If you own a rental property, there is going to come a time when it is vacant and you will have to fill that vacancy. Finding a good tenant for your rental property isn’t as easy as it sounds. It is a process.
During this process, you are going to have to set a clear set of criteria for who your ideal renter is and more importantly, who they are not. These criteria will ensure that you make the right choice and put the perfect tenant in your property.
Here are a few things to consider when getting ready to rent your income property.
1) Before you advertise your rental, be sure you have your criteria set
Before you even start to advertise, you need to have rental criteria that will be the minimal acceptable standard for your renter in terms of income, credit score, criminal history and rental history. It is ok to modify the criteria along this process, but you need to have a solid baseline in terms of the credit score and income levels that you want to require an applicant to have.
When creating criteria, you have to have a vision from your property. In a multifamily property, you can reposition your property to a different grade of renter. Increasing the quality of renter will increase the value and profitability of your property. You need to know about building classifications and what your returns must be to make yourself profitable.
2) Be realistic
When renting your investment property, you need to be realistic about the quality of your tenant. For instance, if you are renting a single family home in a modest neighborhood where the average annual income per family is $85,000 per year, you are most likely not going to be able to find a tenant that makes $150,000 per year.
If it is critical you get that $150,000 per year tenant, so you can charge higher rent to make your property cash flow positive, perhaps you need to re-evaluate your investment. If you have no choice though, it’s not impossible attract a tenant with this level of income. But given that the choices available to a tenant of that income are much greater, it is going to take longer to rent your property.
3) You’ve set your criteria. Now stick with it!
What if you get tired of going through all the emails and offers to rent that you are getting from your for rent ads? Or what if you find someone that technically, according to your rental criteria is not a match, BUT they seem like good people? Or even worse, what if you come upon a renter that gives you some sort of sob story and is pleading for the chance to rent your property?
In every case, no matter what, you need to stick with the plan. You took the time to write up your rental criteria for a reason. You do not want to have a bad experience. You want this to be positive for you, your renter, and everyone in the neighborhood where your property is located.
There is a reason you set your criteria the way you did and therefore a reason why these people aren’t right for your rental property.
Need Help? We’re Here!
Renting a property doesn’t have to be a difficult process. If you need advice about your rental property, are curious about what options are available to sell your rental property, or are curious about the tax advantages of things like 1031 exchanges, we are here to help you in any way we can.
