As a landlord, the most important thing is having someone take care of your property and pay rent in a timely manner. Empty properties cost money. Evictions cost even more money so it’s important to do your due diligence to find good tenants. Good tenants – people who pay their rent on time and take care of your property – are like gold so it’s important to take care of them. Taking care of a tenant means making timely repairs and dealing with other issues they have, such as problem neighbors or an overzealous homeowner’s association.

Here are a few basic steps to finding your dream tenants:

Hire a Realtor

The easiest thing to do when your property comes up for rent is to hire a realtor. Typically, this costs one month’s rent, but then he or she will be responsible for taking all the pictures, putting a sign out front, creating flyers, marketing the property, talking to interested parties, arranging showings, screening for credit and criminal records, negotiating the lease and then executing the contract between you and the tenant. Your realtor will also get the take the fun calls from random people calling to complain that your rent is to high or have some ideas on the JFK assassination.

It may seem like a lot to spend, but the hours and the headaches add up. Our last unit which leased at $1300 took probably 50 hours to rent. This included drive time to and from the unit, scheduling eight to 10 showings (including probably four that didn’t show after confirming they’d be there), following  up on leads, vetting applications and selecting a tenant. One of the best parts of working with a realtor is he or she markets the property to realtors working with renters. Renters working with realtors can be great as other realtors have already screened the tenant and is working with another professional to get the deal done. When you pay your realtor one month’s rent as a fee, he or she will split that with the tenant’s realtor.

Your realtor also has access to the latest lease approved by the Realtor association in your state. This lease addresses all the main issues as a landlord and protects you from any weirdness with your state laws. In the end, your realtor will bring the completed applications to you for your final approval. You may want to meet the tenant at contract signing as you will likely be managing the relationship going forward.

Clean Up and Take Pictures

If you are not hiring a realtor, the first thing to do is get the property empty and ready for showing. It is within your rights to show the property to prospective tenants a few weeks before the existing tenant’s departure. However, no matter how good a landlord you have been, tenants on their way out are moving somewhere else and not especially motivated to keep the place clean or accommodate showings. I like to use the time between tenants to make any needed repairs, paint or other updates to stay competitive with other properties in the area. With one property, we took a week between tenants to refinish the hardwood floors. It made a big difference in the pictures and in listing to say we had newly finished hardwood floors.

After you clean it thoroughly, flip on all the lights, open the blinds, make the floors shiny, clean off all the countertops and get the yard in shape to take some bright, inviting photos. Kitchens and bathrooms are among the most important to tenants so be sure to get a lot of pictures of them. Also, take pictures of anything that sets your unit apart, like a new kitchen or a fenced yard. Camera technology is so great now so if you think some of your images are a little dark, lighten them up afterwards using the edit tools in your phone.

Price Analysis

It is important to price your unit within the range of similar units nearby so that you get a lot of inquiries and can take your pick of the tenants. A local realtor can help you see what listings have rented for in your area recently. Online sites like Zillow and Rentometer can also help you see what similar units are currently commanding in rent. Keep in mind if you don’t get the applicants you want, you can always lower the price a little later.

Market Everywhere

Once you have your spotless house, super-bright pictures and a price, it’s time to market your listing. Zillow is probably the most popular as of May 2020, but it usually costs about $5 to $10 a week to advertise on their depending on your market. The Zillow Group also owns similar sites like Trulia, StreetEasy and HotPads so your listing on Zillow will be syndicated to those sites as well. I also like to put an ad on Craigslist (free) and then post the my ad on my own personal Facebook page and in the myriad of buy/sell/for rent Facebook pages that focus on the neighborhood of the rental. If you have other tenants, reach out to them with the new listing, too. I usually offer a referral bonus of $100 or $200 depending, if their friend ends up taking the unit. This referral helps me stay I touch with my tenants. Plus, it is always good if your new tenants come recommended and a bonus for the new tenants that a friend has vouched that you are a good landlord.

Screening the Tenants

Once your property is officially for rent, you will start to get inquiries by e-mail, Facebook message and phone calls. This is your first opportunity to screen the person. They will usually tell you why they need to move – a divorce, a new job, new baby, bad credit – you name it. After that first screen, if you still like the person, it is time to show the property. We usually try to group the showings together to avoid having to go back and forth. Be sure to collect the potential tenant’s information and confirm the showing beforehand. No shows are annoying and also very common. With COVID19, some folks are more nervous about viewing properties so they may ask if you have a virtual tour. This could be a saved video tour taken with your camera or you going to the property and doing a live FaceTime with the prospective tenant while you walk around. Either way, plan to wear a mask, bring an extra for the prospective tenant, hand sanitizer and wipe down surfaces and doorknobs after each showing.

The All-Important Application

If a tenant likes the place and wants it, their next step is a formal application. I have not found a system that I absolutely love yet, but the two I use most offer are Zillow and TransUnion’s MySmartMove. There are a couple of ways you can do it – get a written application and an application fee – say $50 to cover your costs of checking their history. We usually prefer to let the tenant pay for that service directly to Zillow or TransUnion and give us access to the results. Zillow is nice because the tenant pays $29 and can use the application with other properties within 30 days if you don’t select them. On the application, the potential tenant also lists former landlords and current employer. Be sure to verify their income with their employer, but most importantly, talk to their previous landlords. How they treated that property, is most likely how they’ll treat you, too. Spend a few minutes just Googling the person – read their Facebook and LinkedIn profile and just make sure it matches up with what they’ve told you. Them not having either one of those profiles can sometimes be telling about a person, too.

The Lease

The lease between you and the tenant is a legal document make sure to use one approved by a lawyer or a local realtor organization. This is important because a good lease spells out important things like when the rent is due (1st or 15th?), how you want to receive the rent (check, PayPal, Venmo) and what you pay for and what they pay for (such as utilities and yard care.). This is also where you spell out specifically obligations for utilities, pets and everyone who will be living in the house. This is particularly important as adding in extra roommates and getting new, destructive pets may give you cause to break the lease later. For problem tenants that are not paying their rent on time or are causing trouble with neighbors, this out may be important. This is also where you specify pets and negotiate a pet fee. Some landlords charge a little extra every month for a pet like $25 or require a pet deposit that is returned when they leave, assuming the animals have not ruined the carpets. We usually require a non-refundable, one-time pet fee of about $200. This way, we assume that the pets will cause a little extra wear and tear on the unit so that money goes to repainting the baseboards or replacing a few broken blinds once the tenant leaves.

Show Me the Money

As you execute a lease, it is time to collect the money. My husband usually says no unit has been officially leased until someone has given us a security deposit. Upon execution, you can decide what to require a signing (it’s usually security deposit, first month’s rent and pet fee, but you can decide if you want them all at once or the deposit now and the first month with the keys – it all depends on the transaction). You’ll also want to discuss when they’re moving in. We have often found it an incentive to get the deal done to give the tenant a few free days to move in. So, if the lease were to start June 1, we may give them the keys May 28 to allow them to start moving in. Depending on the amount of time they want or need, you can negotiate any extra charges for some of those days. 

I’d love to hear your ideas on how to find and keep the best tenants. E-mail me at katherine@ae-tx.com.