Finding and buying a rental property is the exciting part. It’s often not until after settlement that the hard work begins. And the thing investors want to know is how to find good tenants for rental property.
Dealing with a vacant unit and the prospect of missed rental income can be terrifying.
Owning and managing rental properties can be very profitable. (From our rental properties, my husband and I receive over $100,000 income each year). While there are never any guarantees, sound business choices will help you to find good tenants who will take care of your property and keep money coming into your bank account
Use The Professionals
My first recommendation is to engage the services of a professional property manager. These people are experienced in their field. A property manager will put your prospective tenants through a full screening process. This will check things like their rental history and employment stability. These affect the applicant’s ability to maintain rental payments on time and you want to have as much going in your favour as possible.
I was having this very same conversation with Chris Snell from Rental Success who I met on Twitter recently.
@How2BuyProperty Thanks Fay. Many landlords think rental management easy until they encounter problems. Then they seek a property manager
— Chris Snell (@rentalsuccessAU) June 7, 2014
Given the fact that you are paying your managing agent, then take notice of your Property Management Report!
If your rental property is new then hopefully everything should be in good working order. If it’s a property you’ve bought secondhand, make sure you keep everything well maintained. This will serve your tenants well, maintain the value of your property and reduce calls from frustrated tenants to constantly fix things.
Take action from the management report and see to any repairs promptly to reduce the likelihood of small problems turning into big tasks.
Rent Property Quickly By Using Incentives
Offering incentives can be a great way to rent property quickly and get good tenants.
Your first instinct might be that you will lose money by doing this. But let’s look at the figures quickly.
Let’s say your asking rent is $415/week. Let’s compare getting a tenant straight away by offering a week free rent versus the property sitting empty for three weeks:
Rented 52 weeks @ 415/wk = $21 580
less one weeks free rent $415 = $21 165
Rented 49 weeks @ 415/wk = $20 335
You get more money by offering the incentive to get a tenant quickly.
If you have gone a few weeks without a tenant, it can be disheartening if your property manager recommends you reduce the rent. But let’s take a look again at how the numbers work if you choose this as an option.
Property empty for 4 weeks.
Recommended rent decrease from $415 to $400 to secure a tenant.
Rented 48 weeks @ 400/wk = $19 200
Standing firm on your rent rate of $415/week
Property remains empty for a total of 8 weeks.
Rented 44 weeks @ $415/wk = $18 260
You are worse off by almost $1000 because you didn’t want to drop the rent rate to initially get a tenant.
Once your property is tenanted, you should ensure there are rent reviews and increases wherever possible, every 6 months. So any incentive or reduction of rent to initially get a tenant into your property quickly, can be caught up on the first rent review.
Finding A Good Tenant Quickly Can Be In The Timing
If you have a property come become available for rent in the week before Christmas it’s probably not going to be an ideal time for you to find good tenants for rental property quickly.
You could easily find yourself with a vacant property for several weeks.
At this time of the year, most people have so much going on in their personal life, the last thing they want to do is move house 7 days before Christmas.
However, just after Christmas or the beginning of the new year, there are lots of people looking to make their next move. This is a time when a lot of professionals, consultants or government workers are making a transfer move and need a new place to call home for a while.
Families are looking to get established before children start the new school year. Don’t leave it too late into the year or these groups of people have already snapped up someone else’s property and are already well settled.
Consider the timing of the lease agreement renewal even from the moment you are signing your offer to buy a property and deciding on a settlement or takeover date. This is being strategic in your investment decisions and squeezing every dollar you can from your investment.
Be Nice To Your Tenants!
Sounds simple, but it’s a simple act that is generally overlooked. Yes, your tenants are doing you a favour by paying you rent week after week. But they are also human beings with feelings just like you. Treat your tenants how you would like to be treated and you will find good tenants that will stay longer and are more likely to take care of your rental property.
The very first property we bought in 1999 is a nice 3×1 unit in Belmont. We purchased it for $108,000 and it is valued at around $420,000 last check. (A nice rise in capital growth.)
Since we purchased it 15 years ago, can you believe it – we’ve had the SAME lady renting it the whole time! She is single, no car and lives a simple life (and has been a great tenant!).
Each year we send her a special note at Christmas time thanking her for taking care of our property. That’s certainly not the only reason she has stayed with us for 15 years, but I’m sure it’s a consideration if thoughts of moving ever cross her mind – Mmmm, what kind of landlord might she get next time???
Make Things Easy For Your Tenants To Rent Your Property
Ensure your rental property is easy to maintain and care for. This will reduce the amount of frustration you will experience over gardens, decks or interiors that may not get taken care of as well as a home owner might.
If you’ve had the ability to influence garden design, building design and interior fit out – be sure to choose designs and colours that require minimum maintenance. Wherever possible, keep the demographic of your prospective tenant in mind and make any changes you see necessary to ensure their ability to maintain your property as easy as possible.
Lots of tenants prefer to pay an increased rent that includes someone coming in and doing the lawn and garden maintenance. This is a great option for you to discuss with your managing agent. If you include this cost as part of the rent, you’ll know these areas are being maintained regularly.
After spending this last weekend cleaning out one of my linen cupboards, it reminded me also that storage is something else that makes it easier for your tenants to be good. Plenty of cupboards inside and/or a small storage shed in the garden means there are places for them to put things away and be tidy. If there is a lack of storage, the place is going to look messy regardless.
Remember, no matter how good your tenants are, there will be wear and tear from general living.
Don’t Rent To Friends And Family
Some of the worst tenants you could have in your property might be friends or family! This might be an exception if you have adhered to my first recommendation and use a property manager to oversee your rental property. By using a managing agent there will be regular inspections and a level of cleanliness to be kept up. It also allows a clear channel for any complaints or maintenance issues to be dealt with.
People come most unstuck when they privately rent to friends or family. Don’t worry – we’ve made THIS mistake too!! Not only will you be down on the rent you receive by offering ‘mates rates’, it’s also likely there will be more maintenance for you to do once they vacate. By being ‘softies’, we were under-renting one of our properties by around $5,000 each year while we had family members in it. Ouch!
I’m sure you’ve seen plenty of stories on TV about ‘tenants from hell’. Unfortunately they are around, but rest assured, there are also lots of great tenants who will want to rent your property.
When it comes to how to rent property quickly, and how to find good tenants for rental property – start with the list of suggestions above and you will be well on your way!
LEAVE A COMMENT BELOW AND TELL ME ABOUT YOUR RENTAL STORY ….. AS A LANDLORD OR A TENANT.
Here’s to your success!
P.S. : Find this tutorial helpful? Subscribe by email to get notification of new free tutorials and detailed case studies. Just click on the box below then enter your first name and email address in the form, and you’ll get the email every Monday morning