As someone looking to become a property manager, your responsibility is to make sure everything runs smoothly while keeping your residents safe and happy. To some, this seems easy; but it’s not always smooth sailing when you’re trying to deal with numerous tenants and several complications at the same time, especially if you’re new at this.
If you’re just embarking on this journey, you’ll want all the help you can get — which is exactly why we thought we’d go to some seasoned experts who have been in your shoes. We asked a handful of property managers and those with experience in the rental industry what their best advice is for people like you, and here’s what they had to say.
Short Leases Can Be a Good Thing
– Mark Amann, Property Manager and Realtor at Vision Real Estate
“Make sure your leases are set to expire during times of the year where it will be easiest to find new tenants. We sometimes get in the habit of doing yearlong leases, when really a shorter-term lease that ends in the summer may be better for the landlord and tenant. You’ll have more potential renters and the option to raise rent.”
Most people, at least in the U.S., move between the months of May and September. Why? Because it’s when young adults are starting or graduating from college, younger kids are out of school and the weather is nicer and days are longer. Each of these makes it more accommodating for renters to move from one location to another.
Like Mark suggested, this means ending your leases at the end of spring or beginning of summer is a great idea. Since there is typically more demand from renters for a viable living space during this timeframe, you’re able to drive your pricing up a bit.
While most landlords and property managers opt for yearlong leases since they find longer-term renter commitment more desirable, consider the benefits of what a shorter six– or nine-month lease can mean for you and the renter. It gives renters more flexibility — a top need for most renters — and gives you a chance at more space to rent out at a higher price than you first rented.
Invest in Tenant Screening
– DeAnne Hill, Realtor, Rental Manager at Parker-Brown Real Estate
“The best advice I have is, do the homework BEFORE you sign the lease and give keys. Do a credit check and criminal background check. Then late payments are just not a problem.”
We couldn’t agree with DeAnne more. As landlords and property managers, you want good tenants — tenants who won’t trash your property, will quickly tell you when something’s broken so you can get it fixed before any major damage happens and who pay their rent on time every month. Good tenants result in a steady cash flow and reduce costly risks.
But, you can’t tell a good tenant just by having a pleasant phone call or having a personal reference say they’re a good person. Like DeAnne said, you have to do your homework on all potential tenants. And the more information you can gather on them, the better. Check their financial standing. Check their social security number. Verify their employment. Do credit, security and background checks.
Thorough tenant screening may be time-consuming, but it’s one of the best time investments you’ll make. It helps you weed out parasitic professional tenants (the ones who think they can just live in your property for free and do whatever) and hand keys over to safe, reliable tenants.
Check Employment History
– Michael Baird, Real Estate Investor, house flipper and Owner of Mike Baird Real Estate and Design
“I believe the most important factor in tenant screening is the length of employment. The length of employment relates to accountability and responsibility, which then results in on time payments. To me, it is the single most import factor. They’re a cash flow asset if their boss feels they’re accountable. I always look for employment history of two years or greater.”
Money doesn’t grow on trees. And while some tenants may get government assistance to live on your property, most renters need a job and have to keep a job in order to pay rent. Think of each of your renters as someone you’re going into business with. If you can’t be certain that they’ll be able to fulfill their financial obligations to you, it’s in your best interest to not go into business with them.
One of the best indicators of someone’s future performance is their past performance. So like Michael suggests, you’ve got to verify their employment and income. You can do that in three ways: call their employer, check their pay stubs and verify their deposits through bank statements, especially if they’re self-employed. If they’ve been able to hold a steady job(s) during the last few years and their boss(es) have nothing but good things to say about them, then they should make a good renter. If they’ve bounced around jobs during the last couple years, take that as a sign of them not being able to hold a job and keep their rent payments coming in on time.
Mike also wanted to add a caution when screening.
“A recommendation from a previous landlord should have very little weight. Oftentimes the previous landlord wants to use an incentive to get the tenant out so you won’t find complete transparency.”
You always want to call someone’s previous landlord, but take what they say with a grain of salt. Dishonest, or just desperate, landlords will do whatever it takes to get a bad tenant off their hands, including telling you a big fat lie about how great of a tenant they are. To get the most accurate information on a potential renter, call multiple previous landlords and not just their most recent.
Establish a Rental Acceptance Criteria
– Pam Storm, Founder at Rent Marketplace
“I am biased and feel strongly the No. 1 mistake is not establishing rental acceptance criteria prior to vetting applicants — which then allows for emotion in the critical phase of selecting residents. Set the criteria and accept only those that meet the criteria, and be detailed on the criteria. It’s best for everyone, makes this the empirical business process that it should be, removes the possibility for discrimination, etc. An excellent screening process will deliver solid tenants, and then most other downstream headaches can be prevented.”
With your rental acceptance criteria, write it down and attach a copy of your criteria list to every application form. Doing so informs every applicant of the conditions they have to meet in order for them to be considered your tenant. A list — that’s both clearly written and detailed — given to them in the beginning also ensures all applicants know exactly what’s expected of them, will help eliminate misunderstandings and keep you from wasting time screening applicants who don’t meet your tenant standards.
Another piece of advice we think is important with rental acceptance criteria is being consistent. If you aren’t consistent with your lists, and say turn down Michael because he’s been evicted in the last two years but overlooked that with Carrie because you know her and she’s had a rough patch but doing better, then be prepared to get hit with an unwanted discrimination case by Michael. The only case for different criteria lists would be if you have different buildings that necessitate different applicant criteria.
Conduct Regular Inspections
– Kallie Holm, Director of business Development & RE Agent at Vision Real Estate
“Regular inspections benefit both the tenant and the owner/management. These inspections can help to identify any maintenance or issues that need fixing prior to becoming major expenses and/or damages. You can also follow up on your residents to make sure they are complying with the lease agreement and conducting their maintenance responsibilities. And of course, if any damage is being done to the property it is better to find it earlier than later.”
You may have spent ample time screening a tenant and they checked out, but that doesn’t mean you shouldn’t regularly check in on them and your property while they’re a tenant. Inspections, usually done monthly, are meant to protect you and your property, and they’re also good for tenants. They’ll save both parties time and money.
What’s the best way to solve a problem? Keep it from happening in the first place. Conduct routine inspections to know if there are any maintenance problems that need fixing before they become a huge, damaging expense and to make sure your tenants are complying with their part of the rental agreement. You also want to conduct an inspection when a tenant first moves in to make note of how the rental property looks before they move in. Our advice: do this inspection with them and take pictures so you know what really was or wasn’t there or broken so you won’t be held liable for something they did.