Good Tenants - Made One at a Time

Good tenants are everywhere - in every town, in every neighborhood. Did you not know that? In economic times like these good tenants are like gold - they pay their rent, don't complain much, and take good care of their units. Unfortunately I hear a lot of sob stories from landlords and property managers about having to evict bad tenants who didn't pay and destroyed property. Have fun with that I say.

What many of these inexperienced property managers didn't realize is that the best way to make money in an investment real-estate income property is to buy at a reasonable price, conduct a professional operation start to finish, and keep rents low.

Buy and Flip Is Dead - Re-Finance and Make Do Are IT
Unfortunately too many people jumped on the real-estate bandwagon with the cheap ARM financing and got stuck with a high price property in an economy that can no longer support the ridiculous rental rates landlords thought they could charge forever. Smart landlords who are able to re-capitalize at lower fixed costs need to learn from the lessons of the past decade and drop rental rates, do thorough tenant credit screening, and attract and retain good tenants with long term leases. The days of "buy and flip" investment properties are over.

My recommendation is decide to run a professional operation or get out of the business, but don't just take my word for it...

Good Tenants Are Everywhere - Nearly Anyone Can Be a Good Tenant
By Matt E Spitz

Good tenants - where to find them and how to keep them that way? People are always asking me how I always end up with great, respectful tenants that pay on time and in full. I've thought about that question often enough now (and see enough other operations) to know why I've been successful while so many others are always struggling. You're going to wait for me to say that it all has to do with location, neighborhood, and the local economy... and to a certain extent that plays a role. Obviously if you buy a rental unit in a high crime, heavy drug use neighborhood a good tenant simply isn't going to want to live there.... or will they?

There Are Good Tenants and Bad Tenants Everywhere
I've got to be honest with you - there are good tenants and bad tenants in every single neighborhood in the country. Some people are steadfastly honest, some people are steadfastly dishonest, and a whole lot of people are in-between. The steadfastly honest people are never going to rent from you. They own. You don't get to stable long term ownership without good long term credit and once you are good and you own you never rent again. That leaves you with but two tenant pools to draw from, the bad folks (whom you never want to rent to), and the middle ground folks who can be good tenants or bad tenants but you're not sure because they either don't have a history, or they have a short history, or their history has some blotches. How do figure out who the good ones will be?

A Good Tenant is Made, Not Born

So here's the secret answer you've been looking for all these years. A good tenant can be made out of these middle ground rental candidates. Laying a foundation of accountability and professionalism on your part allows you the opportunity to demonstrate clearly what expectations of behavior are for tenants and managers. Follow through with complete and clearly laid out codes of conduct and consequences for violations, and then strictly adhere to those guidelines. Making a good tenant is done by being an accountable and professional property manager yourself.

You get good tenants by teaching them good habits from the first day you meet them to the day they leave your rental units. Demonstrate clearly by every action and interaction with your current or future tenants that you run a professional operation - even if you're just renting a room out. That means a complete rental application including authorization for a tenant credit background check. It's up to you whether you do a preliminary (non-FCRA) background check first (why not do them? You can do unlimited searches for under $10/year) to double check their information prior to their interview.

Once you've selected a couple of candidates to bring in for final interviews, do your FCRA compliant background check (see above link) and use that as part of your final selection criteria. Matt E. Spitz

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It doesn't have to take all that much time or money to do basic tenant screening and then run a credit check on the best applicants.

Prior Post: Get a Background Check - Cheap Ways to Get Info On People