You might be interested in renting out your home for a variety of reasons. Maybe you would prefer to sell but can’t find anyone willing to pay the price you need. Maybe you’d like to travel like Bilbo Baggins and take an adventure. But how to find a tenant who will pay the bills and take care of your property? That’s the question.
Here are 5 steps that will help you do just that:
1. Intel to Help Find Tenants
You need to know what homes like yours are renting for before doing anything. The best place to get that information is Craigslist or other online site such as Rent-o-Meter. Make sure you keep a file of your competition so you can reference it in the future. This is important because you’re going to want to gauge the actual quantity and quality of leads that result from the ads you place and the price points you advertise.
2. Target Your Market
Realize that you will always get better tenants if your property is at the higher end of the value proposition. In other words, even if you are in a very middle income neighborhood, you’ll find better tenants by offering a little more than your competition. Make your house nicer in some ways. Spend a little cash and clean it up. Slap on a nice coat of paint. Replace the carpets. Don’t try to attract great tenants to an ugly property. If you have to, consider doing some remodeling. Just make sure you have a value proposition.
Of course, you can charge a bit more than the competition, but that isn’t the reason to go upscale. Your main objective is to have a headache-free tenant, and the way to do that is to have high-quality renters falling all over themselves to rent your home. High-quality people like to live in nice places. Dig?
Now, a word about people with pets.
I love pets. I have two dogs myself. But I’d never allow someone to rent my home who owned any pets. As a general rule, they wreck the place. It’s just not worth it unless you get a huge security deposit. Even then I would take a renter with pets as a last resort.
3. Advertise For the Right Tenants
Look at your competition and borrow their great ideas. Spend a bit more on a larger ad if you have to, but explain why your house is the best and what kind of tenants you will and will not consider. Really pique their interest. Make your home sound like Buckingham Palace.
Having said that, keep in mind that your ad is a screening device. You don’t want a ton of people to call you who aren’t qualified. Be very clear about your terms, the rent, deposit and length of lease. You only need one great tenant.
As a side note – it’s a great idea to let your neighbors know that you’re looking for renters. They may know friends and you can bet your bippy they won’t recommend any loud obnoxious people – because they’re going to have to live next door to them.
Even if they don’t recommend a tenant, you should inform them of what you’re doing. At the very least, they’ll keep an extra set of eyes on your property and report problems before they get out of hand.
4. Interview
Make sure you check their credit score and get references to contact. Call their employers and confirm employment. Look at their rental application with a fine-tooth comb – especially their employment history. Can your tenant comfortably afford to pay the rent? Has she lived up to her responsibilities to previous landlords? Why is she moving now? Does she have a stable work history? You’re looking for stability and responsibility.
5. Second Opinion
You will be doing yourself a huge favor if you have a second interview with the top three to five tenants and make sure some other neutral friend of yours sits in.
Unless you’re in the business of renting out property, you’re going to lean towards renting to the person you like most. That might be a huge mistake. Avoid that error by having someone else you trust sit in on the meetings to make sure you’re being objective.
6. Agreement
Once you’ve selected the tenant, sign a rental agreement. You may want to consult a real estate attorney on this item, but if not, a great option is LegalZoom. I like this site because they ask you some pretty basic questions in simple English and then create a lease agreement to reflect what you really want.
If you rent out your property, how did you find your last great tenant? What would you have done differently if you didn’t end up with the tenant you thought you were getting
optionsdude says
April 22, 2011 at 5:22 AMAs someone who has owned some investment real estate for the past decade, these are good tips. I personally allow pets since more than half of Americans do own pets and so many landlords don’t allow them, I feel that my potential market is bigger. Plus, as a pet owner myself, I know how hard it can be to find a rental.
I do keep abreast of the market and price in the mid-range. With this pricing and allowing pets, my potential renters are numerous. I can usually get a place rented within a few days of putting an ad in the local paper. I had one time where I had someone move out in the morning, had it cleaned in the afternoon and someone move in that evening.