Why Tenant Selection Matters
When I first got my hands dirty in real estate, I thought my daily life would consist of meetings, looking at properties, and of course, raking in the dough.
When I first got my hands dirty in real estate, I thought my daily life would consist of meetings, looking at properties, and of course, raking in the dough. While these are big parts of my life today, the reality is I also deal with backed-up toilets, eviction notices, and squatters as part of my routine. This is one of the not so glamorous parts of being a real estate investor and a landlord.
My tenants are a huge part of my daily life because they ultimately determine how I spend my days. Some tenants I feel like I have to babysit, while others I have seen face to face once. Tenant selection is vital to the success of my company because at the end of the day, it is a customer service based industry and they are paying my bills!
They Stay longer.
Have you ever quit a job because you hated your boss? Most people have, and it is the same mindset when handling a landlord-tenant relationship. No, I am not the tenants’ “boss,” but the tenant also has a right to quit my business once a contract is over if they are unsatisfied with the way I handle my responsibilities as a landlord. Tenants rely solely on you to fix issues in a timely manner, otherwise, they will find someone else to give their money to. A decent landlord is common, but a great landlord is a rare find. When a tenant has an awesome landlord that they like, they are more likely to stay in a property for a longer period of time. It is not a guarantee, but how many of you have stayed in a job because you loved your boss? Nailing the tenant-landlord relationship will increase your chances of keeping tenants longer, or at least get some referrals for other trusting tenants sent your way.
They Respect the Property
I’ll say it, the best tenants are the ones that actually take care of the property on their own. I have no problem fixing anything that is broken on in my properties, as that is 1000% my responsibility as a landlord. The tenant’s responsibility is to take care of the little things, such as daily cleaning and yard work, while they are inhabiting it. I can tell which tenants took the time to take of the property while they lived in it and which ones tried to cover up the fact that they didn’t clean until a week before moving out. Tenants that have respect for the place they live also typically pay rent on time. They are more understanding of time-sensitive issues, such as repairs, and have fewer requests in general. A good way to get a gauge on how responsible a tenant is to check their rental history. If a tenant has a string of late payments and been evicted for throwing too many parties, then they will probably end up being more of a hassle in the long run.
They Save Me Money
I always tell my tenants upon moving in to inform me of any and every little mechanical problem immediately– even down to a leaky faucet. I want to know what is going on in my properties to avoid as many surprises as possible. One time, a tenant called me and told me she had a leaky faucet. I went over to check it out and I asked her how long it had been going on. She answered, “Oh, not long, about 2 weeks I think.” Well in those 2 weeks, what she thought was just a leaky faucet had actually destroyed the surrounding cabinets. So, what could’ve been a $50 plumbing fix 1 week and 6 days ago, now became a $500 cabinet replacement. Some tenants call me when a light needs to be replaced, while others might hesitate to reach out if the house flooded. There is a fine line between reporting issues that need to be fixed when they happen and reporting a new issue every other day because the tenant does not want to do any work on their own. Every tenant is different in how comfortable they feel approaching me about problems, but I try to keep as much open communication as possible to avoid small things turning into big things.
Don’t Make Exceptions
I’ve never regretted saying no to someone, but every time I’ve made an exception for someone, I’ve regretted it. I want to be a kind, compassionate, and understanding person, but I have to draw the line somewhere. This has taken me time and experience to know my boundaries, but I would recommend drawing those lines sooner rather than later. When I let people off the hook or walk all over me, I am losing my time and money. I have heard so many excuses that I feel like I could write a book, so I definitely have to pick my battles about what I will and will not put up with. I have also learned to trust my gut when I meet someone. If I get a weird feeling when meeting a potential tenant, it is probably for a reason. In my experience, nothing tops the human instinct. At the end of the day, I am running a business and having tenants in my properties is a vital part of that. I have learned it is worth it to be patient and find a good tenant than just put anyone in the property because I want the income.
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