Finding and Screening Tenants for Your Rental Property

By Dave Peniuk

Picture this: that property you bought isn't renting like you thought it would. You don't really know anything about renting property, so you decided to rent it out to the first person who showed you some money. You didn't check with their other landlords, or even follow through with a credit check. After all, most people are honest and what could possibly go wrong?

What could go wrong? This lovely new tenant could be unstable and pull a knife on her roommate. Yes - it happened to us at 3am on a Wednesday night several years ago. We had to call the police and have them separate the two tenants. The innocent roommate moved out the next morning and we were left with the knife wielding tenant who then stopped paying rent and refused to move out. It took us three months to evict her. We had to send a collection agency after her for the rent money. We never received a dime.

Now, of course, we are very picky when it comes to finding a good renter. We follow these 5 straightforward steps and they've never let us down:

- Step 1: Prepare the unit for showing

- Step 2: Get your paperwork in order

- Step 3: Research the market rents and place your ad

- Step 4: Show your space

- Step 5: Choose your new tenant.

Step 1: Make sure the unit looks and smells it's best

It's no secret- appearance is the number one thing people look for when choosing a place to live. They want a place where they can be happy, and a nice looking place usually means that.

Easy fixes for your property include:

- make all walls look great by repairing holes and applying a fresh coat of paint

- make sure all the little things like lights, appliances, doorknobs and sockets work the way they're supposed to

- create a checklist to use when the tenant moves in and out. Include details for everything in every room and the current condition- doors, windows, drapes/blinds/shutters, plugs and light switches, shelving, appliances etc.

- make sure the unit smells fresh. Open up the doors and windows to let fresh clean air in.

Step 2: Get your paperwork in order

To attract a good tenant, you will need to be a professional landlord and have the right paperwork on hand. Contact the local residential housing branch of your government or go online and do a search for landlord forms to find the following:

- application forms for tenants

- forms for rental/lease agreement

- forms you might need later, like eviction notices or others. It's always best to be prepared, as some of these forms need to be ordered and delivered by mail.

Quick tip: Every state or province may have different forms, so make sure you have the form that is legal for your area.

Step 3: Place your ad, but do your research first

Make sure the Price is Right!

When renting a property it's best to price it just below the market. You'll have more tenants choose from, and it will rent faster. And the best thing is, a tenant might decide to stay there longer. Online is a great place to research comparable units to make sure yours is always priced below the market.

What's the best way to advertise? We've found that these methods are effective:

- word of mouth - we e-mail all of our friends and let them know we've got space for rent

- use online advertising

- in a readily seen spot on the property (on the lawn or in a window) put up a sign with a phone number

- take out an ad in your local newspapers- these are still effective and not very expensive

- colleges or universities in the area; students are always looking for a place to live.

Step 4: Showing your space

Open houses are still the best way to show off your property. The best thing to do is decide on a two hour block during an evening or weekend, and then have a back up time for a second viewing (if you don't find a good tenant after the first viewing). When someone wants to see it, you can tell them about the viewing times. This way you're not spending all your time showing the unit.

Be dressed in business casual attire with tenant application forms on hand when you greet the prospective tenants.

Encourage people to fill out application forms during the open house, as this will help to make your property seem very in demand. It will also help you to keep the applicants straight in your mind, as you can record your impressions of the people directly on their application form.

Step 5: Choose your new tenant

- study applications carefully, looking for conflicting information or any kind of gaps in time pertaining to where the applicant was living

- always run a credit check. In this day and age it's not enough for people just to have a good job or for you to have a good feeling about them. Verify it.

- always check references. You've asked for them on the application, and you should check them. Remember to ask the critical questions: "Would you rent to them again?", "How long have you known the applicant?" and "What is your relationship with them?".

- listen to your gut. Do you have a good feeling about them? Despite everything else looking great for a tenant, you can usually trust your gut to indicate if you feel that something is wrong. If nothing feels wrong then you might have found your new tenant.

Now that you've chosen your new tenant and they have paid you, make all the other possible tenants aware that the unit is no longer for rent. If they ask you why they weren't selected, it's best to just say "the other tenant had a very strong application". Never say that they were not selected based on factors such as age, race, religion or whether or not they have pets or children. This will help avoid bad feelings (and possibly even a lawsuit). - 23196

About the Author:

Learn How to Retire with Real Estate with Dave's free Real Estate Investing Starter Tips Guide. Learn how to find money for real estate purchases, create financial freedom, positive income and massive wealth with tips like: How to find quality investment properties, find good tenants and keep them, and easy ways to make more money with real estate.