How to Find Tenants for Your Rental Property
Finding tenants on your own
Some people automatically contact a real estate agent to get their property rented. And you might need to do that as well, especially if your rental property is in NYC, where using a broker is the norm. But many times, you no longer need to rely on an agent to put your listing on the MLS: You can list your rental property yourself.
Zillow Rental Manager is top dog in this arena now. They currently charge $9.95 weekly to list your property with them. They also syndicate your listing to Trulia and HotPads. Another option is Cozy.co, where you can list for free. Cozy syndicates to Realtor.com and Doorsteps.com. And there’s always Craigslist and social media as well. With all that at your disposal, you’ll probably get lots of eyes on your rental property, with no agent being involved.
Set the rent price
You need to know how much you plan to charge for your rental before you can list it. If you set your rent too high, you might have trouble finding a renter; too low and you lose potential income.
To help you determine what to charge, pretend you’re the one looking to rent. Perform an online search to see what rentals similar to yours in your geographic are going for. You can also use online tools, usually for a fee, that will perform a comparative market analysis to help you set the price. Note that a real estate agent can do this for you, so this would be a benefit of using one if you can’t determine what to charge.
How to advertise
Just because you can list on your own doesn’t mean you shouldn’t do your due diligence. If you don’t advertise it correctly, your listing could be one that a prospective tenant would pass by. You not only want people to see your listing, but you also want them to respond to it.
The way to help make that happen is to have professional photos of the property. Yes, you can easily take some pictures of your property yourself and then upload them to the listing site, but professional photos usually look much better, meaning your rental will stand out. Attaching a professionally made video walkthrough is becoming more important to attract consumers as well, especially during the COVID-19 pandemic.
You should also write a description that points out the property’s best features, including its location and what’s nearby. Be careful not to oversell, because you don’t want people disappointed when they view the home in person. Just stick with the facts, pointing out the advantages. Read other descriptions to give you an idea.
Using a real estate agent
If you don’t have the time or inclination to find tenants on your own, set the rental price, market your property, and show your property, hiring a real estate agent could be a good idea.
A real estate agent can help with the following:
- An agent could find a potential tenant for you through word of mouth, particularly if they are with a large brokerage. Agents tend to share this information with other agents at their office.
- Real estate agents are pros when it comes to listing property for sale or rent. Your listing will probably look great if a real estate agent lists it.
- Agents can take over the showing aspect of the process. Again, they are pros at pointing out the features of the rental property and the neighborhood.
- As mentioned above, a real estate agent can probably set a reasonable price for your property by performing a comparative market analysis.
- Agents who are Realtors have access to official state lease forms through their state chapter of National Association of Realtors. (Note that landlords can draw up their own lease or hire an attorney to draw one up. They don’t have to use the state-approved lease, but the lease needs to reflect the laws of the state.)
The trick to finding good tenants
There are three keys to finding a quality tenant: screening them by conducting a credit and background check, interviewing them in person or through video chat, and checking references.
There’s no shortage of screening services out there. Just search online for “tenant screening.” Most services will give you the following data:
Credit check
- Credit report and/or credit score
- Percentage of credit used
- Total monthly payments
- Total debt
- Late accounts
- How much time being late
Background check
- Criminal history
- Bankruptcies
- Evictions
- Sex offender status
Once you’ve reviewed this information, you should be able to make a decision as to whether an applicant will be considered or not.
If the applicant will be considered, you can then check references, particularly past and current employers and past landlords. If the applicant leaves a phone number for an employer, it’s usually a good idea to search online for the employer and call that number. There’s a chance you could be calling a friend of the applicant instead of the actual employer if you go by the phone number on the rental application.
If that step goes well, you can then ask follow-up questions. This is a good way to make a decision if you have more than one qualified applicant. You might want to know, for example, how long they think they’ll rent. An applicant who knows they’ll stay only for a short term might not be as good as one who plans to rent your place longer. You can ask any questions you like, but you must be mindful of Fair Housing Laws.
Be mindful of Fair Housing laws
When you ask tenants questions, you first must be familiar with the Fair Housing Act, which prohibits discrimination based on these protected classes:
- Race.
- Color.
- Religion.
- Sex.
- Familial status.
- National origin.
- Mental or physical disability.
You can ask questions, such as when they would like to move in, whether they can pay all your move-in costs (first month rent and security deposit, for example), whether they have pets, and why they wish to leave their current place.
You cannot ask about where there were born (national origin), whether they have a service animal (disability), how many children they have (familial status), whether they would like directions to the nearest church (religion), or anything else that could be interpreted as possibly being discriminatory against one of the seven protected classes.
Set criteria
Although it’s wise to have criteria to weed out a bad tenant: credit score over 630, income at least three times the rent, limited pets, etc., you might find you wish to waive some criteria based on the overall financial picture of the applicant.
For example, maybe the applicant had a short sale on their record that tanked their credit score, making it difficult for them to buy or rent anywhere. But they might have an excellent and established job that pays more than what you seek. You might disregard the credit score for this good tenant. That’s an advantage “mom-and-pop” landlords have over big, institutional leasing outfits, which tend to not be as flexible.
About using a property manager
A property management company can make your life as a landlord easier. A good property manager handles getting and screening tenants, collecting rent, drawing up a lease, being the point person when an emergency hits, handling move outs and/or evictions, and arranging for repairs and maintenance.
But the wrong property manager might not be worth the cost, especially if you find yourself managing the property manager. Fees vary based on the management company. You can figure spending about 10% of your rental income on property management.
If you live far from your rental property and/or manage many properties, you’ll likely benefit from using a property manager. But if you live close to your properties and you have the time and inclination, you can manage your properties yourself.
How about a property management tool?
If you want to manage your own properties, you might want to consider using a property management tool that would automate certain tasks like listing your property, collecting rent, and scheduling property maintenance. You can perform an online search for “property management tools” to find one that best suits your purposes.
Virtual tours and open houses
COVID-19 changed the showing game a bit. More people are becoming comfortable viewing a house online, but they’re wise to the fisheye lens photos that make the rooms look bigger than they are. If they’ll fill out an application without physically entering the property, applicants usually want to view a virtual walk-through. So make sure you include that with your listing.
The bottom line
The landlord business requires you to get and keep good tenants in your properties. It takes some work to find good tenants for your investment property, but it’s well worth the effort. Without tenants, you’d be out of business. With good tenants, you can have a lucrative career as a landlord.
Resource: fool.com
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