So, you bought a house that you plan to hold as a rental property. You did a great rehab and really have it looking nice. Now it’s time to put it on market and get the rent money coming in.
As you begin to look for tenants, I want to caution you on something. Landlords tend to use their application process to see if a tenant can pay their bills on time. That’s important, but paying on time is only part of what you should be looking for in a good tenant. In my mind, you need someone who can do four key jobs.
We call this the four jobs of a tenant and they are as follows:
No. 1: The tenant needs to take care of, maintain and improve the property.
No. 2: The tenant must pay on time.
No. 3: The tenant must be comfortable to work with, which includes being respectful and maintaining good communication.
No. 4: The tenant must be a good neighbor.
When you hire a tenant to live in your house, they must be able to do these four jobs in order to stay there. But I want you to notice something that is built into the job description. Taking care of the property is more important than paying on time.
Think about that concept for a second. Which costs more — a tidy tenant that you had to evict due to nonpayment or the tenant who paid on time while their dog was outside peeing a hole through the AC condenser — a true story — and neglecting to tell you the water heater is leaking — all while their kids are drawing stick figures in sharpie markers on the walls?
The answer is that the tenant who neglected the house costs more.
You spent a lot of time and money getting your rental property in great shape. But instead of just taking the first person who pays on time, you need to find someone who will take care of the house, too.
We have a two-part tenant screening process. The first part is a paper application. This allows us to see into the financial life of the potential tenant, and we can also look at their rental history. As a landlord you want someone who pays and stays for a long time. If you see on the application that the tenant has a history of moving every six months, this is not the tenant for you.
But that’s not all we’re looking for. In the app, we ask them questions like what kind of home-maintenance skills they have and even what tools they possess. It’s hard to do job No.1 if they don’t have the tools and don’t know how to take care of the property.
Once we’ve decided they look good on paper, we move on to stage two, the in-home interview.
We go out to the house where the applicant currently lives and sit down to talk. What we are doing is seeing how they keep the house they live in. The condition of their current residence is a good indicator of how our house will look in two months.
But that’s not all. We want to meet the pets to see how they act. We also want to look at the family dynamics. Family interactions will let you know if these tenants are going to be comfortable to work with. If the children are out of control, you need to know that. I have said it before, and I will say it again: An unruly child can do as much, if not more, damage to a house as an out-of-control pet.
The in-home is the most important part of the application process because of how much information you can glean from it that you won’t see on paper. And if you always do the in-home, you are sure to find great tenants.
Joe and Ashley English buy houses and mobile homes in Northwest Georgia. For more information or to ask a question, go to www.cashflowwithjoe.com or call Joe at 678-986-6813.