Watch other videos HERE
How can I have the best tenants for my rental property?
We understand that an investment property is only as successful as the tenant that’s living inside of it. So it’s really important to have good tenants that are taking care of it. You’ll find that you’ll have better return on your investment, and the management, whether you’re managing your own or you hire it out, management and the investment overall will be much more successful, much more simple.
There’s a few things that I want to discuss. Finding a great tenant is an art. It’s something that takes work, it takes process, it takes strategy, making sure that you’re following certain things that will lead and equate to a successful tenant relationship. The first one is, in the prescreening process, this is before we even allow a tenant to see the property, we want to do some prescreening. We going to ask this question. Which items are non-negotiable and critical for you to be comfortable with the tenant? Now this is subject to fair housing. You can watch my video that talks about fair housing and unlawful discrimination. Because here we’re discriminating, but we’re doing it lawfully and not against any protected classes.
You could ask some of these questions about smoking, about pets, occupancy, the length of the lease, their job and their income. What’s their situation? Are they desperate? Because if they’re showing signs of desperation, that could be a red flag. Criminal history, now this can be a gray area now with some recent changes with fair housing, so we’ve got to be careful there. Of course it’s something that we want to discuss before we even show the property.
Application process. Let’s make sure we’ve got a thorough application that’s going to be getting all of the information that we need in order to properly screen the tenant. If you want to take a look at ours as an example, feel free to take a look at it. You can copy it. We don’t really care. Just make sure that you’re following a very thorough application. You’re having it filled out every time by every adult that wants to rent from you.
Tenant screening. There’s six rules of tenant screening that I just want to briefly cover with you. I have a video where I go into a little bit more depth on this. It’s something that you should follow every single time. Rule number one, don’t trust your gut. We hear from landlords that say, “You know what, I rented to this person. They were great for a little while. We felt so good about them. They were very professional. We just had a great feeling but they haven’t paid us in three months and they’ve trashed the house.” Gut feelings don’t always pan out. People can be really good at putting on a show for you when they’re in the application process. Don’t trust your gut feeling.
Number two, write your process. Write your screening process. Write it down so that you have a checklist of things that you’re looking at, that you’re following. Here’s our screening process that we have here at Keyrenter. 14-point process where we can go through and verify everything, including on the credit reports, debt to income ratios, landlord verifications, criminal history, public registries, all sorts of different things. Have it written down and follow it consistently and you’ll be safe.
Rule number three, verify everything. If they tell you something, verify it. If they say that they’ve been a great tenant, verify it. If they say they’ve got great income, verify it. Verify everything that’s according to your checklist.
Number four, don’t cut corners. Just don’t. Don’t deviate from your process. The one of 10 principle is it’s better to deny nine applicants that are iffy or have issues, will be challenges, and go with the one that will be great. For my investments, if I have to go through 10 different sets of applications to find the one that will work, then that’s fine. Now if the first one happens to qualify on paper and everything on paper shows that they’ll be a great tenant, then great, I lucked out. But oftentimes that’s not the case.
Number five, be consistent. Again, don’t deviate from it. Don’t be desperate for a tenant. It’s not worth the hassles that you’re going to have by trying to get someone out of the home that they’re living in. If they don’t work out, you’ve got problems, and it turns into a bad situation, that’s a bad thing. We want to avoid that as much as we can, so be consistent.
Number six, discriminate wisely. With fair housing, there are different classes that we cannot discriminate against, but we can discriminate. We can discriminate if they’re smoking. We can discriminate if they have been poor tenants in other properties or they don’t make money. We can discriminate all day long, but not against the protected classes. We got to understand those. Discriminate wisely.
The next category is expectations. What is absolutely needed in order for this relationship to succeed? Write those down and just have a plan for your property. Then you’re meeting with the tenant you can set those expectations. Talk to them about rent payment, when, how, etc. What happens if they don’t pay? Let them know when they’re going to have the late fee. Of course, the lease agreement should outline all of this stuff, but you know that people don’t always read contracts thoroughly, so make sure you’re properly setting expectations about rent, when you’re going to post a notice.
Maintenance and repairs. Who is responsible for what, as well as when, and how, and how do they put in a service request to you, and what are the sort of things that they should be responsible for, and do they know how to do those sort of things? Make sure that you’re setting up that tenant to succeed in your property.
Then just other standards. If there’s house rules, things that you want to make sure that they’re abiding by that are legal, of course, and ethical, and reasonable, make sure that you’re setting the expectation. Don’t just leave it in the lease agreement to be read and then you call them up and say, “Hey, you’re not doing this from page nine dash whatever whatever.” Make sure that you set the expectation with them in person or at least over the phone, or at least via email in a very short, bulleted list so that they know what you’re going to be expecting and measuring against.
I hope this is helpful. This is how you can find great tenants for your properties. Again, if you have questions about this, feel free to reach out to us. We’re happy to help out.