Potential Tenants and Communication

[Samir T.]

Hello everyone.

I just bought my first investment property and have it listed for rent. I’m coming across a trend and wanted to see if it’s the norm for everyone.

On a daily basis, I’ll field questions about the rental or hear from interested parties wanting to tour the place, but eventually it goes no where. For example, yesterday an individual asked me to tour the place on Monday. I said sure and asked what time works best, and no response. This has been the case often. Is that normal? It has been happening all the time. Do you guys follow up with these individuals or just let it be. I haven’t been because I don’t want to chase them. If the want to see the place, they will...

Thank you.

[Wesley W.]

Here is my system that I have shared on the forums previously:

It all starts with online ads, within which are several questions I request be answered in their response to my ad. Here they are:

1.) Your first and last name, email address and phone number
2.) Total number of people that would occupy the apartment
3.) Proposed pets (size/breeds)
4.) Monthly pre-tax income for household
5.) Date you wish to move in

6.) Do you currently have enough funds to pay first month’s rent, last month’s rent, and a security deposit?

Next, here's a canned email response I use for everyone who answers my ad with the aforementioned questions answered. If they don't answer my questions, I know they have not read the ad and are just clicking and "tire kicking" or they lack the intellectual focus for me to have any business relationship with them.  

I market on both Craiglist and Zillow and get great leads from both in my market. Problem with Zillow is they have this annoying "1-click reply" where people can just click on your ad without reading it and you get an automated message "Joe is interested in your apartment at 123 Main St." To these responses I just cut/paste the ad narrative into an email reply. This is a waste of my time, but until Zillow wishes to change their process, I am stuck with that if I want to market through them.

Here is the email response:

Thank you for your interest. We have a minimum income requirement to qualify for this unit (3 times monthly rent); based on your email, it appears you meet those qualifications.

Regarding pets, we allow cats and most dog breeds except for the following:

• -any breeds/mixes known under common parlance as “Pit Bull”
• -Rottweiler
• -Doberman Pinscher
• -German Shepherd
• -Alaskan Malamute a.k.a “Husky”
• -Chow Chow
• -Great Dane
• -St. Bernard
• -Akita
• -Wolf hybrids

Unfortunately, these are prohibited for insurance reasons. We require a one-time nonrefundable pet fee of $250 (per pet) that is good for your entire length of residency. We do not charge any “pet rent” beyond this initial fee. We typically like to meet your pets at some point in the process, too.

Our tenants’ safety and the peaceful enjoyment of their home is important to us, so we do a credit/criminal background check on all applicants aged 18+. Big concerns are bankruptcies/repossessions/evictions and crimes against people/property. If you don't foresee any major stumbling blocks (or, if you do, and would like to discuss confidentially - we can certainly do that), I'd be happy to set up a showing for you. Let me know what you think.

As a matter of information, smoking is prohibited inside our rental units.

If you decide that the apartment would meet your needs and wish to proceed with the application process, a “deposit to hold” binder equal to a month’s rent would need to be collected at that time. This holds the unit for 5 to 7 days until the lease signing, and once the rental agreement is signed this becomes the first month's rent. At the lease signing, you will need to put down another $1650, which will be the security deposit ($825) and last month's rent ($825). So, the total move-in costs (not including pet fees, if applicable) would be $2475, all paid prior to lease signing.

Also, we would need copies of the two most recent pay stubs and photo ID for all applicants aged 18+ (I can scan at the showing) to begin the verification process, which only takes a few days.

Since choosing a place to live is a very personal decision, please feel free to do a “drive by” of the property, located at 123 Main St, so you can get a “feel” for the neighborhood. (I will ask that, out of respect for our current tenants’ security and privacy, to please wait until your showing appointment before walking the property.)

If everything above is agreeable to you, let me know your availability and I'd be happy to take you through the apartment.

Thank you, and I look forward to meeting you at the showing!

Note how I reiterate the qualifying criteria as well as itemizing what the move-in costs will be. I also suggest a drive-by so they are not unpleasantly surprised by the neighborhood when they to the showing, and just keep on driving by anonymously as I wait outside. This email gives people yet another opportunity to self-select out of the application process based on my expectations and criteria before an actual showing in scheduled.

If they do request a showing, I send them this email:

Hi Sally,

How about Thursday at 7 pm?  If that works for you, please reply to this email within 36 hours to accept this appointment and I will then add you to my showing schedule.

Also, as a means of courtesy to both our busy schedules, please confirm via text or phone call at least 2 hours prior on the day of the showing to my cell phone (area code and number).

I’ve also attached our rental application. I will have hard copies at the showing, but if you print and fill them out prior to the showing, this would save us both some time should you want to expedite your application in the process.

I look forward to meeting you on Thursday!

If they have not confirmed an hour prior to their appointment, I send this text to their phone (which was required as part of their contact information I required in the response to my ad):

As I had requested in my email, you have not yet confirmed your apartment showing for this evening, scheduled for 7:00pm. If I don’t hear from you in the next 10 minutes, I will assume you aren’t attending and I will move on to my next appointment.

Using this system as dramatically reduced any wasted time I used to endure as part of the showing process as well as giving me data about their timeliness/responsiveness/respect for others' time.

At the showing, I collect their completed application (sent via PDF prior or filled out on premises), scan their photo ID and last 2 pay stubs.

Then, I do some digging around online (social media, court records, Google) and if it looks like they are representing themselves to me accurately, I contact them to set up a "contract to hold" meeting - usually the day after the showing since qualified applicants need to be "closed" ASAP. (During this whole time I continue to market/show the unit. I continue to funnel people into my process until a lease is signed.) Note that I do not put a lot of time into due diligence until the "contract to hold" meeting, when they put some skin in the game.

At the "contract to hold" meeting, I collect an amount equal to one month's rent. I ONLY accept cash or a check drawn on a local bank (so I can walk it in and get cash that same day). We sign an agreement that commits their non-refundable payment for a brief period (usually 5 days), during which time I call landlords, employers, and run background checks. If there is anything untoward, I have a 7 day right of rescission and I give the money back. I absorb the background check fee as it is a small price to pay for dodging the bullet.

Once background checks are complete, we meet again for a lease signing, at which point I collect the rest of the move-in fees. I only give them a short time (about 5 days) to meet for the lease signing before they lose their exclusive rights to the unit, so this prevents someone from dragging their feet after they've signed the contract to hold.

Once the lease is signed, I take down the ads and send out emails to people in mid-marketing flow letting them know that the apartment has been rented but I will reach out if something falls through.