Do I sign a suspect renter because I need renters or wait? Do I lower the price? I am frustrated.
First, I want to share what one of our resident experts, All Cash, has to say:
NEVER, NEVER, NEVER rent to “suspect” tenants. By that I mean anyone who clearly is stretching too much to pay the rent, or has to have “some buddies”, or other “extra” tenants move in to help afford the rent.
You stated that this is your first rental so let me explain about the TWO kinds of vacancies. The first kind is what you have now; now income coming from a “market ready, showable, move-in-able” place. All you need now is a paying tenant to turn around your situation.
The second kind of VACANCY is the kind you have once you’ve allowed a “suspect” tenant, aka a DEADBEAT to move in. At that point you still don’t have the income, you’re facing extra expense to get the deadbeats out and bring the property back up to where you were on February23rd.
After close to 30 years of doing this, with 16 SFHs at one point. The FIRST kind of vacancy is the best.
AllCash is dead on with this one. You are better off with no tenant, then with a bad one.
MikeOH, a new member of the site had another extremly important suggestion:
I would suggest coming up with a written policy regarding tenant screening. Then - don’t violate it.
So where does that leave us?
Here are a few tips for new landlords
1 - Establish your own set of standards that you follow EVERY TIME regarding tenant screening.
2 - If you have a choice between renting to someone who is below standard or waiting for another tenant, WAIT!
3 - Make sure your property is going for close to market rents. An overpriced rental will sit on the market for much longer then a fairly priced one.
4 - Be patient. If your property is fairly priced and in good condition, you will eventually find a good tenant.
What are some of the downfalls of renting to someone who doesn’t meet standards? Here are some examples of what I’ve personally dealt with (most of which I inherited when acquiring properties):
1 - Tenants who damage your property
2 - Tenants who don’t pay the rent or who constantly pay late
3 - Tenants who break the law (drugs, etc)
4 - Tenants who violate your lease agreement (e.g. have 10 family members living in a 2 BR apartment)
5 - Tenants who need to borrow, beg, or steal to cover their payments (got in over their head & you allowed them to)
6 - Tenants who don’t throw away garbage, but leave it in the property
You get the idea . . . All of the above present problems to you. The lesson here is to have patience and wait out the right tenant instead of jumping the gun in order to get units filled. Evicting bad tenants will cost you a lot more time and money then will waiting for the right tenant. We’ll talk about some good screening tips in a future post.
REMEMBER VACANT PROPERTIES ARE BETTER THEN PROPERTIES FILLED WITH BAD TENANTS!