How to Get Good Tenants For Your Apartment as a Landlord
If you are a landlord often the caliber of tenant is as important as the amount of rent they are offering. Good tenants are not hard to come by, but here are some tips on how to avoid the telltale signs of a less-than-attractive tenant.
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Instructions
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Make your apartment show well. Good, clean tenants will not be as apt to choose an apartment that is messy, needs repair, or looks unsavory when it is shown for lease. Do not be cheap. Add a coat of paint, fix the dishwasher, and do the little things that will sift out the tenants who are also dirty and used to living with broken appliances. Many landlords do not realize that the condition of their apartment is the number one way they can control their tenant stock.
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Increase the rent. Assuming that you do make fixes, add paint, and upgrade the apartment, do not keep the rent rock bottom low. Your rent should not exceed the market value for like-kind apartments, but realize that apartments that are very low in rent often attract tenants who may be spread thin when it comes time to pay rent. Of course, this is not always the rule and tenants with plenty of money often do not pay rent. Expect more out of your tenants by giving them a higher quality product and charging an accurate rent.
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Application and deposit check. Have all tenants fill out standard rental applications. Have them give you a check for deposit. Do not deposit the check unless they are accepted, however, as this can be deemed as illegal in some states. Have them sign an application that gives you permission to perform a credit check.
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Have a real estate agent (the one who is handling your rental) or another contact with credit report access run the credit of the prospective tenant. Pay attention to the credit score, but also take note of two things: Current Past Dues and Lates, and the total revolving balance (how much he or she pays a month in credit cards, etc). If the revolving balance is very high, consider that in addition to rent, the tenant must pay this per month. Weigh it against their salary. If they are late on any account, it may reflect an attitude of indifference to creditors and a lack of responsibility. It may also be a mistake on the report. Ask the tenant about it.
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Verify the salary of the tenant not by his word, but by a pay stub. If he or she is an independent contractor or self-employed, ask for the last year's tax returns. A general rule of thumb is to take the salary, divide it by 12 (months) and again by 4 (weeks). This is the number that, in theory, the tenant should be able to afford for rent.
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Landlord references. Call the current landlord and ask if the tenant pays the rent. Ask if he or she is a considerate tenant, if he or she is clean, if he or she is noisy, and so forth. Consider that if the tenant is a pain, this landlord may WANT to get rid of him or her. So, be sure to call the previous landlord and ask the same questions.
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Meet up with the tenant. If you had your Realtor show the tenant the unit, make arrangements to meet him or her prior to signing a lease. Often this will assuage your concerns or will make you realize that this person is not for you. Make sure that you are not discriminating against the tenant on the basis of race, sexual orientation, disability, or familial or marital status.
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Tips & Warnings
If a tenant comes to you beforehand and explains that his/her credit is bad and why, you may want to give him or her a chance to continue the application process. If he is trying to fix his credit, he may be a responsible tenant.
Using a real estate agent is a good idea since they are familiar with the application process. Having one agent that you use for all your properties as opposed to several agents may be beneficial for you since the one agent will feel obligated to get good tenants to maintain the relationship she has with you.
If a prospective tenant comes to you and offers you more rent as long as you do not check his credit, be wary. This may be a red flag.
Just because a tenant makes $200,000 a year does not mean that he or she will pay the rent. Check on the past landlord references and the credit check to get the full tale.
References
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