Considering buying an investment property? Once you locate a good rental property that generates reasonable income and solid future return on investment, it’s time to nail down one of the crucial components to a profitable property rental: finding and keeping good tenants. Having good tenants will make or break (sometimes literally) your rental property. It’s also far less expensive to secure good tenants for the long term, rather than redoing the whole process every time a lease is up for renewal when you can incur an income loss for vacancy as well as refreshing the finishes in a suite.
The Business of Advertising
Good advertising comes with knowing your target market and how to lure them in. You don’t want to cast a wide net and settle for whatever you drag in. You want to be selective; this is essentially the first step in a successful long term landlord-tenant relationship. What is your market (i.e. students, professionals, families, etc.)? While you’re going to get the bulk of your interest coming from online portals (and make sure your ad reflects that – read on below), there is still value to advertising in more low-tech ways as well, say, on post boards at university campuses.
Style, If Not Stage It
When you’re selling your house, it’s a no-brainer to stage it to make it more appealing; the same applies to a rental. Just as when selling, it’s best to keep your palette and finishes in neutral territory, simply because you’re going to appeal to a larger pool of potential tenants. Not only does staging put the best version of your property forward, it also gives you leverage to ask for top dollar. In my own rentals, I always include unique fixtures that make my places stand out from the competition. Adding elements like great pendant lighting, ceiling fans, large rain shower heads, or colourful carpet runners are inexpensive ways to elevate your rental that most landlords don’t think of. Then, make sure your photographs capture some of these details, while still showing the entire space accurately.
While a picture is worth a thousand words, make sure that your copy is impactful as well. Be conscientious in writing down all of your property’s features and benefits, highlighting anything that you think might be a selling feature (layout, proximity to amenities, parking, high-end finishes, outdoor living space, etc.). Avoid confusion possible by detailing what is and isn’t included (from utilities right down to snow removal, and yard maintenance).
When you’re showing your property, listen as much as you’re talk, so that you can make some quick intuitive judgments. Obviously, you’re not going to get to know a person thoroughly in this short window, but you can observe a few things right out of the box that could be potential flags for a rocky tenant-landlord relationship. Firstly – why are they moving? Were they on time for their showing? Are they badmouthing their landlord? While there are two sides to every story, past behaviour is often the prediction of future behaviour. Like any relationship, this one needs to be based on mutual respect – especially if you are looking to the long term.
Always tell any prospective tenant that, in addition to filling out an application form, you will be completing a credit check and calling their references. Shady tenants will attempt to convince you not to complete this critical stage of the approvals process, whereas the bona fide will have no issue (or may even proactively bring letters of employment, credit reports and references with them to secure the place). This is one of the most essential steps of choosing good tenants.
Getting Your Tenants to Stay
For starters, establish open lines of communications. Make sure that the rules are clearly stated (you can’t expect someone to follow rules if they don’t know what they are). Likewise, make sure that you let them know that you are available and accessible should they need something.
Be proactive. If you think something will need to be repaired and replaced, do it before it is broken. Not only will this make you look good (‘I really care!’), but your tenant will appreciate your effort and that their lives go uninterrupted. Look at ongoing maintenance as a way of working towards a long-term relationship with your tenant.
If something does break or need attention, attend to it as quickly as you are able. When it comes to collecting rent, be reasonable. Obviously, if you have tenants that are chronically late or who are trying to take advantage of you, it’s a little bit of a different story. But if your tenant has a legitimate situation (job loss, change in marital status, or death in the family) in which they’d benefit from a grace period in which to pay rent, this act of kindness may go far in cementing a long-term relationship.
Finally, sometimes it’s better to keep your market rent reasonable so your tenants know they’ve got a good deal.
Are you about to become a landlord? Or maybe you’re starting to look at the possibility of taking on a rental property? At urbaneer, we have decades of experience finding homes to help our clients not only enrich their lives, but as part of a shrewd real estate investment strategy. We’re here to help!