For those of you out there who have the stomach to own and manage rental properties, you might find yourself wondering how to find good tenants. All it takes is one bad experience to sour your taste for real estate investing. Finding high-quality tenants for a residential rental property you own can be challenging and time consuming. Here are some tips and best practices:
- Take some pictures of the property – inside and out. They don’t’ need to be professional quality, but should be in focus, well-lit, and give a good sense of space. Use a decent-quality digital camera if possible. Take more photos than you think you’ll need. These will come in handy if you need to email them to an out of town prospect.
- Use free service such as Postlets to help organize your pictures and create a professional looking ad on Craigslist. Take your time and create a descriptive well written advertisement. This may not eliminate the bad prospects, but it will help attract the good ones, especially compared to a poorly written advertisement. You might also consider placing a “for rent” sign in your yard and advertising additional websites such as Rentals.com.
- Establish a set of guidelines for tenants and stick to it. Figure out what is important to you such as minimum credit score, clean criminal background, and your policy on pets and smoking. Make sure your familiar with the Fair Housing Act. You’ll want to make sure that your guidelines don’t violate any federal laws. Don’t feel pressured to rent your home to the first prospect that comes along, or someone who doesn’t meet your guidelines. You may regret is later on.
- Start showing your home and intimidate the bad prospects away. Explain that you will be the best property manager they’ve ever had, but you are very selective. Let them know you do a thorough background check including talking to references and prior landlords, and requiring proof of income. You’ll find that many of the less qualified tenants won’t bother filling out a lease application in person and will end up moving on to a less discerning landlord.
- Screen your prospective tenants carefully. Have them fill out a lease application giving you permission to check their credit reports and verify employment and income. Find out what kind of past tenant they’ve been, have they made their rent on time, had prior evictions, and what condition they left their last home in. You also might find it helpful to use a tenant screening service such as E-Renter or TVS to pull credit reports, verify identify, search for past criminal activity, etc. These services range from $20 to $40 per person and are only as accurate as the information systems they access.
Once you’ve found a qualified tenant, be sure to sign lease agreement and review your expectations with them thoroughly. You’ll want to make sure your first months rent and security deposit are paid with a cashiers check to avoid a bounced payment. Make sure your lease agreement has been reviewed by an attorney and you have the appropriate NV dwelling fire insurance to cover your home and liability exposure. Good luck!