When you have a vacant rental, you will inevitable have to advertise and fill it. And, you want the best tenants you can find. Unless you are extremely lucky, you will not rent to the first person who inquires on your rental — or at least the first person will not likely be qualified to live in it.
At some point, you will need to decline a rental applicant. This is one of the main problems landlords have: being unable to decline a tenant.
Getting the Best Tenants, Paying for Advertising & Having Rental Criteria
I generally do not pay for advertising.
I post ads on Postlets, CraigsList, and once in a while, on RentBits. They are all online ads, and I have a lot of pictures and a decent virtual tour video that I post on YouTube. I never use printed media; it is too expensive, and renters who do not have online access are generally low quality renters. If you have a solid marketing program, a decent quality rental, and are priced right, you will get lots of responses.
If you do not, you can look in the mirror at your problem.
Before you even start to advertise, you need to have rental criteria that will be the minimal acceptable standard for your renter in terms of income, credit score, criminal history and rental history. It is OK to modify the criteria along the way, but you should have a good understanding of the credit and income levels that you want your renter to have.
If you do not have any criteria, you will by definition get low quality renters. If you have a property manager, they should know what criteria they have used to get successful tenants. If they do not, run away from them as fast as you can.
When creating criteria, you have to have a vision from your property. In a multifamily property, you can reposition your property to a different grade of renter. Increasing the quality of renter will increase the value and profitability of your property. You need to know about building classifications and what your returns must be to make yourself profitable.
Be Realistic About Tenant Quality & Location
In a single family home, you need to be realistic of your renter quality.
If every family on your block is making $35K a year, it may be difficult to get a renter making $100K a year. If you have over-improved or overpaid for your property and you need to have your rents very high to make a profit in a $35K neighborhood, you might need to re-evaluate your investment.
If your renter has to make $100K so they can afford it, it is not impossible, but will be more difficult to find a great renter. The same is true for renting in a higher priced neighborhood. Taking in a renter who cannot easily afford the rent will short change you in the profit section of your P & L statement sooner or later.
Real estate is all about location, but it is not physical location; it is about the income stratification of the neighborhood. That is why the largest house in the neighborhood is not worth much more than the average house in the neighborhood. Credit score is income independent and does not necessarily correlate with what the neighborhood income level or pricing is.
First, Exchange Contact Information
As I have written in my previous posts, once you start to advertise, you will get a lot of people who do not qualify for your rental. This is expected and almost guaranteed. When they respond, you need to have a standard response that you give to everyone, so you can separate the wheat from the chaff as soon as possible to avoid spending any additional effort.
If someone calls my cell phone, I will attempt to answer any questions that they have. As soon as I can, I will ask them to give me their email address, so I can send additional pictures and more information. I generally request that they text me the email address, so I do not write it down incorrectly. The same goes when I get a text inquiry. I will request their email address right away.
Of course, if I get an email response from the ad, I have their email address. Be sure to be careful of some of the blind email addresses that are masked by some of the websites. Get a “real” email address as soon as possible. And make sure you give up your own email address; if an ad is removed and you haven’t exchanged contact information, you and the tenants are unreachable.
With many of the online advertising venues, there is either a limit of number of pictures or text. Postlets has no limits, so that is my main ad. I can input a link to a virtual tour and have lots of pictures. Postlets, as well as some of the other advertising sites, send your ad out to other sites, but the number of pictures and amount of text is limited. Very seldom are other links allowed, such as a YouTube link to a virtual tour.
Have a Response Ready
My typical response from a tenant is something this: “I am interested in this property. Please set up a showing.”
So here is what I reply back with, and it is based on questions that renters have typically asked me in the past:
Thank you for inquiring. The unit will be available ~8/1. It will not be available any earlier. There are tenants currently in the apartment; the video and pictures in the ad were taken just prior to them moving in.
There are stairs to get into the unit. This unit is on the second floor, and there is no elevator. You have a private garage, which will fit two cars.
No Akita, Chow, Pit-bull, Rottweiler, or any cross breed with wolf are allowed.
I generally show the unit between 6 PM and 7 PM during the week, and on weekends between 11 AM and 4 PM. I have tenants in the unit, so I need to give notice.
I do not take Section 8. If you have had an eviction or you have had recent criminal activity including DUIs, I generally will pass on you. If you are not a legal resident of the USA, I will not be able to rent to you.
I will be looking for tenants with a 625+ credit score and a solid household income of at least ~$46,000 per year. If you are marginal on both of these items, I will generally decline you. Your criminal and rental history must be clean. If you have had a foreclosure, I can work with you a bit on this.
If you still want to look at the apartment, please let me know.
Postlets link here
YouTube link here
I am sure I lose some tenants who are qualified after they get this email back, rather than a showing being set up. I am sure I rule out tenants that other landlords would die for — and who would probably be great tenants. That’s OK; I am going for a virtually risk-free tenant.
If the tenant does reply back for a showing, I set one up. I have their email address, by definition, so I can set up an appointment in my Gmail calendar and invite them to it. I make sure to capture their phone number and name in the calendar entry so I can text or call them just before I meet them there, or if they are late. I also invite my current tenants to the showing, so they are notified as well.
With these simple steps, you have just declined 9 out of 10 bad tenants, simply by letting them know your criteria. The tenants did not have to give up any personal information. If you actually get an application from a tenant who does not pass, they can be declined with the letter from the credit check company. My background check company automatically generates an “Adverse Action” letter with text that is approved by the folks that approve credit denial letters. I can just print it and mail it.
Do Not Budge
Occasionally, you will get a renter who would not pass most checks, but they still need a place to live. And you have a vacancy. They may offer an additional deposit, a co-signer, an immediate move-in with money — or even their first born if you let them move in.
They may even cry on the phone and tell you that they are going to be homeless if they cannot find a place. They will tell you they had some trouble when they were “younger,” yet they are only 23 years old now. They will tell you their credit is bad because they are young and are still building it. They just got a divorce and their “ex” was to blame. They were a victim of corporate downsizing. They will ask, “Can someone just give a person a chance?”
I do not care what the story is; I go by the facts I can get on paper.
Rather than feel sorry for them, ask yourself why no one else wants them either. Do not fall for a hard luck story; just go back to your preset criteria. Blame your rejection response on an imaginary or real property manager, the “owner,” a partner, your bank — or any other excuse you need to come up with, but do not budge. Politely decline them, and wish them luck.
If you decide your criteria are too strict, do not deviate from your set standard with this renter. If you want to change criteria, do it with the next renter. Think about your criteria and the reasons for your change. Do not change them “on the fly.”
Do you have preset criteria for selecting renters? Have you ever fallen for a hard luck story and got burned?
This post was originally posted here