Why Do People Believe All Tenants Are Bad?
Friday Jan 06th, 2017Share
Like many others, I’m sure you’ve heard the countless horror stories that have come from those unfortunate few landlords who leased their units to some bad tenants and paid the price, both literally and figuratively. When I first began to express my interest in Real Estate Investing, it seemed like everyone had something negative to say, friends, family, everyone. The unit got trashed, the neighbours complained of the noise, people didn’t pay rent, it took months to get an eviction, the list goes on.
While I’m not saying it won’t ever happen, in fact if you plan to own or deal with rental properties for any period of time, you are very likely to eventually run into a few bad apples, but if you treat your portfolio like a business and keep a few things in mind when managing that business, I think you’ll be just fine. What do you want to keep in mind?
- Location, Location, Location – This Hasn’t Changed
When analyzing a potential Income Property, you really have to think about which neighbourhood you are buying in, which street you are buying on, etc. I’m sure most of you can think of a place or two in your hometown you would not want to live, a place you would not want your kids to go after dark. Well follow the same thought process for your Investments, if you don’t want your kids walking through those streets, what kind of tenant will you get there?
Now I know the price may be very attractive in certain neighbourhoods, but if you’re anything like me you’re interested in Real Estate for the FREEDOM it can give you, you aren’t trying to give yourself a second job hunting down rent and repairing damaged walls. A good tenant, will want a good home, in a good area, for themselves and their family, keep this in mind when making your purchase.
- Condition of Your Unit
Do your units look like a place you want to live in? Or is it really beaten up, dirty carpets, filthy walls, broken doors etc. Well this may be a good reason the applicants you want are not looking at your unit. Just like you, good tenants want a home they can take pride in, they can bring their friends over to and show off. Save money and keeping your cash flow at a maximum is great, but there are times where you need to spend a little to earn a lot, and keeping your units in great shape is one of those times. By having a nicely kept unit you will attract a larger volume of quality tenants allowing you to have some options for a good tenant. If your unit looks like it’s occupied by a squatter, well lets just say the applicant volume and quality will dwindle significantly.
- Proper Screening
This one is absolutely key. Once you have shown your beautiful unit, in a great location to a whole lot of people who are highly interested, DO NOT and I repeat DO NOT just take the first person who hands you over a deposit. What you need is a good application form, a list of documents they are to provide you with, a set of screening questions, and some queues as to what constitutes a red flag and when to tell someone no.
I know its very tempting, maybe your unit has been sitting vacant for a short period of time and you have had to pay a little extra out of pocket, you might be sweating to just get someone into the unit. I promise you it is never worth it to do so without proper screening. Taking a little bit of extra time to really know who you are putting into your unit is what could save you from having to deal with months of headaches, and even further lost revenue down the road.
Director - Property Management
My Capital Corner Team