Probably the number one fear of real estate investors is the thought of having to find and manage Tenants.
We’ve all heard horror stories about Tenants that have destroyed the house or refused to pay their rent. These stories have almost become urban legend and invoke fear in the hearts of investors. So much so, that many would-be investors never make the leap into income property ownership.
The sad part is, this fear has created a barrier. Not only a barrier to the experience of being a real estate investor and the resulting financial benefits, but also to the positive experience of being a Landlord.
What you don’t hear are the stories about how rewarding and fulfilling being a Landlord can be. Providing high-quality housing has a long-term, positive affect on everyone involved, including both the Tenants and the Landlord.
The key to a positive experience as a Landlord boils down to one thing:
Your Tenant Selection Process.
What is a Tenant Selection Process?
Basically, you need to have a systematic and reliable process to filter the pool of potential Tenants. Not only will this process reduce your chances of selecting a bad Tenant, but it will also make your job as a Landlord so much easier and stress-free.
But filtering the pool of potential Tenants starts way before you even look at an Application….
1. Offer a great product
Quite simply, a crappy house will attract crappy Tenants. Buy a great house in a great area and the great Tenants will line up at your door. If the Tenant sees that the house is well-maintained (clean, freshly painted, high-quality flooring, landscaping), they will be more likely to take pride in the house as well.
2. Start at the top of the price range
Do your research to determine the rental price range for your property and area, then start your pricing at the top of the range. A higher price will deter most semi-qualified candidates and make your job much easier. Reduce the price incrementally, depending on response to your advertising. Ultimately, the market will determine the rent, but you will avoid wasting time with sub-par applicants.
3. Great Advertising
Your goal is to generate as much awareness about the property as possible. At the time of this writing, Kijiji.ca is the most effective method of reaching the rental market. MLS (Realtor.ca) is also an option, which definitely expands your market exposure, but at a higher cost. High-quality lawn signs can be effective, depending on the location of the property.
In terms of information about the property: More is Better! Nothing is worse than looking at a property listing that tells you absolutely nothing about the property. It’s an indicator of a lazy, low-quality Landlord. So, what kind of Tenants do you think this will attract?
High quality pictures are critical and a Youtube video is an option, as well. An effective advertising strategy is to publish 2 versions of your ad: one that lists the point-form features of the property, and one that describes the benefits of the property. Each version will appeal to readers differently.
Include a line of text at the bottom of the Ad stating: “Serious inquiries only. First and Last Month’s Rent, Credit Check and proof of Income required”. This will instantly discourage less-qualified candidates from responding (which is a good thing!)
Make it easy for potential tenants to get in touch with you. If you are comfortable, provide a phone/Text number and email address within the text of the Ad.
4. Respond quickly to inquiries
It’s important to stay on top of your Ad responses and make contact with potential candidates as soon as possible, meaning minutes or hours, not days. Their interest in your property is fleeting, as they might also be responding to 20 other Ads. You’ll find that about 30% of incoming inquiries will go nowhere, as they have likely made contact with another Landlord by the time that you reply and you will not hear back from them.
If possible, try to make verbal contact. This increases your chances of booking a showing and you can also tell a lot about the candidate by their mannerism on the phone (another filter!).
