While there are many strategies to REI (real estate investing) one of our major focuses is to buy and hold multi-family homes to rent them out to dependable tenants. The key here and where a lot of people find trouble is filling their units and keeping them full to avoid very costly vacancies. When an apartment is vacant it leaves an owner paying for the utilities, mortgage, insurance, etc. without income flowing in from the property. To avoid this, you want to advertise your properties in as many ways as possible to find dependable people. Then you want to screen these tenants to make sure they will be able to not only be responsible for your apartment but also be able to afford it in the long run.
When advertising you want to get it in front of as many possible tenants as you can. There are many sites available such as Zillow, Apartments, Realtor, and one where we see heavy traffic is facebook marketplace etc. Some cost money to list your units while others do not. Some major sites also syndicate with other websites to get your listings even further. For example, one of our favorite sites is Cozy.co. This website allows you to list your property, collect applications, screen applicants, and it syndicates to Realtor.com which is usually only accessible to those with a real estate license. Other sites include Doorstep.com, ForRent.com, and Trulia.com.
Something that we have found interesting is the feedback that we receive when we put a listing up on the Facebook Marketplace. We find that more and more people are using it to find rentals. The problem we find with it is that many people just hit the interested message and then will not respond because they were just shooting it out to as many as possible. So, while this will increase inquiries for your listing it will also give you more to respond to that might not answer after the first response. But, it is our belief that the more exposure you can get your rental the better even if it means more work.
Other ways of accessing tenants that we have used, include locating possible tenant pools in your area. For us this includes a local college, real estate agents, a military base, and companies that are actively hiring. We will place flyers with permission from the school, we post on the military housing site, we check local hiring companies through sites such as indeed or the newspaper and with their permission put fliers in some of their communal areas. Real Estate agents can also be leveraged to place a rental on the MLS for further exposure or to reach out to their network. We have found in some circumstances it also helps to post in local landlord groups because some will have tenants looking for other housing.
Once the inquiries start pouring in then you are responsible to set and give tours of the property. In the past we have seen people fail to highlight their property when giving a tour. This is your chance to not only show the benefits of living there but also to meet and get to know the people that you will possibly be dealing with for 12+ months. They want to know you and you should want to know them. Tenants are much more likely to be a pain if they don’t like you, so create some sort of professional and friendly relationship. When you do go, make sure you have answers to all of the normal questions, for example, what is included in the rent, is the heat, oil or electric, etc. If you do not know one of their questions just let them know you’ll get back to them with an answer. It can come back to bite you if you are wrong. If possible, it can be super beneficial to stage the house. It allows people to see what the house could look like when they move in. Finally, make sure that you have a way they can apply immediately or create a contact list. Our application is online and we like to bring a notebook that people leave their contact information in if they are interested. We then send them an application when we leave. If your application is a paper copy just make sure to have some with you. We suggest group tours because it gives a sense of urgency and will get more people applying quickly if they know there is other interest. Thing have changed over the past year due to COVID-19 and we have adapted to offering virtual tours. Even though then potential tenants aren’t allowed to do group tours it still allows for them to get a feel of the home in a safe and personal manner. For landlords it’s also an opportunity to maximize group tours with technology like video calls or meetings.
Once you are able to find interest it is important that you screen and qualify your tenants. It is usually good to set a minimum credit, income to debt ratio, and factors that will either pass or fail possible tenants. We suggest writing them down and stick to them for everyone. This keeps you from putting tenants in place that may damage your property, not pay rent, or other possible issues. For example, one of our pass or fail factors is, that there is to be no criminal record or evictions. Also, that their income to debt makes sense for the place to be affordable. We try to aim for rent to be close to 25% of their income as possible. We will stray slightly above this if their monthly debt payments are low but, 25% is where we like to see it. Remember when screening your tenants, you cannot charge them a screening fee in the state of MA. You can however require them to complete them. On Cozy.co it allows you to require it and it charges them $40 for both but it is never collected by us. Some of our clients even offer to roll it into the first months rent if the applicants do become the tenants.
This screening is done on every applicant that is over the age of 18 that will live in the household. This is to make sure that everyone responsible for rent is screened and taken into account and that we are aware of past issues that any occupants may have previously had. For example, this background check will allow us to know if anyone with a criminal record will live in the home. Your application should ask for the information you find important to know for your tenant. We ask for references, job information, and rental history for example. We then follow up with the references as a final step of our screening. Some also require W2 forms to prove income. We personally have not required this as of yet but it is still another good idea for your screen process.