I often advise my clients, that they will call me more after you purchase a property than beforehand. After all, there is a lot to understand about owning a rental property that you either don’t think about ahead of time or you may have not considered the information as important until it comes time to act upon it.
First off, you should have a plan for who you are going to accept or not. You need to have a written copy of your requirements. An example would be to use a mid-score minimum of 620 (FICO score) and no felonies or multiple misdemeanors on a person’s criminal record. You could also require the tenants to have a minimum of 3X the monthly rent in income. Please check local and Federal laws as to what you can and can’t do in this situation.
I would also highly recommend that you plan for the lease to end somewhere between April and August. It is much easier to find tenants in those months than it is during the Winter or late Fall. Some owners like to do month-to-month leases rather than doing a whole year or longer. It allows the owner to end the lease without a specific reason (after giving proper notice) if they are having issues with the tenants. You would either need to agree to have a tenant move out, or evict them (with proper cause) if you sign a year lease. If you try to lease your property in the Winter you will likely get tenants that are wanting to play Let’s Make A Deal with the monthly rent.
Another item that is important is your photos of the property. Don’t be afraid to have a professional take photos of the property, and then keep them on file for years to keep showing your property at its best. It may become very difficult, if not impossible, to get good photos when you have messy tenants. Just like selling a property, when prospective tenants look on-line at your property, the photos will draw them in. If you don’t have any photos or few that look good you will limit the number of people that will set up a showing.
One simple Idea that will save you a ton of time and aggravation is to set-up open houses rather than going to the property for showings at any and all times. I found this out through frustration because I would set up a showing-at the prospective tenants whim and then go there only to have them not show up. If you tell people that there will be an open house on the property from noon to 2 on a Saturday you accomplish three things. First, you only go there one time not five or more. Second, you create a sense of urgency when you have multiple people in the property all at once. Finally, your current tenants won’t get as miffed by having multiple showings at different times.
If I could scream this out I would: Make sure to list on the ad that you run that you will do a criminal background check and a credit check. When I first started in the business I had a lot of people that would show interest in renting from me until I pulled out the background check. Then they would magically disappear. I didn’t put two and two together immediately, but found that I didn’t have that issue when I listed the two checks on the ad that I ran.
Last, but not least, I was talking with a friend that is one of the best managers that I have ever known. His philosophy on getting employees to cooperate with him was simple. He said “manage people on the simple small items, even micro manage the small things. If you “call” an employee on being late by a minute or on a small item in the dress-code you won’t have to talk with them about bigger things”. If you don’t do this and let small things slide, he added, you will have even bigger issues more important situations.
A good example would be the first time someone is late with a rent check. A lot of people will let it slide the first time, and even not bring it up. If you do this, you open yourself up to other situations because the tenant has seen how you treat the initial situation. Rent shows up on the 6th then the 15th then not at all, or maybe a you notice a dog in a unit that doesn’t allow pets. Treat it like a business, and people will respect you.
If you need help buying or selling a property please feel free to call me at 612 332 9000.