Tip #1: Set Realistic Expectations
The first tip for how to find good tenants for a rental house or apartment is to set realistic expectations. In general, you can expect to get your property rented within 30 days after putting it on the market. Within 30 days you should either have a tenant moving in or a signed lease for someone moving in in the next couple of days. The exception is around the holiday season. Thanksgiving, Christmas, New Year’s. People tend not to move that time of year, especially in cold climates. In general, people are consumed with the holidays and visiting friends. They’re not thinking about moving. Things slow down about that time of year.
Rental activity then picks up around February. There are two reasons why it’s that late. One is that a lot of tenants get their refund checks from the IRS in late January or early February, so they can start putting down security deposits for new apartments or houses. The second reason is that a lot of wives can’t get their husbands to go out looking at houses on the weekends during football season. The Super Bowl is usually the second weekend in February. After that’s over things start to pick up for landlords. In general, you could expect 30 days to get your property rented from there.
This is why, ideally, if you can control it, you don’t want to close on a new property in November because you might have a longer vacancy than you would at other times of the year. If you can, it’s better to time it.
Tip #2: Use Lots of Photos
The second tip for finding good renters is to use lots of photos in your postings. The reason o do this is that you want to give your prospects as much information as possible. You can see in the pictures in the video [1:55] that the kitchen is very bright. You can see clearly the quartz countertops, the cabinets, the stainless appliance package and the recessed lighting. All that’s very detailed. You want pictures of every room in the house so that the prospective tenant knows exactly what to expect and has all the information they need to make a decision.
Also, you want to show photos up and down the streets so the tenant has an idea of what the neighborhood looks like. The neighborhood is clean, the lawns are well-manicured. People have pride of ownership. They take care of their houses. You have a nice SUV in the driveway there. There are clunkers on cinder blocks, etc. You want to remove the “FUD” factor: fear, uncertainty, and doubt. If you have detailed pictures of every room and up and down the street then the prospective tenant should have all the information they need to know that they want to see your house and possibly rent it.
Tip #3: Check Out the Competition
If you want to find good tenants to rent your property, it’s important to check out the competition. Don’t just post things online in a vacuum. Go to a rental site like Zillow or Redfin or Realtor.com and see what other landlords are doing.
In this video [2:45], you’ll see an example from a search I did in Ocala, Florida. I clicked for rent, and I set the filter to three bedroom two bath houses, single-family homes, and new. See how many properties there are like the one I’m trying to get rented. You see there’s 36. Now, Ocala has a population of 65,000, which is a fairly good-sized city. 36 results isn’t terrible, but it’s not ideal either. You have competition.
You then have to ask yourself what rent range is realistic. In the example, you’ll notice the rent ranges from $1,775, $1,795 and $1,845, so roughly somewhere about $1,800 a month on average. That’s the rent range you want to be considering. That’s the information and the intel you get by checking out the competition online. You’ll need to look at several sites just to see what’s out there.
Tip #4: Price it Right
Tip number four [3:55] is to take that information and price it right. You want to avoid likely tenant rent caps. For example, when a prospective tenant is looking on Zillow they mat set the price range to a max of $1,800. If you were to list your property for $1,825 you’re going to miss out on a ton of potentially good tenants for your property because if they’re screening on $1,800 and lower. These tenants are not even going to see your property. If you consider the difference between $1,795 and $1,825, it’s only like $30 a month. It may sound like a lot, but it’s nothing compared to what you’re going to lose.
If you do the math, let’s say it takes you an extra month to rent this property, you lost $1,800 in rent. In order to gain $30 a month, it’ll take you 60 months to make up that lost rent for that first month. 60 months is five years. It’s just not worth it to try to swing for the fences and get the max rent. It’s better to just price it under whatever those caps are so that you can rent the place quickly and get it cash flowing quickly.
The mistake I see investors make is they ask the property manager the wrong question. They ask, “What should we rent it for?” The property manager is trying to do what’s right for the investor and trying to tell the investor what he wants to hear, so he says, “Oh, we can get $1,825 or maybe $1,850, even.” That’s the wrong question. What you should ask is, “What is the 30-day price? What do we have to list it at so that the property rents within 30 days?” That takes some pressure off the property manager because they know they don’t have to get the max rent, they just need to rent it quickly. Once you tell them that, then they can give you a more realistic number so you can price it correctly.
Tip #5: Post on All Rental Sites
The final tip for how to find good tenants is to post your home on all rental sites. These include Zillow, Trulia, Realtor.com, Redfin, and of course, the property manager’s own site. Trulia is owned by Zillow, so I don’t know how much difference there is but you never know. Maybe some tenants will look at Trulia and not think to look at Zillow. Some property managers only list it on their site, and I think that’s a mistake because most tenants have never heard of your property manager’s company and won’t think to look there. For every one that finds it on your property manager’s site, there’s probably a hundred that’ll find it on Zillow. You want to tell your property manager to post it everywhere.
3 Common Mistakes That Lose Good Prospective Tenants
Mistake #1: Poor photography
The first common mistake newbies make when trying to find good tenants is poor photography. The culprit here is that the property manager is too busy so the pictures are taken with a handyman’s cell phone instead of a professional photographer. What you wind up with is a photo with poor light, not enough pictures, or sometimes no pictures at all. What happens is the property manager says to the handyman, “while you’re there, take some pictures and send them to me.” This is just a handyman who is there to clean and touch up paint to make the place ready for rent. They don’t know anything about taking quality photos. You then get pictures that are very dim and not very clear.
In another scenario, the property manager will send out the most junior person in her office to take pictures. This person doesn’t yet have a sense of aesthetics or what the pictures have to look like to appeal to a good prospective tenant.
Mistake #2: Not posting your listing on all rental sites
Mistake #3: Not pricing the property correctly
To wrap up, the five tips for how to find good tenants are to (1) set realistic expectations for yourself, including seasonality; (2) use quality photos throughout the house and up and down the street; (3) check out the competition to see what you’re up against; (4) make sure you price it right; and (5) post it on all the rental sites so you cast a wide net and attract as many prospective tenants as possible.
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