Protect Your Property Investment by Choosing the Right Tenant: 10 Tips for Landlords

When you decide to rent one of your properties out to tenants, you quickly realize that finding a good tenant is a massive boost to your profits. There are many reasons for this, which will be covered in this article, but we’ll also go a step further to show you HOW you can find good tenants and keep them for longer. Let’s start off with why it’s so important to have a good tenant. 

Property Preservation and Good Tenants

It goes without saying that your apartment itself is the bulk of your investment, and finding good tenants means you can rest easy that they’ll take care of it for you. But good tenants are also accommodating when it comes to yearly maintenance, allowing you to upgrade or renovate your apartment as time goes by. 

Early Termination Will Cost You Money

It’s not uncommon for landlords like yourself to go through several tenants before they find a good one. During this process, they quickly learn that short-term stays cost them more than they’re worth. The money and time it takes to find new tenants after the old ones have left isn’t a fun process, so finally, finding a good tenant is a good enough reason to keep them for as long as possible. 

Property Damage is a Real Risk

Bad tenants make up the nightmares of property owners who are considering renting out their units. The prospect of experiencing damage to property not only prevents people from becoming landlords in the first place but has also scared many into abandoning the idea altogether. When it comes to choosing the right tenants, reputation is everything (see below). 

Consistent Flow of Rental Payments

Making money from your rented-out apartment is a helpful way to make some extra cash or pay off your mortgage. But this is only worthwhile when the income is consistent. If there are constant or significant breaks in rent coming in, it severely hinders your property investment prospects. 

The Legal Costs for Landlords

Investments always carry some degree of risk, but the trick is to suffer as little risk as possible. That’s why many landlords retain a good attorney in case something goes wrong. This in itself can be a good deterrent to negative situations, but as always, legal costs are not cheap. Having a good tenant prevents you from needing legal counsel in the first place, which is great for your profits. 

Now that we’ve looked at WHY it’s so important to find a good tenant, let’s find out how to get it right. Here are some tips on getting the best tenants out there. 

Check References

Speaking to past landlords is a great way to get a feel for your prospective tenants’ history. Questions like the following can really help you:

• Did they pay on time?
• If they have pets, how did this affect their living situation?
• Were they easy to deal with?
• What were the circumstances of their lease termination?

The last two landlords or property managers should be able to answer these questions and give you a good idea of what’s in store for you. 

Create a Sturdy Rental Agreement

Chatting to an attorney if you’re doing it alone or a property agent if you have one is a great way to get a solid legal rental agreement in place. Most of them are pretty standard, but you’re welcome to add any small clauses that suit you. If you do, though, make sure you communicate these with your tenants. 

Appoint an Experienced Property Manager

It’s cheaper and super helpful to have a property manager handle your contract, the canvassing for tenants, and the handling of grievances for your property. This is a good way to protect your investment because these individuals are experienced with the legalities of dealing with difficult tenants and finding good ones. 

Stay in Contact with Your Tenant

Communication is always a good idea, even if you do have someone else managing your property. Stay in touch with your tenants and check in on them every once in a while to make sure everything is still going smoothly. This will make them want to stay longer and build up your reputation as a landlord. 

Go Easy on the Rent Increases

The economy is tough for many people at the moment, so the typical 10% increase isn’t really viable anymore. Many landlords are choosing to retain their tenants rather than having to seek new ones. One of the ways they do this is by setting the increase at between 3% – 5% annually. 

Final Thoughts

Ultimately, you’ll manage to pay your property off faster and even make a decent profit when you choose the right tenant. If you do find a good one, do what you can to keep them for as long as possible. If they do give signals that they want to leave, be sure to communicate with them and see what you can do to help them stick around.