As the landlord of a rental property, finding and keeping tenants is the best way to protect your investment and build your wealth over time. By being proactive, you can recruit and retain good tenants.
Here’s a quick look at how to find — and keep — tenants to make your income property profitable.
Before putting your rental property on the market, it’s important to make sure it’s in good condition and fully operational. This means thoroughly cleaning the home between tenants and making repairs, touching up paint, and ensuring everything from the HVAC system to the oven is in working order.
If you’re hoping to make your property stand out in a crowded market, you might consider adding bonus amenities. This could include installing a new refrigerator with built-in filtered water, air filtration systems, and more.
The amenities that matter most to renters can vary from location to location. It helps to have the advice of a top-rated local realtor before you invest in your property. Consult a real estate professional who won’t break your bank with fees and commissions.
Reinvesting in your rental properties by making renovations and improvements can have more benefits beyond making it appeal to tenants. Business-related expenses can be written off at tax season, and you can defer profits made from income property sales through IRS Code 1031. Learn more about the rules and regulations involved in a 1031 exchange, which you can take advantage of in every state, from California to New York.
To cast the largest net for finding tenants, advertise in the places renters will look. This includes placing ads on websites such as Craigslist and social media. Although there are paid services for landlords, you can still reach a lot of prospective tenants using free services.
In your advertisements, be sure to include high-quality photos and videos. Most tenants will want to visit the property, but offering a virtual first look will help your property stand out. In addition, including amenities and rules, such as pet policies, the amount for the security deposit, and so on, will ensure only relevant tenants will apply.
Before signing a leasing contract with any tenant, it is important — and expected — to complete a screening process. The screening process protects both you, the landlord, and your tenants.
As part of the application process, make sure all potential tenants provide information for you to conduct a background check. This includes their name, social security number, current and past addresses, and proof of employment or income.
During the screening, you will want to make sure your future tenant meets several criteria, including having a track record of on-time payments, a steady income, a positive credit report, no prior history of evictions, and no negative record of behavior, such as problems with neighbors or dangerous criminal records.
Although there are several factors you can consider during the application process, most states prohibit landlords from denying applications for reasons that fall under fair housing. You could land yourself in legal trouble if you deny applicants based on nationality, race, religion, familial status, and more. Be sure to familiarize yourself with fair housing laws in your state.
Building a good relationship with your tenant begins before you sign a lease. Be sure to establish the expectations you have for tenants clearly before they move in. This can include everything from when and how rent payments are due, how property damage will be handled, and the best channels for communication going forward.
Once you have a good tenant in place, there are steps you can take as the landlord to ensure they are happy and will stay for a long time. Start by making sure you charge a fair rent. Although prices may increase over time, frequently increasing the rent by large amounts could price you out of your tenants’ budget.
It is also important to be responsive to requests from your tenants. As the landlord, you are responsible for major repairs such as damages to the rental, faulty plumbing, pest management, and so on. By being available and visible to your tenants, you can build a relationship that will benefit all of you for a long time.