How to Get Good Tenants
One of the most common questions we get as landlords is: “How do you get good tenants?” And that is a very good question. One of the biggest concerns as a property owner is how will someone else treat my property. Hell, we live right next door to our tenants, so imagine picking your neighbor. The unfortunate thing is that you won’t truly know if they are a quality tenant until you already have them. But, you can definitely raise the likelihood that you get a quality tenant by qualifying them through these methods.
Getting Good Tenants
I’d like to preface the rest of the article with mentioning: to get good tenants, you should be a good landlord. Yes, everyone has to live somewhere, but we have no desire to be slum lords. Keeping a property in good working order, and treating people fairly goes really far. This doesn’t go unnoticed by potential and current tenants. If you treat people like shit, and don’t take care of their place, you’ll be more likely to have a Breaking Bad situation on your hands.
We need to be perfectly clear about one thing: every potential tenant must go through the same process. Don’t cut any corners. Don’t skip any steps. And whatever you do, don’t change your criteria because you like someone or you think they’re more qualified. The only way to protect yourself from potential lawsuit is to follow every step like your life depends on it, make every person jump through the same hoops, and allow the first qualified person to become your tenant.
Make a Quality Listing
Don’t overlook a quality listing as the first step of the process to get good tenants. Take the time to make sure the space is clean, and the lighting is good. A great place can look terrible if there isn’t any effort put in to the pictures. The same applies to your description. Take the time to use some adjectives and describe the property. Just to make a point, here are two listings, both 3 bed 1 bath, in the same area:
newly remodeled 3 bedroom/ 1 bath with hard wood floors.
This is literally the whole description, and the first picture on the listing. That description is absolute shit, and the pictures are the same quality. Four pictures of the interior, no lights on, cardboard boxes in the corner, construction material lying around. Just shitty.
Now here’s our listing of a 3 bed 1 bath we had listed a few months ago:
Cozy 3 bedroom 1 bathroom home in the heart of Huntsville. Open floor plan with new carpet, new paint, new roof, new windows, new HVAC unit, and new washer and dryer. Open kitchen with plenty of counter and storage space. Oversized master bedroom with two closets. Large fenced in back yard gives you plenty of room to relax. Less than 5 minutes to I565, Redstone Arsenal, Memorial Parkway, and entertainment options like Campus 805, and Lowe Mill. All appliances are provided except microwave. Pets are allowed on a case by case basis with non refundable $250 fee. $40 background and credit check. Income must be 3 times the rent amount.
If you were a tenant, which property would you take the time to look at? With less than 3x rent in income, or knowing your background check or credit check was going to come back with some glaring negative marks on it, you’d likely omit yourself from my pool of potential renters and reach out to the first listing. If you aren’t worried about your credit history, and meet the income threshold, you’d take a closer look at mine.
The first listing has been available for 155 days as of this writing, and ours was listed for 2 weeks. Ours was also listed for $850, as was theirs, but then they dropped it to $695 after a week and it’s still available. By taking the time to have good clean pictures of every room, a great description, and listing your application criteria in your description you’ll not only appeal to more people, but also have many that are unqualified filter themselves out.
Have a Clear Application Process
Once you have a quality listing up, the inquiries will start pouring in. We made the next step of our process the application for an important reason: time. If we showed the house to every person that reached out to us, we would never leave the property. By making the tenants fill out the application first, we then get to verify that they meet our criteria and are qualified applicants. Frankly, 90% of people who reach out to us to view the property won’t take the time to fill out the application. This is fine with us because they have eliminated themselves from our pool.
Another time-saving tip is to set up an email template. Once a property is listed, I’ll write-up a generic email template that thanks them for asking about the property. Also, this email explains the process, which is: fill out the application, and schedule a time to view the property. At that point, if they decide to move forward with renting the property, we have them do the $40 background and credit check. The template email includes the link to the application. The first couple times, we used our own application, but we found that using Cozy’s application process was easier considering we use Cozy for the background and credit check, and for collecting rent.
For those of you that don’t know, Cozy (not an affiliate link, I just really love Cozy!) is a free property management website that allows landlords to take applications, collect rent, add additional fees (pet fee, lawn care, late fees, etc.) and run tenant screening reports. As a tenant, you can pay rent per month, set up auto-pay, submit maintenance requests, and keep up with your lease. The application is thorough and requires information like:
- Employment & income
- Residence history including: rent amount, dates of lease, location, and previous landlord along with their contact info
- Payment history (if they used Cozy in the past), so you can see if they ever had late or overdue payments
- Emergency contact
- Screening questions about smoking, bankruptcy, evictions, felonies, etc.
- And finally, it gives them a space where they can write a little snippet about themselves so you can learn about them.
At this point, if their income is sufficient, and they pass the eyeball test, you can dig deeper. For the sake of time, again, do this once the applicant has actually scheduled a time to view the property, which will be explained a little further in the next section. We typically call their employers to verify employment and position. We will call their last two landlords and ask them some questions verifying rent, length of occupancy, and whether they would unquestionably rent to them again.
Show the Property
After you’ve received the filled out application, and verified that the applicant is qualified, you should schedule a time for them to view the property. Again, saving time is key, so I’ll explain how we do it. We schedule for people to come within 15-20 min of each other depending on the property. We haven’t had an “open house” yet, because while we like the idea of it, we want to personally have conversations with each person who’s viewing the property as they view it.
By scheduling the viewings close together, it gives us time to talk with each tenant, show them the property, go over our expectations of a tenant, and have the next person roll up right before they leave. It’s a little salesman-y but, it has the desired effect. The tenants, if qualified and interested, know that there is other interest in the place. This means they won’t waste time making a decision. I’ve had four tenants pay for the background and credit check and put down their security deposits before leaving the property after viewing it. Less time spent showing the property. Less time waiting on people to make decisions. Also, less time on the market all means more money for us.
At this point, you should have a grasp on how to get good tenants. It all starts with listing your property, accepting applications, and showing the property. We don’t want to give specific criteria in this article for credit and income. Those criteria will vary between area, and property. One thing that we mentioned in the previous section is the conversation about expectations with the tenants. From the beginning to the end of your interaction with the potential tenants, there can be no wavering, no negotiation, and no sympathy. You have to be a stone cold killer. That’s not to say you can’t be friendly and inviting, but you also have to be firm. We set the tone early with the listing. Then, supplement it with the email. Finally, we drive it home when they see the property.
By being clear with the tenants, we let them know that the rules we have set in place are to be followed without exception. They also have a full understanding of the consequences if they falter. With that being said, we have had incredible luck with our tenants. *Currently knocking on every piece of wood I can find*. They all pay on time, or even early. They submit maintenance requests accurately, which we resolve quickly. And best of all, they take care of the properties. Because we have the right steps in place, and follow the procedures that we’ve set, we know that we are comfortable renting to anyone who makes it through the process.
Are you planning to report late payments to the credit bureaus? I’ve struggled a bit with getting paid on time by s couple of my tenants. Finally, I threatened to begin reporting it, and they seemed to respond favorably out of fear. But in looking at what reporting entails, I realized I would need to report every payment of every tenant, late or not, and that seemed like time I didn’t want to spend.
Great question, Dustin! I’ll be honest with you, I haven’t had to escalate any late payments that far yet, but one of our tenants is late every single month. Never more than 5 days, but still late so I get to bank that extra late fee every month. Something that I do for prospective tenants to avoid this issue is to mention that Cozy reports payments to the credit agency. I don’t phrase this as a threat, but as a beneficial feature for tenants to boost their credit rating. Now, that is an option in the Cozy website that the tenant can opt into or not but I also think I can opt them in. I’d have to double check though.