Landlords with a few units to rent out have a valuable asset that can earn them passive income for years to come. But those four walls can also sometimes become home to someone who is a terrible tenant. Maybe they’re always late on rent, constantly calling to complain, or they create health and safety issues on your property (think hoarding).
We’ve heard of landlords so traumatized by terrible tenants that they let their property remain vacant rather than face renters again. If you’re one of those landlords, we’re here to help. Just like mending a broken heart, once enough time passes (and you learn from your mistakes), you will eventually be able to trust a stranger enough to rent your place again.
While handing over the keys to your rental property is a leap of faith, here’s what every landlord can do to ensure they find the right tenant.
Advertise the right way
Free sites are attractive because of their no-cost ease, but advertising on a site that requires a small fee might net you a better tenant.
“Skip Craigslist, and advertise your rental on reputable websites to attract better-quality tenants,” says Cliff Auerswald, president of All Reverse Mortgage in Orange, CA.
In addition to where you post your rental, you want to consider what you’re posting: namely the photos and description of the property. Be honest and upfront about the state of the rental, and use pictures that capture the home and all its best—and worst—features.
Also, include a section on what you’re looking for—and want to avoid—in a potential tenant. For instance, if there are no pets or smoking allowed, say so upfront. And include which utilities are rolled into the rental price. All of this information can make a big difference in who you attract.
Meet prospective tenants in person
While making initial contact with a prospective tenant over email or text message is fine, always arrange for an in-person viewing of your property. Not only can you show the candidate around, but you can also use your instincts to assess the person’s maturity, manner, and reliability.
For instance, note if they pester you about pets even though the listing clearly says “no animals.” Another red flag is if they ask you to lower the rent or forgo the security deposit. Again, these things could signal a troublesome future tenant.
And always have a conversation about the rules and expectations for tenants living on your property. For example, let them know if they’re in charge of landscape maintenance or if they can sublet.
Finally, gather as much information as possible about a prospective tenant before you even hand them an application. Here are the top five questions to ask:
- Do you currently rent? If yes, where?
- Why are you looking for a new rental?
- How long have you lived in your current place?
- Does your current landlord know you’re moving?
- Can I contact them?
Establish a thorough screening process
“A tenant credit check can expose a wide range of tenant frauds, including identify theft, lack of financial responsibility, inadequate income, and more,” says Dustin Fox, a real estate agent serving Virginia, Maryland, and Washington, DC.
Next, check references. Call the applicant’s most recent landlord, employer, and a personal reference. This is an essential step toward learning about your potential tenant.
Mark Severino, a real estate investor and landlord in Dallas, recommends asking the previous landlord the following questions:
- Did the tenant pay rent on time?
- Did the tenant get along with the neighbors?
- Did the tenant cause any damage to the property?
- Do you plan on returning the tenant’s deposit? Why or why not?
When you call an applicant’s employer, ask to verify the individual’s income.
Require a substantial deposit
Ask for a deposit large enough to cover any potential damage to the property, just in case your tenant turns out to be horrible after all.
And don’t make the security deposit the same amount as the monthly rent to avoid any confusion. Making the deposit and the rent equal can lead to the tenant assuming the last month’s rent is taken care of with the deposit. Break down the difference between the rent and the security deposit in writing.
Get to know housing laws
Finally, familiarize yourself with the federal and state laws covering tenant and landlord rights. For example, the Fair Housing Act prohibits discrimination in the rental of housing based on race, color, national origin, religion, sex (including gender, gender identity, sexual orientation, and sexual harassment), familial status, and disability.
While most people know not to discriminate against someone for one of the above reasons, the courts say that “the law allows for discrimination claims based on seemingly neutral practices that may have a discriminatory effect.”
To protect yourself from any allegation of discrimination, you should follow the same process for each and every potential tenant. And document every decision you make, especially when rejecting an applicant.
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