Renting out a real estate investment has proven to be a wonderful supplementary income for many entrepreneurs and their families. With the rental market heating up, and more people choosing to rent over own, landlords tend to have their pick of the litter when it comes to finding tenants for their space. So why is it that so many landlords have to deal with the nightmare that is terrible tenants? First impressions aren’t everything, and jumping the gun to get someone placed in your rental property can result in some serious consequences. Keep these tips in mind as you place your next tenants and keep your investment protected.
Consider Your Ideal Tenant
It’s important to sit down and determine what you want in a tenant before placing your ad and fielding applicants. This is not necessarily a profile of the type of person, but rather the qualities they might possess. For example, you may want someone who speaks respectfully in all interactions, communicates quickly, or someone who has great credit. You might be looking for someone who makes more than three times what you charge in rent, or someone who doesn’t have pets. It’s important to note all of these things before crafting your ad, as this will help you narrow in on the caliber of tenants you’d like to attract.
Consider the Federal Fair Housing Act
After crafting your ideal tenant, make sure you aren’t in violation of the Federal Fair Housing Act. It’s vital that you follow these rules; not doing so could result in charges of discrimination, which can lead to hefty fines and costly court fees. Keep in mind that you cannot discriminate based on race or color, national origin, religion, familial status, disability, or sex. These aren’t the only rules to be aware of as you narrow down your search on prospective tenants. Many states enforce their own Fair Housing Rules that must be abided by, so do your research and understand the ramifications of local laws.
All About the Ad
Convincing prospective renters to come check out your property means crafting a high-quality ad. Use professional photos of the space, be sure to list all amenities, and highlight proximity to local restaurants, bars, school districts, and the like. The more thorough you are, the more likely you are to entice high-quality tenants. Ad placement is important. If you want to attract high-quality applicants, it’s important to make sure you get your listing out there. Beyond Craigslist and word of mouth, it’s important to use certified rental listing sites. These allow for easy upload and help you access a whole new crop of prospective tenants. Check out LiveLovely.com and see the difference a great ad can make for your rental business processes.
Consider Rental History As You Screen
There’s nothing more important than screening your applicants thoroughly. Use a screening service that provides information on prior criminal convictions and any former evictions, like MySmartMove. You’ll likely ask for references to previous landlords, and when an applicant provides contact information, be sure to use it. Call each reference on the list, and ask a few key questions.
Was rent always paid on time?
Did the renter act courteously to the landlord and neighbors?
Was the property left in good condition, or did they cause damages?
Were they evicted, or did they give proper notice before moving?
Some tenants won’t have rental history, so this may not be applicable. In these cases, many landlords prefer to have a co-signer, whether it be a parent or other relative, to help cover liability.
Always Including a Subletting Provision
It’s all well and good if you screen a tenant, but what if they decide to sublease a room in the property? You’ll have no control over who resides there if you don’t include a subletting provision in your lease. Whether you decide to ban subletting altogether, or require your tenant to seek your approval first before allowing someone else to move in, it’s important to get it in writing before allowing anyone to live in your property. Consider using the help of an experienced real estate attorney who can help you craft the perfect lease—you’ll thank yourself for it later.