The key to maximizing profitability and minimizing risk as a landlord has much to do with creating and securing the right tenancies. That is to say, finding good tenants that stay for long periods is an optimal situation for both landlord and investor. Here are a few tricks to weeding out the best renters for your properties and motivating them to stay put.
1) CREATE AN EFFECTIVE AD CAMPAIGN
Right now there may be dozens of potential tenants out there who are looking for a place like yours to rent. You can advertise in the newspaper, on billboards or on the Internet however, you may be wasting your time and money advertising to people who either aren’t interested in what you have to offer or aren’t qualified to meet your minimum tenant standards.
A good “ad campaign”, on the other hand, lets you pinpoint and attract just the kind of tenant you’re looking for! In order to devise an ad to meet your needs, you must first identify and understand your ideal tenant, and then strategize the best way to find them.
Step 1 – Identify and understand your ideal tenant
An advertisement works best when it appeals to the type of tenant you are looking for. So before you decide what information to highlight, consider for a moment the best tenants you’ve had or could have. Think about what characteristics you value in an applicant.
Step 2 – Create effective advertising
Once you’ve identified qualities of your best tenants, think about what they have in common and what factors contributed to their tenancies being so successful. What did you have to offer them? Assessing this information will help you decide how to target your rental ads. For example, let’s say you’ve determined that your ideal tenants have almost always had small children, owned a small animal and worked in the nearby business district. A good strategy then would be to advertise benefits that appeal to those types of applicants such as “Near Park”, “Pets OK” and “Close to Downtown”.
Step 3 – Find “model” tenants
Once you’ve identified some advertising strategies to attract your ideal tenant, you will need to consider the best medium to reach them. One idea is to ask an ideal current or past tenant to post an ad for you at their place of work or college bulletin board where there may be more of the same types of people looking for housing. You may even offer a referral fee to anyone who sends an acceptable applicant.
Step 4 – Continually expand your “model” tenant ideals
Identifying common characteristics of good tenants is not an argument for discrimination. As we are reminded by the federal anti-discrimination laws, don’t ever judge a book by its cover. You would be wise to remember that the more you are able to expand upon the qualities and characteristics of good tenants, the more of them you will be able to target and attract.
In short, you want to spend some time identifying your ideal tenant, creating effective advertisements or flyers that will attract them and then determining the best ways to get your listing in front of people who will most likely desire the amenities you offer, want to live in your area and who can afford your rent.
2) TELL IT LIKE IT IS
Once you have found your ideal tenant, you will need to have a plan in place to nurture a healthy landlord-tenant relationship. First and foremost, you need establish a very clear understanding about what you expect of the tenant and what they can expect from you. Take your time going over the lease, explaining the most potentially problematic issues such as the rent due date, late fee assessments, lease violations, notices and remedies, reporting repairs and maintenance, entry and inspection situations, move-out procedures and security deposit refunds. You want to be clear about your strict adherence to your policies and procedures but also sure to illustrate your respect for your tenant’s rights and needs as well. This sets up a friendly and professional atmosphere in which you can both thrive.
3) PRACTICE WHAT YOU PREACH
Having clear communication with your tenant is only part of the equation on keeping good tenants. Another consideration is that you consistently practice what you preach. For instance, if you’re policy is to assess a late fee on the 6th of the month, resist the urge to waive the charge for the first time “out of courtesy”. On the contrary, being strict with your policies will send a very important message to your tenant about taking the terms of the lease seriously and will be a significant factor in avoiding problems in the future. The minute you demonstrate flimsy boundaries, especially in the beginning of the relationship, the more likely a tenant will be to take advantage of you in any and all situations they can. The time to show leniency, if ever, is after your tenant has demonstrated responsibility and respect for the lease terms in the past.
4) MAINTAIN COURTEOUS PROFESSIONALISM
One last suggestion that will earn you respect and loyalty from your tenants is the ability to always be courteous and professional. This means:
- While you will want to be friendly with your tenants, do not become their “friend”. Remember: it’s difficult to evict a “friend”.
- Avoid getting emotionally involved or arguing with your tenants. If an uncomfortable situation arises, make all communications in writing and stick with the facts.
- Deal with issues that arise and deal with them in a timely manner. This includes, dealing with repair and maintenance items or returning not-so-urgent phone calls. The more you show your respect for your tenants’ time, privacy and personal needs and comfort, the more likely they will reciprocate.
- Once a tenant has demonstrated a consistent respect for you and the terms of their lease, reward them by going out of your way to accommodate them when the need arises. Use opportunities (such as minimizing or eliminating annual rent increases) to develop a mutual trust and appreciation that will ever increase your tenant’s happiness and desire to stay. This will make you more money in the long run!
Being conscientious about how to attract and keep good tenants will make a significant difference in your experience as a landlord. Pay attention to what tricks of the trade work well for you and use them as opportunities to achieve more and more success in attracting long term, loyal and happy tenants. This is a win-win situation for all and will significantly improve your experience as a landlord, not to mention your pocketbook!