How to find great tenants?

Question

Have a 2-unit rental property, first time landlord. What tips do you have for finding and keeping great tenants? What should I do on the front-end (how to market, what forms to prepare, what checks should I do), during the rental time (ongoing support or maintenance) and on the back-end (when tenants are moving out)?

Thomas S. · Answer

You are off to a good start. keep going. What you are seeing is a highly unorganised, often fly by night, business where personal opinions rather than good common scenes business practices often rules. It is a mix of hobby and professional landlords operating at opposite ends of the business spectrum. You also have a mix of investors and speculators. You must develop your own best business practices based on knowing who is giving the advice.

My advice is always straight up pure business. Many are unable to grasp this approach.

Keep in mind all information on here must be taken with a grain of salt. There are many people on here that do not have a clue about what they are doing, every state has different regulations and even those that do know what they are doing do not all agree on what is best. Some even allow their personal feelings to influence their decisions.

Rule number one there is no place for emotions, compassion or personal feelings in this business. If you have feelings leave them at home.

Every single decision must always be made with the best interest of the business in mind. Falling for any applicants sob story is the sure sign of a hobby landlord. Applicants all lie, it is your job to find it and reject their application.

If you ever hear yourself say anything like "trust" or "assume" reassess yourself.

Dealing with tenants make this a very difficult business, never allow yourself to be lulled into complacency because you believe you have good tenants. Tenants do not like landlords, many hate landlords. Remember that.

Thomas S. · Answer

You need to start studying on this site and other sources before you even consider looking for tenants. You are no where near ready to start screening anyone at this point in time based on your questions. This is the highest risk point in your business and do not want to screw this up.  Step back and educate yourself on the complexities of tenant screening and make sure you have studied and learned all your state landlord tenant regulations and fair housing laws.

You have a boat load to learn before you will be even close to actually dealing with applicants.

This educational process should have taken place before you bought a property not after. Making a mistake now, as many novice investors do, could end your investing for the future.  You need to take your education very seriously.

Stefanie K. · Answer

What has worked for me in the city....

Advertise for free on Postlets.com and Craigslist.  Make sure you create a nice advertisement, something YOU would be interested in replying.  This has drummed up enough good interest for me to hold a weekend of "open house appointments".  You do the showings to meet possible tenants.  Have folks commit to 15/30 minute rolling slots so people feel like they have an appointment vs just it being a true open house.  You will get far more committed people to show up and people seeing others interested in your place will make them feel that it is in demand . Have tenants complete an application (free) at the property if they are interested or they can take one and email it back before the weekend ends (most of the time, the people who take them aren't REALLY interested and won't be your tenant).  Review the applications which have most of the cursory information you need to find a qualified tenant.  When you have selected a tenant, only at that point ask them to continue with the process by paying for the full background check.  If they are not serious, they will not pay, if they are, they will gladly.  If cedit/background comes back ok, follow up with prior landlords and employer to validate they will have a job.  Tip:  In Chicago, forget a security deposit, they are a massive hassle and instead consider a "non refundable move in fee" (+ addl for pets).

Other things that just seem to have worked for me.  Females tend to really like my places, I must advertise to them subconsciously :)  I love people in the service industry, never a lack of cash or opportunity to generate more cash to pay rent.

Mindy Jensen · Answer

@Jo Klekowicz , you're in Chicago? Are your rentals there, too? They have their own set of rules, so make sure to read the Illinois state landlord tenant laws, as well as Chicago's landlord tenant laws.

Jo Klekowicz · Answer

Thanks @Stefanie Kwasiborski, Account Closed. Stefanie - what cursory info does your application ask for? What do your advertisements sound like?Robert - how do you set your rent price point? I've done comps in the area, etc, but what's different about my rentals is that it will include heat and hot water, since the building has radiators. How do I price that?Johann - what service do you use? and are there better or worse services to use or all they all the same, but have different costs associated with them?

Account Closed · Answer

Than again, another unit, SQ footage and other things come in to play. My property is structurally built like a ranch home, duplex only attaches 1 wall. So there are heating loads coming from 5 directions including roof and basement. Only mentioned because math changes. I also added significantly to insulation in the attic to offset tenant heat abuse.

Account Closed · Answer

Jo, that is a  very good question. I originally advertised one of my rentals not including heat, several years ago a bit tougher market, an agent recommended I raise rent $100- per month and include heat water n trash removal. While her advice was very helpful for renting, my tenant abuses the free heat so they are able to heat up basement. $125-150 more might be a better plan. Hope that helps.

Account Closed · Answer

Every specific area within the Chicago area has its own set of market dynamics. Some areas people work more through brokers to find rentals, other areas using a broker is usually a rookie move. Would try to wrap your head around what is going to work better for a specific location. If your going to handle yourself, would use Zillow Rental Manager only, and a street sign if allowed. You could also post on realtor.com through Cozy. I prefer to start high with rent and test the waters, you can always drop rent for a tenant you like.

Scott Steffek · Answer

Jo,

I apologize if this was already mentioned, but I didn't see anyone talk about it. I strongly suggest you get yourself a quality property management company. You're very new to this and I promise you, that if you find a quality company, it's worth every dime they charge. If you do it yourself, think about this: 1. Who will run the criminal background check?  2. Who will call the references?  3. Who will accept the applications and spend hours and hours sifting through them, calling them, showing the place etc. 4. Who will take the phone calls?  5. Who will you call to fix a repair?  6.  Who's going to do the book work every month? 7. Who's going to chase a tenant if the rent is late? 8. Do you know the laws in Illinois? The state is very friendly towards tenants, NOT landlords. It can be a major pain in the rear end to evict someone. Especially if they know the laws. 9. Are you willing to learn on your first property, all the laws about what you can and can't say to tenants? I hope you don't take this in a negative way. I'm just trying to give you a dose of reality. Sometimes people "sugar coat" things and don't tell the newer people the reality of things to come. Personally, I wouldn't manage a property for anything. But that's just me. Best of luck to you, no matter what direction you go.

Stefanie K. · Answer

@Jo Klekowicz I ask for basic info like name, current address, employer, years at employer, current landlord name and number, annual income, if they have pets (number and kind).  I am pretty sure I found a basic template online when I first started.  I make it clear in my advertisement the credit score required for renting so I don't ask it during the application.  My advertisements are not fancy but I do take great photos and generally explain the unit and features and the area.  I price generally around the top of the market because I believe I have a premium product for the areas I am in and I want a quality tenant.  They aren't anything fancy (small 1-2 bedroom condos) but I keep them well maintained, nice appliances, nice paint colors, so they attract better quality tenants.   So far, this has worked well for me.  Hope that helps!

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