as people lose jobs. Their financial capability and job security are very important to your cash flow.
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A couple of missed payments can ruin your investment and we don’t even want to think about defaults. And for enterprise property managers, tenant turnover really eats into the bottom line. Great properties are one thing, but great tenants can cut your workload significantly. The only thing that cut your workload more is perhaps the best property management software.
How to Filter in the Best Tenants
Tenant analysis and selection is likely the most neglected task of most property management companies. A credit and reference check is about the extent of it. Have you ever wondered if that was a risky approach business-wise?
Right now, what comes to mind when you visualize your ideal tenant? What do they look like? What’s their occupation and financial status? Why do they want your rental property? Have you reviewed your initial observations against the actual bottom line results in workload and revenue? What’s the ROI on your selections?
Tenant marketing and selection performance isn’t offered in most property management apps, yet it impacts your sustained financial performance.
Write down the top 5 attributes of an excellent prospect so you can track back in a month from now about how your views have changed.
If professional growth and better results are what you want, a review might help you understand a lot about your assumptions as an investor, landlord or property manager.
How Much Can You Learn About Prospects?
To deal with a lack of reliable knowledge about tenants, some tenant screening services are digging in deep. They’re controversial, however at this time they’re not illegal in most states. It’s important to follow the law, and it’s important to represent your owners best interests. Mistakes all come home to roost.
Should you screen in with positives and rank them, or just screen out with negatives which may be less work? Some property managers screen out prospects with many negatives but that doesn’t tell you which is the best. Other PMs screen in with all the positives and rank the best.
Even if you focus on positives, income, credit, character etc. you have to know about the negatives. If it comes up later, your owner will not like that you were blind on the negatives. They’ll lose confidence in you.
7 Ways to Get Much Better Tenants
1. Have a Clear Idea of your Ideal Tenant. Take an inventory of your best long term tenants and that will tell you which future tenants you might focus on.
Certainly you can’t discriminate in who might rent in your units. Yet you should visualize the characteristics that make a good long term, regularly paying tenant. Cash flow and low maintenance and ability to pay higher rental rates when necessary, are priorities.
2. Don’t Discriminate. Do you discriminate against a single person who would like to rent your house? Do you cancel disabled people right away? If you focus on their character and ability to pay, you can avoid common discrimination. Just because they work in the neighborhood doesn’t mean they’ll be at that job for long. Their religion, family status, and physical limitations might actually make them stay longer, thus reducing your work.
3. Advertise in the Right Places. Professional marketers know that you are where you get your customers come from. The source is everything. Advertise in upscale apartment rental websites or websites related to the interests of your ideal prospect. Desperate advertising in the wrong places brings the wrong tenants who could be more costly long term. Google, Linkedin, and Facebook have targeted ad capability and can help you gain fine tuned exposure to the ideal tenants.
4. Write Your Apartment Rental Ads Carefully. As we describe in this post, how you describe your rental opportunity pulls in specific renters. You determine what you get. The renter you want should like your words and phrasing of the specific features and benefits of living in that home.
Just selling the rental opportunity isn’t enough. You’d be fishing with a big net and catching unwanted prospects.
5. Tenants with Good Credit and Income. Tenants with at least earnings of 3 times the rent are best if you can attract them. What is their debt to income ratio? Tenants with a solid record for paying bills on time and who can meet emergencies are better. With rents and inflation growing, the tenant’s ability to keep paying is in question. Even one default can create a lot of work for you.
Definitely use one of the tenant screening services and assess the types of “negative marks” on their credit history. And of course, check for the usual prior evictions, civil judgments against or bankruptcies as a general indication. A bankruptcy during the last great recession was a common event so don’t make it a cancelling item.
6. Tenants with a Good Work Record. Anyone who changes jobs frequently raises the likelihood they’ll have to move at some point. Upwardly mobile people are great, but they move on. Call their past employers to confirm length of employment, attendance, and exact earnings to compare to what the prospective tenant stated.
7. Tenants that Stay and Don’t Damage the Home. Call the former landlords and ask about relations with that tenant. Did they pay on time? Did they say they were looking long term and then cancelled their lease after one year? Did they get along with neighbors and establish a lasting situation for themselves? Ask the prospective tenant about former residences and what they liked and didn’t like about the unit, neighbors, and the landlord.
Drill Down for Real Insight
If you drill down in each of these areas, you’ll get a better view of renter prospects, free of your own misconceptions and prejudices. That could wreck your vacancy advertising. It might be your own marketing and screening habits that hold you back from higher property management performance.
When owners see you’re this in-depth about your practices, they’ll be impressed and respectful. This is one of the ways you can build demand for your services and build your reputation with owners and investors.
Good luck optimizing your practices and financial performance. A focus on this will serve you well as a professional property manager who is upwardly mobile.
Combine your professional skills with a great property management solution and you’re ready to excel. Take ManageCasa for a test drive while you’re here. See why ManageCasa has more to offer for enterprise or SMB property managers at an affordable cost.
Tips for Property Managers and Landlords
See also: Property Management Companies | Property Maintenance Checklist | Best Time to Sell Property | Landlord App | Property Management Account Software | Best Rental Property Management Software | California Housing Market | San Francisco Housing Market | Texas Rental Market | South Florida Rental Market | When to Buy Rental Property? | Rental Housing Market | Rental Property Management Software | Property Management Tips | Apartments for Rent | Renters Insurance |Best Cities to Buy Rental Property | How to Reduce Tenant Turnover | How to Use Rental Property Software