One of the marks of a great property manager is knowing how to find good tenants. While most rental agents are across the basics of the tenant selection process, only the minority of property management experts have the ability to identify and select great long term tenants.
This is particularly important as the quality of your tenant can make or break your property investment. Find a good one and you can pay down your mortgage and grow your portfolio, knowing your place is looked after. Get stuck with a bad one and the stress builds as your rental returns are ruined and your property is put at risk.
While certain locations and price brackets are more prone to issues, every property can attract its share of bad applicants. The trick is knowing how to find good tenants – careful screening can help, but there are few other tricks that can help make sure you secure the perfect person for your property.
Tip #1: You need to be realistic about how long it can take
Many investors dramatically underestimate how long it takes to find a good tenant. While it’s natural to want to have your place tenanted as quickly as possible, that’s not how to get good tenants.
Generally speaking, most rental properties are advertised for between 2 and 4 weeks before a tenant is approved. It’s important to understand this timeframe and plan accordingly. For example, we recommend any investor make sure they have at least 1 to 2 months’ worth of mortgage payments put away.
If you’re re-advertising your property after the departure of a tenant, this period may be shorter (as you can start the search before the previous tenant leaves). However, it’s always best to be prepared for the worst case scenario – particularly if any maintenance or renovation works are required between leases.
Acknowledging this vacancy period, and planning accordingly, will help make sure you’re not left short. It can help with how to find a great tenant, as you will be able to hold out for a quality applicant.
Tip #2: Don’t feel you have to accept the first application you receive
Once you’ve accepted how long it may take to find a good tenant, you need to recognise the importance of finding the right tenant – not just a tenant.
As an investor, you want to keep your property tenanted and to minimise the costs associated with vacancy. As such, it will be tempting to approve the first application you receive. However, while this could see someone in your property quicker, it’s not necessarily how to find good tenants.
Generally speaking, most properties receive at least one application every couple of days. This means that, if you can afford it and the first applicant doesn’t seem suitable, waiting another week could mean you end up with a better tenant. While this can cost you financially in the short-term, it can save you in the long-term as a good tenant will always pay on time and look after the place as if it were their own.
Also, be wary of any property manager that encourages you to accept the first application or an application that seems sub-par. This is generally a sign that they measure success by how quickly they fill properties and care less about how to attract good tenants.
Tip #3: Don’t feel you have to accept the applicant who offers the highest rent
Some renters believe that the best way to make sure they get the property they want is to offer to pay a higher rent. They know that returns are a major motivation for most investors and promising to provide them with extra income is a great way to stand out from the crowd. They are also aware that offering higher rent can be a good distraction if some areas of their application are weaker – like they have no rental history, poor references or constantly changing jobs.
So, when thinking about how to find good tenants, it’s important to consider all parts of an application – not just the rent offered and applicant’s income.
Tip #4: Clearly communicate your timeframe for making a decision
Chances are high quality tenants will apply for multiple properties at one time – and will probably be accepted for more than one of them. As such, while they may prefer your place, if they don’t know how their application is progressing, they will have no reason to believe they will get your place and could quickly become someone else’s great tenant.
An important part of how to find good tenants is making sure that, once you’ve identified them, you keep them updated and engaged. With that in mind, we recommend doing an initial review of the applications you’ve received to work out if anyone is potentially suitable. Your property manager can then contact these prospective tenants to discuss your property, get a sense of how interested they are, and ask them whether they’ve progressed with any other applications.
As part of this conversation, your property manager should also set a clear timeline for making a decision. This will help give your potential tenant a sense of your interest in them and allow them to plan responses to any other properties they have applied for.
Tip #5: Review applications carefully, but quickly
While you should aim to process your tenant’s application as quickly as possible, that should not be at the expense of thoroughness. Careful selection is one of the most critical considerations of how to find good tenants, and past behaviour is usually the best indicator of future behaviour. As such, in addition to checking employment and income details, seeking out references from previous property managers will help give you a real sense of what the tenancy will be like.
To help speed up the review process, make sure you respond to any contact or recommendations by your property manager as quickly as possible.
Tip #6: Authorise your agent to approve applications on your behalf
If you have been working with a property manager for a while, and you know they understand your investment goals and how to find good tenants, you may want to consider giving them permission to act on your behalf. This will allow them to focus on quickly securing the best possible tenant, and minimise the impact on, and requirements of, you.
Want more information?
Your property manager can guide you on how to find good tenants. As part of this, they should be able to advise how to attract good tenants and what you need to do to secure – and keep – them.
If you’re not a Local Agency Co. client, but would like a second opinion on how to find good tenants for rental houses – or more information on our property management services – contact us on 1300 258 888 or via firstname.lastname@example.org. We have over 18 years of experience, specialise in leasing and property management, and are always happy to answer questions and offer advice.