In this last article in the series we follow up property buying skills and getting your numbers in line with picking the right tenants for your rental. Buying your property is exciting but enthusiasm can sour quickly when the consequences of poor tenant selection start to arise.
When buying a property there is so much time dedicated to finding it, financing it, making sure your numbers are realistic and doing renovations that it’s easy to forget what comes next; Tenanting.
Tenanting is the long-term outlook of your property. Unless you’ve bought a parking lot, even then you have “hourly” tenants, you’re going to need tenants in your property to make it an effective and profitable investment. To get you started on the right foot, envision your “tenants” as your “clients”, because that is what they really are. Aspire to have great clients and don’t be afraid to fire the bad ones.
My foolproof way to finding and keeping perfect tenants for your rental
I believe there are 5 steps to finding a perfect tenant and I’m going to share them with you. I’ve learned these steps from managing my portfolio of 75+ units and over a decade of real estate investing experience.
When I give you these tips I’m assuming you’ve found a property in a good area that when rented for $X dollars will give you $X amount of cash flow. If that’s not the case go back to Part 1 of this series.
5 Steps to the Perfect Tenant Experience
- Documentation and Follow up
This is the first line in getting your property to the world. When I started in Real Estate everybody advertised in the papers. Now you must be online. The point is be open to where your tenant will find you and be adaptable to the market.
Get excellent photos of your property. Excellent means photos that are well lit and show a clean suite from the very best angles. Take the photos in sequence of walking from the street to your house this shows the curb appeal and a gives the tenant a good idea of the layout of your property.
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Write your ad in such a way that you target exactly the kind of people you want as your ideal tenant and the ones that will be interested in seeing your property. Why? This prescreens tenants for you. Caveats like no pets, no smoking, suits singles or students, reduce the amount of non-starter tenants you have to turn away. Be very clear how long of a lease you want, how much rent is, and how utilities are paid.
Use adjectives! Sell your place hard. Stand out from all the other listless ads by telling your tenant how amazing living in your place will be; paint a picture, use emotive words.
Make sure to tell them what they get in your suite. Is parking free? Is there a yard for their pleasure? I became and effective ad writer by reading other ads and copying writing styles that stood out. I tried multiple ads for my suites and determined what worked best.
You meet a prospect and show them around your suite. They seem great, they look ok and you seem to click. Why not rent to them right now and seal the deal with a handshake? Sometimes the worst tenants, like professional tenants, know how to act and dress to look like the best tenants. Think conmen.
Never rent without getting every piece of information allowed to you by law. The information you get in your application is sometimes all you have to help you collect owed rent or damages. Many landlords hire companies to do tenant screening. It’s a great idea and often cost effective in reducing trouble down the line. Using facts as well as your feelings can help you make the decision of whom you want to rent to.
You can get make your own application or get one online. In Canada you CAN ask for a S.I.N number if your tenant has had frequent address changes. Copy of Driver’s License, Passport and depending on age, next of kin or parent’s contact information are useful.
Your lease is your legal contract with your tenant. I used to have a lease that was 17 pages long it covered parties to pets to what kind of clothing was acceptable! Then I took some courses and learned you can write anything you want in your lease but nothing is enforceable that doesn’t comply with the Residential Tenancy Act (RTA) here in Canada.
Get a lease from the Landlord and Tenants Advisory Board in your area. They are under $5 and available in bulk. The Landlord and Tenants Advisory Board offers courses and has a help line if you have questions. Make sure you keep a copy of your lease and give the tenant a copy. Initial any changes, the bottom of every page and always follow the RTA.
When move in day comes you’ll do a move in report with the tenant. It’s a snapshot of the property at the time. Some people are harder on properties and cause more damage.
I do inspections every six months. I take photos and I point out what needs to change. It’s also a great time to find out about the “I’ve been meaning to tell you….”.
You’re guaranteed to hear it. Whether it’s a damp basement or a noisy fan you’ll get some insight into what’s not working at your place. This is priceless information for keeping your property in excellent repair.
Documentation and Follow up
When, not if, you have to take legal steps to remove a tenant or get payment you need proof of all the infractions or late payments. The only way to get this is to document every interaction with the tenants.
Take the example of the yard maintenance. A notice comes from the city warning that the grass is too high and noxious weeds are taking over the yard. Copy it and write a dated notice to the tenant outlining the problem, what you want done and the repercussions of not completing the actions required by a certain date. Drive by the property and take date stamped photos leaving the documents either with tenant or affixed to the door. If the tenants don’t cut the lawn you have 3 levels of proof of their negligence – the city notice, your notice and photos.
Tenanting is by no means easy and is often what turns people off from investing in real estate. The human element can super charge situations and get emotions running high. Screen your tenants well, treat them with respect and you will have fewer bad-apples (but you’ll still get some!) in the basket.
Always remember your end goal – why you invested in the first place and don’t forget nothing worth doing right, is easy!