3 Major Mistakes to Avoid When Finding A Tenant For Your Rental Property
Whether you are looking to build a long-term retirement fund in real estate, or just trying to make some extra cash on the side, getting into the landlord business can be an extremely lucrative decision.
Yet, this obviously comes with its set of major drawbacks as well, which we will cover in more detail below. For example, learning how to successfully market your properties, communicate with and screen tenants, and establish a healthy landlord/tenant relationship that ensures you make reasonable profit is a MUST.
Imagine 3 gears in a watch - each of the pieces needs to function well independently as well as in relationship to the others. Consequently, when one part fails to work effectively, the entire operation comes to a crashing halt.
From our experience, we have seen both seasoned and brand-new landlords make the following same 3 mistakes over and over again, which can lead to a lot of headaches, confusion, lost profits, and eventual burnout .
When they neglect to follow the right system, their real estate business very quickly turns into a full time responsibility. Of course, this goes against the typical dream of a real estate investor to build relatively passive investments, which allow them to have more freedom and time to do the things they really want .
So where do you find yourself with things? Are you currently “living it up” and enjoying the lifestyle that the landlord business can provide, or are you feeling stuck, lost, overwhelmed, and ready to quit?
Perhaps you have already decided that a little extra help on your properties could go a long way. If that’s the case, you will find details in your email about some of the property management services we provide at a reasonable fee.
Marketing Your Property
Now, let’s dig into some more details about how your can successfully market your property using both online and offline mediums.
Did you know that approximately 90% of people begin their real estate related searches online ? Of course, if you are not optimizing your exposure with Internet marketing (which most landlords are not), there are a ton of opportunities that are being missed daily (NOTE: If you are not comfortable with this process, we can manage this all for you!).
Since most landlords are familiar with the more “traditional” forms of advertising (such as signs, mailers, classified ads, etc.), the following list will cover some progressive online marketing ideas. Here is a quick (but not exhaustive) checklist of items that you should consider:
Facebook Business Page
Basically everyone and their grandma are now using Facebook to stay in touch with friends and loved ones. But, you will especially find a huge percentage of your target market is signing on here daily. Setting up a free page with information on your specific rental properties is a great way to start. Very cheap ads can also be setup for each available unit by spending just a few dollars a day, and you can choose very specific demographics.
Everyone loves to watch videos. Plus, YouTube is the second biggest search engine outside of Google. Simply record some footage of every property you need to rent and upload to your Channel. Use these on your blog, social media sites, emails, or anywhere else that allows you to share content. Additionally, you can even consider running short ads (like the ones you see appear before watching a video) across your local YouTube market utilizing their own advertising platform.
Although restrictions of what you can and cannot post on here continue to increase, this is still a viable place to post details about your properties. Hundreds or even thousands of people in your area are using this site daily to search for real estate related services. Our experience also shows that a larger percentage of these people tend to be a part of the rental community.
Lead Capture Pages
This is perhaps one of the most powerful forms of marketing available. One thing that our company specializes in is creating websites that can be used to advertise and convert traffic into leads. So while you are featuring your property, why not build up an email list of people looking to rent in your area (especially if they do not like the current unit being offered)? That way you can stay in touch with your audience and email them details on new rentals that become available.
Other Social Media
Facebook is not the only option here! There is also Twitter, Instagram, Flickr, Instagram, Google+, LinkedIn and more. All of these sites are free to setup and post content to. It’s a great way to share photos, rub shoulders with locals and influential business people, and start building huge followings of people that can easily share your content with others.
Setting Your Rental Rates
We’d like to emphasize that if you implement the first part correctly and strategically, you will begin to draw in a larger pool of people, which will allow you to selectively choose the best tenants who can afford to pay the ideal rates .
Instead of settling on a person or compromising on rent like many landlords do, why not put them through a stringent enough process that ensures you are getting a responsible and trustworthy individual/family?
Pulling from the infographic on the next page, there are a few guidelines you can consider to help ensure that your next tenant screening is a smooth one:
- Tenants must earn at least 3X the rental amount
Each person must have good references from all previous landlords
A person cannot have any history of evictions, judgments, etc.
Background checks must come back with no felonies or other negative criminal activities
Communicate your minimum standards up front in order to avoid showing each property to those who don’t qualify
Gather information about their current employer and job, and other required personal data to make an informed decision
Also, when setting your rate for the specified property, consider the following:
- View from property, recent updates, layout, floor level, and extra closet space
Conduct a thorough review of competitor rates by searching classifieds, online ads, units in the same complex, etc.
How are people responding to your current price? This could indicate if your choice is too low or too high
What is the current situation/demand for rental units in your market?
Cover your expenses at a minimum
No More Mr. Nice Guy!
Finally we will discuss the importance of the landlord/tenant relationship. Unfortunately, in most cases “ when you give an inch they will take a mile .” Setting the proper tone, expectations, and mutual understanding that you are their landlord and not their friend is absolutely essential.
But this is easier said than done, right? For many of us, it’s hard not to show care, compassion, or even flexibility in certain situations. It can become very challenging to know where to draw the line many times .
The problem is that when people know you personally and continue to meet you face-to-face, there is a natural tendency for each tenant to start feeling as if they can ask for special favors once in a while.
Plus, you know what happens next…late night phone calls, harassing emails, collecting rent on time, taking tenants to court, protecting the property from damage, helping to fulfill property maintenance, etc.
Let us give you a word of caution: If you really want to be in this for the long haul by building up a strong portfolio of cash flowing properties, it is ideal to focus on this as a business endeavor more than a self-employment opportunity.
For example, there is a HUGE difference between how Starbucks runs and your local mom and pop coffee shop. On one hand, Starbucks is managed by dedicated employees who help fulfill the day-to-day duties and assume responsibility for an overall smooth operation.
On the other, Don’s coffee shop down the road becomes his baby. Spending 80 hours+ a week in order to ensure that the ship doesn’t sink is his responsibility alone. Why does this occur? Don doesn’t have the systems in place to allow him to step outside the trenches in order to focus on the bigger picture.
But the good news is that by working with a team of competent and professional property managers, you will be able to step out of this demanding role in order to truly spend time on the things that matter to you.
By using our progressive and innovative approach, our team will help you to:
- Market your property to the largest pool of prospects possible , so you’re able to find a tenant fast.
Command the highest possible rental rates for each property
Eliminate the stress and hassle of management and make more profit in the long run
To schedule a free assessment and to discuss all the options that are available to fill out the information below and our team of Professional Property Managers will be in touch.