How to find (and keep) good tenants for your rental house

Published 10:22 pm Sunday, July 18, 2010

Sit down with a seasoned landlord and you might hear stories about unpaid rent, property damage or other tenant-related problems. On the other hand, ask about experiences with trustworthy, reliable renters, and the same property owner will beam with contentment. There is no mistaking it: Good renters make real estate investments worthwhile.

Dependable renters provide their landlords with two valuable benefits — consistent income and relief from ongoing stress. And yet, most property owners don’t take personal responsibility for the people who lease their spaces. They praise tenants for paying on time and caring for their investments, and blame them for poor manners, accidents or harm to their property. Of course, renters are accountable for their own behaviors, but property owners play a significant role in the quality of their tenants. As a landlord, your decisions directly influence the outcome and overall success of your rental relationships.

Choosing tenants

“Landlords need to establish their criteria and apply it to every applicant that comes in,” said Sue Lewis, certified property manager and member of the Institute of Real Estate Management. “They also need to determine the capacity to pay, ensuring that tenants have enough income to cover the rent.”

According to Lewis, landlords should “verify a steady, reliable income source,” adding that in our turbulent economy, some renters don’t have a long-term employment history with a single company. Landlords can still build productive relationships with tenants who have varied career histories, “as long as they worked in one field for a while,” she said.

Before the economy took a downturn, many property owners relied on financial background checks to screen out risky candidates. Recently, many families have been forced into high debt, bankruptcies and foreclosures for a numerous reasons. Also, because of the increase in identity theft, many prospective tenants have “frozen” their credit reports — a temporary, deliberate choice that restricts access to private financial information. If landlords pin their rental decisions on the results of credit reports, they could miss out on decent, responsible tenants.

Because of these factors, direct referrals often provide more useful insights than standard financial reports. During the screening process, ask each potential renter for a list of employers and landlords. Personally contact these individuals and request details about the renter’s history of keeping commitments and paying bills. Be sure to contact several former landlords to confirm the accuracy and consistency of referral information.

Rental relationships

“Tenants and landlords have very different perspectives as they come into a rental agreement,” Lewis said. “The landlord feels very strongly about their property. To them, it is a vitally important investment. The tenant feels strongly about the property for a different reason. It is their home.”

Because of these opposing viewpoints, landlords need to establish open lines of communication with their tenants. Begin the interaction on a positive note, and inform tenants of your screening criteria and expectations. Use written contracts. Your clarity and professionalism will help encourage a long-term relationship based on accountability and respect.

As time passes, you might need to address property changes or concerns with your renters. “Most issues can be resolved if you approach the relationship in an unemotional way,” said Lewis. “Also, your style of communication is very important. When you need something, focus on the outcome. Clearly say what you want and why. This helps people understand each other.”

In addition to forthright communication, it is essential to maintain a respectful distance from your tenants, so they may feel at home in your property. Many desirable tenants are self-sufficient, and expect a hands-off relationship with their landlords. At the same time, they depend on you to respond quickly when they require assistance. Provide your renters with up-to-date contact phone numbers and e-mail addresses. Tell them how to handle emergencies and repairs.

Especially in an unstable economy, it’s necessary for landowners to attract and retain good tenants. Select responsible candidates, establish clear communication and make it a priority to develop a rewarding and respectful relationship. By doing so, you increase your chances of retaining loyal, long-term renters who take care of your property and pay their bills on time.