You’ve heard of horror stories about real estate investors whose investment property got trashed or damaged by the tenants. While this certainly isn’t always the case, finding the right tenant for your investment condo can make the difference between getting a positive return on your investment or walking into a nightmare. The good news: there are ways you can learn how to find the right tenant.
Landlords have the power and control to influence what kind of tenant occupies their investment condo. You can’t necessarily guarantee that you won’t get a bad tenant. But here are a few things you can do to get the right tenant who will pay rent on time and take care of your condo.
How to find the right tenant
Here is what you should do to attract the right tenant to rent your condo.
Clean your condo before showing
The state of cleanliness of your condo speaks a lot to the kind of tenant you will find. Tenants who are professional (and neat freaks) typically shy away from dirty condos. You’ll attract the kind of tenant who is comfortable with the space you are offering. Take the time to clean your condo or hire a cleaning service before listing it for rent. Not only will it show better, but it will raise the level of expectation when it comes to the tenant’s cleanliness.
Older condo? Get fresh paint
One of the most cost effective ways how to find the right tenant and upgrading the look and feel of your condo is with a fresh coat of paint. If you’ve rented your investment condo a couple of times, and there are scratches and scuff marks on the wall, it’s time to a fresh coat of paint. Doing this will help you attract better tenants because they feel you are taking care of the place. Tenants who don’t really care about how their living space looks and feel aren’t always the best ones.
Is your condo still sporting the traditional (old) white appliances? Or have your appliances been so used up you can see the signs of them being extremely dated? Upgrade them to stainless steel or any newer model appliances. Prospective tenants will see and feel the value of paying the rent you’re asking for if they feel they are getting their money’s worth.
Patch up holes and fix up cosmetic wear-and-tear
It goes without saying, but how a tenant sees your place is likely how they will leave it. If there are holes in the wall, or if there are scratches, scuff marks, dents, broken appliances… well, you get the idea. You’ll attract the type of tenant who is comfortable with the space you have. So if your space exudes carelessness, you’ll attract a careless tenant.
Get rid of carpet
Nobody (or maybe very few people) likes carpet anymore. It takes a lot of time to clean and it also presents an allergy concern to some people. If you still have carpet in your investment condo, it’s time to get rid of it. Laminate or engineered wood floors are inexpensive and easier to take care of. Chances are, some tenants may even ask you to replace carpeting with wood floors. Be proactive and take care of this before showing your rental condo.
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There are several things you need to look at to make sure a renter fits the profile of a perfect tenant. And these are things your real estate broker can help you out with.
Renters rent for a reason, but not necessarily because they’re in a poor financial situation. Some renters just don’t want to buy a house, while others don’t want to commit to moving to a particular area just yet. The credit score speaks a lot about how to find a right tenant. And how a prospective tenant handles their finances. Lower credit scores (600 or below) present a payment risk (you might not get your rent on time). Higher credit scores (ideally 700 or above) means it’s more likely your tenant will always pay on time. You have to look at this on a case-by-case basis.
Rent comes from income, so you have to make sure a prospective tenant earns enough to pay you the rent every month and support their livelihood. I’ve had situations where prospective renters barely earned enough money to pay for the rent, let alone support their food, transportation and living costs. Ask for an employment letter but don’t stop at that. Verify the information on the employment letter with the most recent T4 and notice of assessment. The NOA is a government issued document based on tax filings. If your prospective tenant says they’re earning a certain level of income, use the NOA to verify it.
Is your tenant really who they say they are? Curious about how to find the right tenant using references? Ask the references they’ve provided on their rental application. Some landlords skip this step and just rely on what the tenant provide them. If you really want to dig deep and find out what kind of person the tenant is, ask the references they’ve provided. Sure, the tenant may have prepped them for the reference phone call, but let’s talk about how we can really find out who they are.
Before you commit to signing a rental agreement with a tenant, sit them down for an interview. Learn about how to find the right tenant using this technique. Don’t accept any offer to lease without doing this. When you meet them in person, you can really gauge the type of person they are, their intentions, and how you feel about them renting your space. What you’re looking for when you meet a prospective tenant is how responsible they seem and what position they are in when it comes to their livelihood. After you’ve met the tenant and asked them questions, do you feel comfortable with them taking over your space?
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I work with both landlords and tenants. I help them learn how to find the right tenant for their condos. Before I start working with a tenant, I make sure they are qualified and have the information they need to prepare a complete rental application with all the documents I’ve mentioned in this article. So if you’re a landlord looking to rent out your investment condo, get in touch with me first and let’s talk about a strategy to find the most suitable candidate for your condo.