Every landlord faces the same challenge: finding and keeping good tenants. It can be a lot harder than you might think.
At the same time, it doesn’t have to be difficult if you understand what a good tenant is and what they look for in a rental property. There are a number of factors to consider when trying to attract responsible tenants. Some are obvious, but others are much less so. Figure out what these factors are and you’re on your way to saving (and making) money.
Good tenants generally look for more than just the basics. But even if your property is better suited to lower-income tenants, that doesn’t mean you won’t be able to find good tenants. One of the biggest mistakes a landlord can make is to assume that the income level of a person indicates what kind of person they are. Discrimination is not your friend, so don’t flirt with it. There are good and bad people from all walks of life. Keep this in mind and you’ll have a much easier time finding great tenants.
Developing a Strategy for Finding Good Tenants
The first step is to figure out what good tenants are looking for. You have to market your property to them and you must understand that there’s usually a lot of competition. Every responsible landlord wants tenants they can trust—so you have to compete for great tenants. Knowing what good renters are looking for in a property is half the battle.
It’s like fishing: use the right bait for the right fish. If you’re just going for quantity, you use a net. If you’re looking for a specific quality of fish, you need a lure specific to the fish. So how do you catch the fish you want?
Spend some time researching current trends and you’ll save a lot of trouble in the long run. Check out your competition and see what they have to offer. Visit open houses in your area and chat with realtors and property managers. They have their ears to the ground and know exactly what people are looking for in your region. Ask them about the types of people looking to buy or rent, and what they’re looking for in an ideal property.
Some of the big things that good tenants look for:
- Fair Market Prices
- This is obvious. Price too high and few people will even contact you. Too low and you’ll be overwhelmed with people trying to move in. This makes it much harder to sort through your applicants and make the right choices.
- Great Property Features
- People are looking for modern conveniences. An old, worn down property doesn’t usually attract the kind of tenants you’re looking for.
- Having additional appliances like dishwashers, washing machines & dryers come standard will be a major bonus feature for your property.
- Air conditioning units are also a big plus.
- Energy efficiency equipment upgrades will not only increase the value of your property but also help reduce energy usage expenses, keeping both you and your tenants happy.
- Be sure the exterior of your property is in good shape and clean.
- A well-groomed landscape looks attractive to tenants because it shows you invest in both your property and your community.
- Offer plenty of storage.
- Parking options are a plus, especially in high-traffic areas.
- Consider the benefits and setbacks of allowing pets in your units.
- Nearby schools
- Scenic view
- Easy access to freeways and/or public transit
- Near shopping centers, restaurants, and recreational areas
Design your advertisements based on these factors. Be sure you’re highlighting all the amenities available both at your property and nearby. Communication should begin before a potential tenant fills out any paperwork. You know how your ideal tenant behaves, so your advertising should be written to attract that type of reliable occupant. Be clear in your advertising. List exactly what you have to offer, but write it with your ideal tenant in mind.
The Application Process
When a potential tenant responds to your ad, talk with them on the phone first. Again, communication from the very start is essential. Be friendly, but find out a bit about them. Ask them why they’re moving, how long they’ve lived at their current residence and if they smoke or have pets. Find out if they can provide references.
Here’s the big one: Make it clear that they understand you’ll be doing a background and credit check during the application process. Responsible people (who are traditionally good tenants) understand that this is an important variable to a landlord and should have no problem with this. You may also want to charge an application fee. This will immediately weed out potentially bad tenants. If the prospective tenant isn’t ok with this, it’s likely they won’t bother with the rest of the application process, and if that’s the case, there’s no way they would be good tenants anyway. Don’t waste your time coaxing irresponsible people.
Lease & Rules
The next step is to be sure that everything is clearly laid out to each tenant in writing. Go over the application and lease agreement with each tenant before they apply and be sure they understand your requirements to become a resident. The best thing to do is to have a professional draft your lease for you. It doesn’t cost too much money, and will save you money and hassle in the long run.
Copies of the lease and rules should be signed and kept on file in your office. The tenants must have copies of these also. By going over everything with each tenant, you ensure there’s less chance for disputes later on related to miscommunication. Any time these standards change, the paperwork needs to be updated and sent to all tenants.
Enforce Your Rules
Your tenants must understand that the rules will always be enforced. By creating standards that secure the safety and care of your property and your tenants, you will further target and attract responsible tenants. Tenants must have their own copy of the rules, and if those rules are updated or changed, they must receive the most recent edition. Good tenants understand that rules are important and should have little or no issues so long as your expectations remain fair and reasonable.
Collecting rent, allowing pets and storage space are some of the biggest headaches landlords consistently deal with. How you handle these and other such issues are ultimately up to you. For example, if your lease allows for a day or two of leniency on when rent is due, you cannot compromise beyond that. Late fees must be applied and cannot be negotiated.
The degree of leniency is up to you, but it should be moderate on occasion. Life happens and sometimes people come upon situations that require some flexibility on your part. Be sure that all your tenants are aware that you’re willing to work with them when these situations arise but are only able to if they communicate with you about the problem immediately. Explain to your tenants that they should immediately communicate any problems relating to the rules or conditions at your property. Yet again, communication is the key to keeping your good tenants around.
If you start bending the rules too much, you’re guaranteed to have trouble. Always address problems firmly and immediately. Remember: taking care of problem tenant issues also keeps your GOOD tenants happy!
Knowing how to be a good landlord involves many factors. It’s not just about the money. It’s about the people as well. Understanding and working with your tenants will help you to run a successful business. The happier your tenants are, the happier you will be.
Disclaimer: We are not experts on landlord and tenant laws, so please check with local organizations to be sure you’re operating your property and interacting with your tenants in a legal fashion.
In Wisconsin, try the Tenant Resource Center for more information. The Apartment Association of Southeastern WI is also a great resource for landlords. In the City of Milwaukee, the Department of Neighborhood Services offers Landlord Training.
In Indiana, check out this handy Landlord and Tenant Duties reference page. And the Indiana Apartment Association is an extremely valuable resource, so if you’re not a member already you should look into becoming one.