Even the best real estate investment strategy is doomed to failure without the presence of the most critical ingredient – qualified, reliable tenants. Ask any landlord who has learned this lesson the hard way. Problem tenants can wreak havoc at your property and stall your income stream. The good news is that with proper prescreening to find the right tenants, you can avoid potential nightmares and the proverbial tenants from hell.
Follow these tips to minimize your chances of leasing to problem tenants:
Screen all Prospective Tenants – No Exceptions!
Screen EVERYONE interested in renting from you and make no exceptions! I don’t care if your cousin’s best friend comes highly-recommended. Take the time to conduct thorough and reliable background and credit checks on all tenant applicants. Ask for references from current and past landlords. Interview the prospects and find out why they are moving. A clever person may be able to fool you in one or more of these tests, but it is unlikely that they will pass all the tests if they are not a quality tenant.
Do not panic and lease to the first person who comes knocking on your door because you are anxious over the thought of a vacancy. Remember that in the long-run, the expenses associated with problem tenants will far outweigh the cost of a short-term vacancy. When preparing your property budget, set aside reserves to cover the potential cost of loss of rent while you search for the right tenant.
Learn How to Spot Red Flags with Prospective Tenants
In addition to the obvious red flags such as a low credit score, non-existent bank account and lack of references, beware of prospective tenants who wish to delay payment of their security deposit, move too frequently or are unwilling to cooperate with the tenant screening process. Also, look out for tenants who appear to be breaking their current lease mid-term. If they do that to other landlords, they will probably not hesitate to do the same thing to you.
Hire a Professional Property Manager
Think about retaining the services of a professional property manager – an individual or firm specializing in the management of residential rental property. Leasing and managing real property is a time-consuming business that is best left in the hands of professionals who are already set up to handle tenant turnover and coordinate routine repair and maintenance issues. These managers usually have their own websites to attract quality tenants and they maintain accounts with reliable vendors providing credit and background reports. Many landlords are surprised to discover that the added cost of paying a property manager is balanced by increased income in the form of higher rents and lower repair and replacement costs owing to preventative maintenance that is performed on a regular basis.
In real estate, turnover costs money. The best tenants are the ones who stay in one place for a while and have reliable sources of income and a proven record of timely bill paying. They respect the property of others as if it were their own. A satisfied tenant who renews their lease will save you the expense of procuring a new tenant and preparing the property for a new tenancy. Whether it is your first property or your fiftieth, do yourself a favour and take the time to prescreen and recruit the best possible tenants.
Are you looking to Sell or Buy a home in Calgary and need someone who won’t rest until you’ve found your dream home or until your home is sold? I’ll work hard to earn your trust and to deliver exactly what you need. Contact me at 403-589-0004 or at TheHowardTeam.net.
About Bryon Howard
Bryon Howard and his team of Calgary real estate professionals sell an average of two homes a week. He is a member of the MLS Million Point Club, which ranks him roughly in the top 1% of productive realtors in Calgary. His aim is not just to please clients but to help them buy/sell a home in Calgary at the best price, in the shortest time, and with the least hassle. He is a member of the RE/MAX House of Real Estate that leads in the Canadian market. Learn more about Bryon at TheHowardTeam.net.