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How To Choose the Best Tenants

December 03, 2021

Choosing Great Tenants is Wise

Many small to large scale landlords might agree that tenant quality is the lifeblood of most rental property investment strategies. Yet many of you may not have a thorough process to filter in the best candidates and filter out the bad ones.

The best property management 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. This is because you have to live (figuratively) with your choice. Before you screen and sign the lease with them, take your time to determine the best process of screening.

Of course, good tenant advertising and acquisition is the key to landlording success. Good tenants are a pleasure to have as customers.

Can I Just Automate the Whole Tenant Selection Process?

One landlord app type in demand now is tenant screening apps. 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 acquire the best tenants.

You can automate certain parts of the tenant acquisition process, but automating without thought and a thorough screening strategy is not wise.

A Professional Level Screening Process

Maybe you’ve gotten that old advice about trusting your instincts. It might be wiser to trust your screening strategy.

The reasoning is simple. A screening goes beyond instincts and impressions to ascertain the applicant’s true fit, ability and intent.

For most PM’s, cash flow is king. In major metros, rental prices and cost of living are serious matters. This article was written before the pandemic and landlords were truly victims of their own screening. When the economic cycle heads downward or high unemployment continues, rent default is bound to happen. Tenant generated losses are perhaps the worst that most landlords suffer.

How to Filter in the Best Tenants

Right now, what comes to mind when you visualize your ideal tenant? How do they appear to you? What’s their occupation and financial status? Why do they want your rental property?

There might be complaints about tenant screening of any kind. Others look only at the applicant’s credit rating. However, the bottom line is that your rental property enterprise is a business.  That means being thoughtful about tenant’s ability to pay and whether they’re going to work out okay.

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.  Knowing subtle differences and qualities makes a difference.

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 and countries. It’s important to follow the law, and it’s important to represent rental property owners best interests as well. Mistakes all come home to roost.

What Can You Learn About a Prospect?

The point of tenant screening to learn what it is about the prospect that makes them ideal to your needs as a rental property income business,

  • ability to stay employed and earn sufficient income to pay rent continuously
  • ability to get along with neighbors
  • ability and intent to pay the rent (who will make a priority or those who are chronically late)
  • conscientious and responsibility in taking care of the property and appliances
  • willing to develop good landlord/tenant communications
  • loyalty and willingness to lease for a long period
  • whether they will appreciate the rental or dislike it until they find another rental
  • whether they will agree to the lease contract (no pets, no smoking, no big parties, additional tenants living for free)

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, read up on what a good tenant is.

Certainly you can’t discriminate in who might rent in your units. Yet you should visualize the characteristics that make a good long term, responsible, easy to maintain, regularly paying tenant. Cash flow and low maintenance and ability to pay higher rental rates when necessary, are priorities too.  Inflation will put more pressure on tenants and you.

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 charges which can be a mark on your landlord reputation.  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 liability to loss.

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.

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.  Ask them if they intend to move in the next year.

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 their 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.

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.

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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 TipsApartments for Rent | Renters Insurance | Best Cities to Buy Rental Property | How to Reduce Tenant Turnover | Reduce Churn | How to Use Rental Property Software

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