When you buy a piece of rental property, whether you live in it or not, it is a huge financial investment. Why then, do owners end up with tenants who do not pay their rent, destroy the apartment, and cause owners to pay massive legal fees, loss of rent money, inflict extreme stress, then leave your building to move into another newly prepared unit? What can a homeowner do to prevent renting to an irresponsible or high-risk tenant? One of the most important decisions a homeowner with vacant apartments will make is to choose a tenant who will pay the rent, respect the property and the other tenants, and obey the laws of the land and the rules of their lease. However, around the country, there are countless numbers of homeowners who are keeping their vacant apartments empty. The primary reason is fear, or past negative experience of renting to the wrong tenant. If you have rental property, you want to get the most income out of it, while keeping expenses low on your investment. You may not always have the funds or the desire to use an outside real estate broker. There are also owners who like to rent their own apartments in order to control who will live either with them and their family in the same building, or in an investment apartment. Homeowners need to learn the basic and effective methods of the tenant selection process used by professional property managers. Landlords need to learn from the experiences of professional apartment renters, who can recommend which decisions and procedures work best, and advise which poorly used techniques will not get you the kind of tenant you need and desire. Over my career, I have rented thousands of market rate and subsidized apartments, rooms, investor condominiums, etc. I have three primary reasons why I think homeowners, landlords, and/or managers end up with poor choices of tenants. For the most part, there are three areas of omission: 1. Owners do not check or verify all of the applicants information through a rental application; 2. Owners accept the rental applicants explanations and excuses instead of searching for the facts; 3. Owners do not ask the right questions or enough questions by interviewing each candidate Some homeowners allow a total stranger to occupy their real estate financial investment. They take the minimal amount of time and spend as little money possible to investigate a rental applicant. If the applicant is friendly, smiles a lot, is personable, and appears to be neat and clean, he or she can get the keys to an apartment with little else than a security deposit and the first months rent. There are owners who will rent their apartments to their relatives and/or friends of their children or neighbors, without checking anything at all. Rental applicants come to you for a roof over their head on a month-to-month paying basis for a pre-determined amount of time. There is a cost to having shelter provided to an individual or family. Those who do not pay for their shelter must be asked to leave the premises, so that a more responsible family may benefit from the housing. There are costs associated with providing decent, safe, and sanitary housing. A homeowner needs to check out a rental applicants information in order to attempt to ensure that you will receive the rent every month, on time, and that the tenant will respect the condition of the apartment and building. The return in spending the time and money in checking out a rental applicant as thoroughly as possible in advance of handing out the keys, will be the long-term stability of your property, and especially your finances from that property. It is important to remember what we gain from using a practical approach to renting out a vacant apartment. Here is a short list of what you can avoid when you take the time to choose a good tenant for a vacant apartment: Aggravation; Frustration; Bank Foreclosure; Feeling of Helplessness; Bankruptcy; Legal Expenses; Repair Expenses; Prolonged Vacancy; Confrontations; Irritation; Anger; Loss of Savings; Resentment; Fear Desperation; Arguments; Stress; and Headaches. When you take the lazy approach to picking a tenant, when you cut corners, spend less or no money to verify application information, when you listen to excuses, or just do not pay enough attention to the answers, you can rent an apartment to your peril. Many owners realize too late they have allowed an applicant to slip through the process. Perhaps the unit has been vacant for a long time. Maybe the unit is not one of the most desirable in your portfolio, or is in a neighborhood that makes renting it out difficult. Whatever the reason, the time and money spent checking out every piece of information on the rental application is rewarded with a low-risk tenant. It is certainly cheaper than the eviction process. |
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