Many
good prospects have long ago purchased homes with their A credit rating.
Marginal prospects have been coaxed into buying by lucrative financing and
seller incentives. Less than stellar prospects have been swept away by lustful
mortgage companies who behaved like lonely drunken bachelors fondling girls in
bars at closing time.They found
positive attributes where few existed.They
skewed their perspective to find beauty where only ugliness resided.Then they pimped that to unsuspecting investors who ‘turned a blind
eye’ to reality to earn high yields, resulting in the current junk mortgage
crisis.
So,
what kind of potential renters remain?Who
is left to choose from?Do you need
to use rubber gloves to shake hands, handle applications and subsequently
process evictions?Can you still
find quality in the prospective rental market?
Well,
I won’t delude you.The quality
of prospects is not what it used to be before the ‘housing boom’.However, acceptable and even good tenants can be found.It just takes a little more work.
There
still are good people out there.Some
are just coming of age and beginning their housing tenure.Some simply missed the great ‘housing boom’, they just sat on the fence
and now don’t want to participate in the ‘housing bust.’Others are just now moving into the area.
Then
there is a large market of others who have made credit errors, learned from
their mistakes and now cannot buy a home until they re-establish their finances.They’ve had serious credit card debt problems, foreclosures,
bankruptcies, lost their jobs, and been robbed in ugly divorces.
They
can be a source of good long-term rentals. If you can cull through the perpetual losers and latch onto
the truly reformed, you just might have a captive audience for years to come
while they repair their damaged credit.
What
differentiates the perpetual losers from the temporary losers?Simply put; character and intelligence, in that order.A person’s credit is representative of their character.When you establish credit, you’re making a promise to the lender that
you will pay back the indebtedness in an agreed upon manner.
When
the promise is broken, it may be because of that person’s ignorance of finance
which enabled debt to mount and mount until it became unsustainable.Sometimes circumstances and ignorance merge to create a default
situation. Make sure the prospect has learned his or her lesson and is on the
road to a more responsible life.
Or,
the default may have been because of a flagrant disregard for the agreement.People of good character make every effort to keep promises.Those of poor character do not.Your
job is to ascertain the difference.
Ignorance
can be cured by recognition of past errors and newfound information. Poor
character traits generally don’t resolve themselves as easily.Learn to tell the difference between the two.
Talk
and talk to your prospects with an emphasis on listening.Most people love to talk about themselves and will really open up in the
presence of a good listener.Be a
good questioner and a better listener.Make
the time to delve into their personal life. Your prospects character will
generally reveal itself to you.
Encourage
them to talk about themselves.If
you talk long enough their character will become obvious. In my experience,
honest people are often open and forthcoming, deceptive people become nervous
and ‘bob and weave’ difficult questions.Others just blab and blab about things they should and shouldn’t be
talking about to their prospective landlord.Either way you get an insight into their character, helping you to make
your decision.
When I lease a home I spend a lot of time with the prospective tenant.Once I have sold them on the property’s virtues, I am ‘all ears.’I encourage them to talk about anything and everything.In
short order, it becomes obvious what kind of person the potential tenant is.Have they taken advantage of other people?Do they show empathy for others?Do
they sound ambitious, or are they someone who does the minimum in life to get
by?
If they don’t care for others, you can be assured you will fall by the
wayside as well.If they explain
how they have cleverly beaten a merchant or fellow worker out of this or that,
you might be next on their list.If
they make an effort to be effortless, then you can be assured that your home
will be allowed to deteriorate from neglect and laziness.
Successful people leave clues.Losers leave even more clues. In fact, many will love to tell
you how immoral they are, if you will just listen. Overlook them as your own
peril.
I’ve
had prospects brag how they stole from their employer, got even with that so and
so former landlord and strung out their cable bill for months before
disconnection.Then there are the
less subtle signs; like the guy who cheated on his wife, slept while at work or
was proud of getting overtime for not working.Over the years I have heard all kinds of dribble rollout of the mouths of
prospective tenants.If you let
someone talk long enough, their true character will slip out.Become a good listener and you’ll be able to pick and choose the
quality tenants from the indiscriminate masses.
Next,
‘trust, but verify.’ People can cleverly misrepresent themselves, landlords
anxious to fill a vacancy can subconsciously delude themselves into unreal
assumptions, but a tenant’s history is evident.Always check references to confirm your reasoning.
How
do you attract the good rental prospects?
Firstly,
advertise, advertise and advertise.It
is money well spent.Which would
you rather do, spend a couple of hundred dollars advertising for a long term
tenant or spend thousands for a vacancy and all the costs and troubles
associated with that?
Attract
as many potential renters as you can from as many sources as you can.By aggressively advertising you encourage many prospects at one time.This brings in more ‘qualified’ potential renters and helps eliminate
the frustration of having to decide from the ‘best of the worst,’ a common
malady of today’s landlord.
Attract
quality tenants.Advertise in those
areas where prospects will be of the caliber you’re hoping to attract.If you are not entirely pleased with the other homes in the neighborhood
where your rental property is located, don’t put a sign for lease in the yard;
bring in people from outside the immediate area with advertisements.
Secondly,
set your monthly rental a little below market.This is important, particularly in a tight market.You will attract a larger number of prospects. More applications increase
your chances of finding good tenants.Yes,
you will attract more potential tenants from both ends of the spectrum, but that
is the price you must pay to attract desirable tenants.
Amazingly,
other good things happen when you price your property a little under market
value. Smart responsible people start knocking on your door.Quality tenants are good shoppers.The
same commonsense applied to shopping for a good rental value is usually applied
to other aspects of their lives, such as paying their rent and taking care of
the property in their charge.On
the other hand, irresponsible people are careless.They make poor decisions, like overpaying rent and carelessly caring for
the property they are leasing.When
you price your property well you attract intelligent and responsible prospective
tenants.
In
addition, once you’ve obtained your good tenant, they will likely stay for an
extended period of time if they feel they are getting a good value, saving you
an enormous amount of money on releasing and the maintenance, advertising and
vacancy associated with that.
Years
of experience suggest that you’ll save much more than the rent forgiven.
Tenants
who believe they are getting a good price will better care for the property and
be reluctant to bother their landlords with minor repairs.Renters who are being charged the maximum rental will often feel they
must ‘get their money’s worth’ from their expenditure by placing
additional wear and tear on the property and by pestering their landlord with
petty repair calls.
Thirdly,
make your property the best in the neighborhood.It doesn’t have to be adorned like a mansion, but it should
be clean, decent and tastefully decorated.Often, the difference between an average property and an above average
one is merely cleanliness and taste.It
costs little more to add nicely groomed landscaping, modern light fixtures and
well kept carpet and paint.Above
average tenants have above average tastes.If you are going to attract them and keep them, then your unit must be
appealing.
Fourthly,
insist upon a long-term lease.Short-term
rentals are costly and often attract the wrong type of person.If the home is appealing and you have sold the prospect on the merits of
the property, time should not be a big factor for most potential renters.In fact, moving is a bit of an ordeal and many good stable prospects
relish the idea of a longer lease without the possibility of an increase.
In addition, a new tenant's enthusiasm for their new home at the onset of the
lease will usually override any reluctance they might have to commit to a
lengthy agreement.
Once
you have sold the prospect on your above average property at a below average
price, it should be easy to negotiate a long term contract, relieving you of the
headache of turnovers for some time to come.
Lastly,
be patient.I know, sometimes it is
easier said than done, but the rewards of a good tenant are well worth the wait.
