I’m in the middle of putting up a “for rent” sign, so I thought this would be a timely article. I have been very fortunate this time around. The sign went up Friday January 17th and I had an accepted application on January 21st. Is the market really that hot? The rental market is picking up but there are other factors. The fact that the complex across the street from my units just had a major rent increase the first of the year sent many locals looking for a new home. The new tenant has a high FICO score and has lived in one place for over 7 years. Yea!! This was a perfect storm, but it doesn’t always happen that way. Here are some things to help fill vacancies and to be prepared.
- Determine the market rental value of the unit. There are various ways of doing this. I use a website called Rentometer. There is also the old fashion way, calling on for rent signs in the area. I like to keep my rent just right below the average, however I am clear that with my tenants there are annual rent increases.
- Determine repairs, cleaning and enhancements. Even if you are handy, it’s often good to get an estimate from a third party. This can also protect you and give you documentation for the cleaning deposit. The biggest mistake is over or under improving for the area.
- Advertise the unit:
- Property sign – Always a good idea – Less words are better. Number of beds, baths, phone number to call and maybe the rent.
- Flyers in a box – There is a reason realtors use flyers at properties. One, it answers questions and two, if people are looking at multiple properties, it helps them remember yours. I also suggest, if your unit is in an area where another language is prevalent, have the flyer in that language as well. Make sure however, you add a line that says when they call that no one speaks the language (if it applies).
- Free listings – You can pay for ads however, today there are many places to place your ad for free such as Craig’s List. This is one of the things we review in the Professional Real Estate Investor Class
- Local Employers – Also, if there is a business such as a hospital, factory or college close to your unit, that is a great FREE place to advertise. These applicants tend to be stable and have a job.
- Application: Make sure you have a good application that follows all the legal requirements for your state. Charge an application fee ($10-$15). This would weed out the applicants that aren’t serious, or don’t want their credit checked. It also helps cover some of the cost. VERY important to always run a credit check.
- What to look for when reviewing an application and credit report: Most important is employment. The longer the employment the better. Number of occupants and ages. References and past landlords with contact information. On the credit report, I like to see the following; 1)established credit 2) do the questions they answered on the application (i.e. have you ever filed a bankruptcy) match the report 3)they pay their bills on time.
- Lease: Once again, make sure the form is legal and follows state laws. There are several good websites to find these forms. Also make sure that you communicate with your tenant what the lease says. People don’t always read. I also like to have a list of rules and I have them sign that they have read and understood them.
I heard this great quote on a webinar the other day and it sums what have been saying for years, “Everyone is paying a mortgage. The difference is that it can be yours or you can be paying someone else’s.” I love having my tenants pay my mortgages for me.