Clues to Finding Long Term Tenants

Clues to Finding Long Term Tenants

 

One of my major themes for any landlord is to focus on long-term tenants.

 

Why? Long-term tenants can greatly reduce your labor and costs as a small landlord because you have fewer turn-arounds (and all the related unit preparation) as well as fewer vacancies and related work in screening new tenants.

 

Landlords with one or one hundred units can benefit from long-term tenants (reducing costly turnovers). My focus is on the part time landlord with a few units, but some of these tips are pretty universal.

 

But how can you attract and retain those looking for long-term tenancies?

 

Of course, all screening and selection should first be legal (see your states rules and federal fair housing rules for more guidance). But when you have a pool of qualified applicants, using neutral business criteria like these factors below can help you hone in on which ones may be your next long term tenant. Put on your detective hat and try and look more deeply at your next stack of rental applications for clues like these....

 

Aim for Them: Goes without saying, but some people forget to mention the required tenancy length in the advertisement. I list only six month or one year, to be flexible. But many people require a one-year lease. If you don't set parameters (which I once did with an ad early on) people will even ask about weekly rates.

 

Parse Past Tenancies: Rental history should be a key factor in any tenant selection decision. As you might suspect, a leopard doesn't change his spots. So if you select a tenant coming off a long string of short 3-6 month tenancies, you probably don't want to put away your cleaning supplies (you'll need them in a couple of months). On the other hand, my longest serving tenant (over five years) was coming off a seven-year tenancy. Some people settle; others are just rolling stones. Look for tenants with a pattern of long-term tenancies.

 

Look Deeply at Employment or Source of Income: Another great neutral category is employment. Our first instinct is to focus on the income (and maybe to make sure the person is not an venomous snake breeder that brings home work), but employment also can indicate how long someone will stay. Again, if you pick a tenant who just has a summer job in your area, keep the same ad handy so you can run it again in fall (I learned this the hard way doing some seasonal rentals). However, someone with a three-year contract in the area is likely to stay in your unit that long. A postal worker and an intinerant construction worker may have the same income but in terms of longevity, one is clearly preferable, with the construction worker leaving when the project is done and the postal work in town for the foreseeable future. You may even know a bit about major employers in your areas. Some may have rapid turn over and others keep employees for life. Similarly, some industries, like education or health care, may be more steady and long term than drilling oil wells or highway construction.

 

Fit: My longest term tenants have liked (even loved) the rental unit from the outset. It generally fit their needs. Those with some reservations or difficult requests seldom stayed longer than the lease (if even that). If your applicant has a true passion to have a horse on the property (and you can never legally accommodate this in your condo), realize the tenancy will only last until the tenant can find a real home (your rental will just be a stay over). Similarly, people who really want a yard and a garage for their car (and you lack both) or a rental closer to work, will probably be gone as soon as they can find a place that fits them better.

 

Finances: Of course, you will use consistent ratios and look at income and debt in your rental application (a process explained I have see explained many times on this BP site). But a further analysis can be a clue for tenant longevity. If the rent is a stretch or financial strain, it is not recipe for long-term success. Instead the tenant will be gone as soon as they locate a more affordable unit (or worse, not pay you).

 

Fur and Fins: While I don't have a scientific study, my longest term tenants have  been pet owners. Partly this makes sense as it is much harder to find another rental if you have a pet in many locations, making them less apt to move on quickly. You also have to generally be more settled and stable with pets (making it hard to pick up and move or jump on a plane). Of course, many landlords may not allow pets.