If you buy real estate as an investment, that means that you have to deal with finding and keeping quality tenants. Good tenants who take care of your property, pay their rent on time, and stay in the property for years are key to making your rental property business profitable. However, how do you find such tenants and how do you know them when you see them.
1. Create a tenant profile. Knowing ahead of time the minimum credit score, employment history, income and other parameters that you are willing to accept will help prevent you from getting swayed by a charismatic personality or overlooking a good candidate who happens to be meek.
2. Use newspaper advertising as a last resort. Traditional classified ads for tenants not only costs money, but it offers no way to qualify who is seeing your ad. You may get a pile of responses without any of them meeting your criteria. A better (and less expensive) option is to offer your existing, good tenants an incentive for introducing you to new, quality tenants and/or using focused social media groups to advertise your properties.
3. Be realistic in your expectations. It's often necessary to limit your expectations based on your likely pool of tenants. For instance, if only 10 percent of the residents in your county are college graduates, it's probably not realistic to expect your new tenant to have a degree.
4. Do the background checks. This may sound obvious, but many part-time landlords have other job and family responsibilities. It can be easy to skip the background check if the applicant looks good on person and on paper. However, anyone can fill out a stellar application and wear a nice suit. You don't want to turn over the keys to a part of your investment portfolio without doing your due diligence.
5. Don't stop showing the property until the check has cleared the bank. It's also a good idea to keep prospective tenants in the pipeline up until the point that the new tenants funds are deposited in your bank account. That way if he or her check bounces or he or she backs out of the agreement, you still have someone to move in your house or condo.
Attracting the most qualified tenants you can find is a key part of a successful property business. Improve the tenants you attract by knowing your tenant criteria before you start accepting applications, eschewing traditional newspaper advertising in favor of personal recommendations or targeted Internet ads, and making sure to do the necessary credit and background checks.