If you plan to hold your real estate investment for the long-term, you will want tenants who take good care of your property and pay the rent on time every month. For beginner real estate investors, one of the key factors driving your success is tenant screening. The wrong tenant can deplete your profits and destroy your property! How can you find good tenants?
#1 – Determine How Much Rent to Charge
Your Real Estate Agent can give you a list of comparable properties for rent that are similar to yours. You can also use www.rent.com to find comparable properties and rents. The factors that determine the amount of rent to charge are:
- Quality of Schools
- Number of Bedrooms
- Number of Bathrooms
- To learn other factors which determine the amount of rent to charge, sign up for your Free Tenant Screening Resource below!
We always charge slightly below market rent to bring in more potential applicants and rent the property quickly.
#2 – Advertise for Tenants
When we started investing in real estate 25 years ago, we advertised in our local newspaper, and placed flyers at the local grocery store. Now, due to the Internet, we place online ads on:
- Craig’s List
- To learn other ways to advertise for tenants, sign up for your Free Tenant Screening Resource below!
Prospective tenants like to see photos, so we add loads of photos to the ads. Zillow encourages the use of videos, so we upload videos to YouTube .
We just started using videos and have received positive feedback. Here are sample videos for a 2 bedroom 2 bath ground floor condo:
#3 – Telephone Screen Prospective Tenants
When we get phone calls or emails from prospective tenants, one of the first questions we ask is “how did you hear about the rental?” It’s important to know which advertising methods are effective, especially if an advertising fee is required.
We have developed a list of Tenant Telephone Screening questions we ask everyone who calls or emails. Naturally, we ask for their first and last names, and how to spell their names. Afterwards, we ask how they heard about the rental. We collect their home and cell phone numbers, and email address. Additional Tenant Telephone Screening questions are:
- When are you looking to move?
- Do you currently live in the area? If so, where?
- Do you currently work in the area? If so, where?
- Are you currently renting?
- How long have you rented from your current landlord?
- Will your landlord give you a good reference?
- How much is your current rent?
- How much rent are you willing to pay?
- To learn the remaining Tenant Telephone Screening questions, sign up for your Free Tenant Screening Resource below!
These questions help assess the quality of the prospective tenant. If their current landlord will not provide a good reference, there is no need to waste time scheduling an appointment. We had a recent call from a prospective tenant who was honest with us and said she was late on her rent. The reason we had a property for rent is because the former tenants got too far behind on their rent. They paid their rent every month, but they were becoming more and more late each month. When they paid their August rent on the 20th of the month, we decided it was time for them to go. Therefore, when we heard the prospective tenant say she was late on her rent, we told her that was unacceptable and wished her the best in her search!
#4 – Research Prospective Tenants Before They Visit Your Rental
After you collect information on prospective tenants, it’s smart to do a little online research to determine if it’s worth your time meeting with them. The Internet is a goldmine for landlords! Your collection of tenant data will help with your search. Your first step is to google their name by going to www.google.com and entering their name and city/state. You can narrow down your search based on the data they provided during the Tenant Telephone Screening. Other ways to research prospective tenants include:
- County/District Court Databases
- To discover additional ways to research prospective tenants, sign up for your Free Tenant Screening Resource below!
It may seem unfair to screen prospective tenants before allowing them to visit the property for rent, however when you are managing multiple properties, time is a valuable commodity. We have learned the hard way by spending time and gas running back and forth between properties when the prospective tenant wasn’t serious or qualified.
#5 – Interview Prospective Tenants Face-to-Face
If a prospective tenant has cleared your initial investigation, the face-to-face meeting is a good opportunity to confirm the information collected during the Tenant Telephone Screening. After the prospective tenant has looked around your rental property, if they appear to be interested, use the opportunity to establish a rapport with them. Refer to your questionnaire and ask for clarification on areas of concern. For instance, it the prospective tenant plans to move in less than 30 days, ask if they need to give notice to their current landlord. This is a key question because it indicates whether the prospective tenant is responsible enough to give proper notice to their current landlord.
The face-to-face meeting also gives the prospective tenant an opportunity to ask you questions. Ask the prospective tenant if they have any questions or concerns. This is the time to get a “gut feel” for the character and personality of the prospective tenant.
#6 – Follow-Up With Prospective Tenants
Based on your face-to-face interview, and the data you’ve already collected using the Telephone Tenant Screening questionnaire, you will know who you’d like to apply for the rental of your property. Follow-up by phone or email. We prefer phone because you can use your instincts to measure their reaction. If they are interested, encourage them to fill out a rental application. If they are not interested, ask if there was anything in particular about the property that was a concern to them. This might be an opportunity to negotiate on the terms, such as the rent, move-in date, length of the lease, etc. If they have good credit, good landlord reference, and good income, you may want to be a bit flexible on the terms. Notice that we have not received a rental application yet, but we do have enough information to determine if we want to move forward with the prospective tenant.
#7 – Reel in Good Candidates!
As mentioned in the previous section, if the prospective tenant has been truthful, we already have enough information to determine if they are a good candidate. Reel them in by offering flexibility on the terms. For instance, we usually let the tenant move in early without charging rent for that time period. If they need to give 30 days notice, it takes us about a week to process their rental application. After we have approved them, we’ll draft the lease so that they can move in early, rent free. This is an excellent way to get quality tenants!
#8 – Process Rental Applications
We collect the following information in our rental application:
- Name (first, middle, and last)
- Phone Numbers (home, cell, work)
- Driver’s License Number
- Place of Birth
- Date of Birth
- Current and Former Employer (dates of employment, salary)
- Current and Former Supervisor Name and Phone
- Co-Worker reference (Name, Phone)
- Current and Former Landlord (Name, Phone)
- To learn additional information collected on Rental Application, subscribe to get your free Tenant Screening Resource below!
The opinions expressed herein are solely those of the Author/WebMaster. Before taking any action, please consult your real estate, financial, and legal advisors.