805: Finding and Keeping the Best Tenants

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00:01

Welcome to Episode Five of Season Eight of the Growing Empire Show. Today we're going to talk about how to find and keep the very best tenants. So stay tuned.

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Welcome to Growing Empires, hosted by real estate entrepreneur and trusted investment advisor Jennifer de Jesus. Growing Empires provides insight to building wealth through passive income producing real estate investments for those who want to build and manage a more profitable real estate portfolio.

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Finding and keeping the best tenants. Today is going to be a very interesting topic and I'm excited to share some of my insight on this subject with you. So, how to find and keep the best tenants? Let's first start talking about finding. Where do you find the very best of the best tenants? Well, to find the best of the best tenants, you have to attract the best of the best tenants. If you are a landlord that has multiple properties, one of the easiest ways to find tenants is to make sure that your reputation in the marketplace is a solid one. Make sure that you are a landlord that cares for your building. Make sure you are a landlord that addresses tenants needs. Make sure that you're an owner that really takes a lot of pride in presenting a great home for people to live in. Because if you are, you will find that word of mouth is the strongest form of advertising. And if you can be that person in this marketplace, then you're going to find that tenants will gravitate to you and usually they are the best of the best tenants. But let's say that this is maybe your first opportunity in a specific marketplace. How do you attract tenants? Well, you want to first find out where tenants look for quality housing. And every market is going to be different in this sense. So what you may have been doing on one side of the country may not be what you're doing on the other side of the country and I want you to keep that in mind. Some of the things that we do internally are we market the property as if we were selling the property. So just the same way that we market a property being sold for, you know, real estate purposes, we marketed the same way for advertising or rental space. And the reason that we do that is, that's the widest net that you can cast on a web based method. So we're going to use things like the multiple listing service, which is used primarily by agents across the valley. And we use that because, you know, maybe there is an agent out there that is working with a tenant that's looking to find housing. And sometimes it's not always tenants, sometimes there's people that have to move out of their home and for one reason or another, they haven't found a new home. So they need a place to live. You can find both short term and long term tenancy that way. So that's an option for you. And, you know, in our market in the Lehigh Valley, there's over 2000 licensed agents. So why not cast a net that allows 2000 other people potentially, to find a tenant for me? I also am a big advocate of social media platforms. And I do not think that you have to spend a great deal of money to advertise your rental because there's a lot of demand, at least currently. That's another thing that you have to measure, though is how much demand. Because the demand as well as the network in which you reach that tenant is a very big piece of the puzzle. So years ago, like as an example, I can say that we used to always use Craigslist, right? That was one of the biggest formats are forums that we would use to get tenants and we were very successful in using Craigslist. And because Craigslist is a worldwide kind of platform, it was really easy to get people from all over the place to rent our properties. The challenge that started to happen with Craigslist, and why we shy away from using it anymore, is there started to be a lot of scams. And we do not want to associate our properties or our landlords with these scams. So we retracted all of our advertising from that platform and went to another platform called Facebook Marketplace. What was happening on Craigslist is there was other people posting using our pictures using our information, they would post a similar rental unit, but they would post it for a much lower price almost like that too good to be true deal. But people would fall for it. And then they would say things like well, you've got to reserve the spot. You've got to, you know, wire over money or you've got to ACH over you know, money for your security deposit and people were being scammed by this and actually losing money. So we stopped using Craigslist for that reason. The other thing is, is that we started to get a lot of people that didn't have good credit. They couldn't look anywhere else because they were constantly being turned down so they were resorting to Craigslist to find a rental and those are not necessarily the types of tenants that we want to attract. So we shied away from that we went to a forum called Facebook Marketplace. And that seems to be a really popular one as of late to advertise units for rent. We certainly will always use the web based consumer products as well, like apartments.com and zumper and homes.com And there's there's hundreds, if not 1000s of other resources that we can use. We use our own website, of course, and we're constantly directing people to that website. We've got a lot of traffic on that website. And that is very helpful as well. Because as we have tenants that are turning over, you know, moving out of the unit because they're moving to another area, or just need a bigger space, they can just go back right to our website, find something compatible. And since they've been a tenant with us, it's easy to transition them into another apartment or another home. So that's been really successful for us. But Facebook Marketplace is, you know, social media. So it casts a very wide net.

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Let's take a moment to talk a little bit about what your marketing should actually say. Because again, you're not the only one on the web, posting your apartments for rent. If you're going to go out this alone. And if you're not going to go out this alone, and you're going to use the help of a property management company, you're well on your way to finding a very good tenant. But if you do decide to go out this alone, let me share something with you that has been very helpful for us in our marketing strategies. You want to try to not fluff the property, okay. Don't put out this long description on how wonderful the property is, and how amazing everything is. Nobody cares about that. They care about the facts. They will make their own assessment as to whether or not it works for them. But you want to lay out the facts. Because think about it think back to like newspaper days, right? When when people used to read the newspaper for ads for your jobs or whatever. Think of it that way. People are skimming through these things on the internet. So something has to catch their attention to make them stop. Think of the way that you scroll on Facebook. You scroll, and when you see a picture or video you stop, right? That's the same type of thing that they're going to do when they're scrolling for a place to live. So make sure that the details that stand out to them are things that would be attractive to them. So like all utilities included, or fully remodeled apartment, you know, something like that. But you want to stick to the facts. Again, leave out the fluff. Don't talk about, you know, the area and stuff like that. Just you know, three bedrooms, two baths, all utilities included, appliances included laundry on site, parking is available. You know, that's the stuff that people care about. So that's what you're going to want to make sure that your advertising is saying so that as they're skimming through these, they don't pass by your ad. The other thing you want to pay very close attention to as the pictures that you share. If you are taking pictures, because you have a tenant actually occupying the property, and you're trying to get a head start on the marketing prior to a new tenant moving in, make sure the pictures that you're posting look good. If the tenant is leaving a mess, or is a disorganized kind of tenant where things are kind of all over the place, you don't want to post those pictures. You want to ask the tenant to clean up and then go in and take good quality photos. Because if the place doesn't look good, it's not going to be attractive to the new tenant, you know. Make sure the place is really clean before you take pictures. Because those things are noticeable. You know, little things like making sure that you're not in the photo, because you're reflecting in a bathroom mirror is a good tip. Making sure that you know trash cans are closed, toilet lids are closed. Any of that kind of stuff really helped to show your property better. Don't take pictures of things that are small, don't take pictures of closets, don't take pictures of basements don't take pictures of garages, those things tend to not photograph very well. So make sure that you are taking photos that are going to really represent the quality that you put into the property that you're going to give to the next tenant. And the other thing that you want to make sure that you do is when you show your pictures, make sure that you show them in an order where somebody would get an idea of how the building feels or how the apartment feels as they're walking through it right. So don't have a picture of a kitchen next to a picture of a bedroom and then back to the kitchen. You've got to make sure that it kind of flows. So here are all the pictures of the kitchen. And then you walk down the hall and then you're in the bedroom here all the pictures of the bedroom and then you walk down another Hall and you get to the bathroom. Here's all the pictures of the bathroom. So make sure that they have some kind of like chronological order or some kind of sequential order that makes sense for how people will see your property when they actually come to view it for the first time.

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The episode will continue in just a moment.

09:41

If you're like me, you know the importance of diversifying your investment portfolio. Real Estate Investments, whether you're an active or passive investor are a great way to add variety and reduce risk to your overall portfolio. But what about stabilizing that portfolio? If your portfolio is diversified through real estate, you still have to stabilize your properties with the right tendency know when and exactly what capital improvements to do and assess your entire properties portfolio to maximize property values and their income potential year over year. Yes, it's a lot. And you'll need help to make sure you're looking at everything as objectively and strategically as possible. Get the guidance you need to assess and make the right decisions that will stabilize and optimize your property so their longevity is assured. Book a call with me, and I'll guide you through the process and answer your questions. Go to growingempires.com and click on book a consult, and you'll be on your way to a healthier, more stabilized and diversified portfolio with real estate.

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Now, let's talk about once you find a good tenant, how do you know that they're a good tenant and how do you keep them? How do you know that they're a good tenant is the screening. It's your due diligence that you're doing ahead of time to make sure that the person that you're about to put in your unit is qualified. No matter how long your vacancy has been, there is no value in accepting a less than stellar tenant. Because if you have to turn that unit over, you have lost more money than your waiting period to find a good tenant. You do want to make sure that you price your property accordingly, you want to make sure that you are in the group of market rates, and that you're not trying to overprice your property. You also don't want to underprice your property either because that doesn't help your actual income on the property. But once you have an applicant, you want to make sure that you go through their screening and make sure that the information that you're getting is actually truthful and that it fits the qualifications that you expect for your unit. So some of the things that we look at when we're qualifying a tenant are and these are no really specific order, but we check credit and background. So when I'm looking at a credit report, what I'm looking for is what is your history of spending? Do you have a bunch of credit cards that have high balances to the available balance? Do you have a lot of late payments? Do you have a repossession of your car? Do you have any medical bills? Do you have student loans, you know what types of things are on the actual credit report? Now some of the things that I weigh heavier than others are your spending history versus your medical bills or your student loans? Right? It's very possible that you're going to find people that have a history of medical bills, but I can assure you that people in general will pay their housing and their lifestyle before they will foot money for medical bills and student loans. So you want to look at more of the spending, not necessarily the debt that somebody has, okay. Because the debt and how they pay, it is a choice. It's the spending that gives you a good understanding of whether or not they're responsible enough with their money. And that's what really credit is about. Credit is about your responsibility with money. So again, if you have a ton of credit cards that have high balances, and you are constantly late on payments, this is somebody that doesn't have a really good handle on money and they're likely to fall into some kind of hole where they're going to have to try to get out of that. And that could affect their housing and their ability to make rent payments to you. Next thing I look at is their job history. If you're finding somebody that jumps jobs, you're going to find that their income is very inconsistent. So you are going to look for somebody that has a longer term history in employment. And even if they do change jobs, are they in the same industry? Are they constantly just jumping hourly job to hourly job? What we're looking for a stability here, for somebody to have a stable home environment, or to have a stable ability to pay for the rent of their unit, they have to have a stable work. And if they're constantly jumping jobs, that's not a stable tenant. So you're going to want to look for somebody that has a history of long term employment, and that the income that they make the net income from their job is at a minimum, two and a half to sometimes even three times the rent price. And I mean net income, not their gross income, their net income, right. And we came up with that calculation many years ago and it's worked very well for us. Because, you know, there's a percentage that you know, lenders use when you go to buy a home, your debt has to be a certain percentage of your income. Same thing here, same theory. You know, we want to make sure that you make more than two and a half times your housing debt each month. Because if you don't, you're gonna have a really hard time living. And we don't necessarily want to attract tenants that live paycheck to paycheck, because if they have any extenuating circumstances in their life, their car breaks down, they lose their job, they get sick, their kid gets sick, those things can have a drastic impact on their ability to consistently pay your rent and pay your rent on time. And that's not the type of tenant that we're looking for. So make sure that their income their net income, is showing at a minimum two and a half, sometimes three times the rent depending on the quality of the unit that you're giving them and what the actual market rent rate is. The other thing we like to look at is we like to look at their job history. And we like to get the references from their previous employers. And what we're looking at is to verify a couple of things. One, we're looking to verify their ability to work over time, as they may have said that they do. So when you call the employer for verification, you want to make sure that the employer is going to A agree that the tenant is working there and is gainfully employed, that they work the amount hours that you think that they work full time, and that they have the ability or flexibility to work overtime as needed. Those things will all be a huge piece of the puzzle when trying to determine their overall income. You're going to want to see what their previous landlord had to say about them. So if they have rented before, and they have just left a current rental, you're going to want to talk to that landlord to see what that landlord thought of them. And you're going to want to find out, you know, did they have pets? Even if your tenant says something like, I don't have pets, ask the previous landlord, did they have pets? How many people lived in the apartment? Did they pay their rent on time? Would you rent to them again, is one of the best questions you can ask a previous landlord. And if they say no, ask why. Why would you not rent to this person? Again, what did they do that cause you to not want them in one of your units, because that could be the same reason why you do not want to rent to them in the future. And then the last but not least, you want to check landlord tenant relations areas where they would post information regarding judgments and evictions in place or in the past. And you're going to want to check how they behave on social media. Because what you see on paper is not necessarily what they are in real life. So not only do you want to have somebody that can afford your unit, has gainful employment, has been a great tenant in the past, and it was not reckless in their behaviors on social media. But you also want to make sure that they're the type of tenant that is going to fit well in your building with potentially other tenants. Do they have pets? What is your process on pets? You know, what is their obligation to those pets in your building? How they're going to care for them? These are all things that you want to discuss upfront. And then you'll be able to come to a conclusion on whether or not this tenant is somebody that you should rent to. And once you've made the decision to rent to a tenant, now it's time to talk about how to keep the tenants. Because the idea is once we have a tenant that we really, truly like, and his tenant is able to pay rent consistently, we want to make sure that we keep this tenant not just for a year, but for very long term. And the easiest way to do this is to keep them happy. And how do you keep them happy, you address concerns that they have. You check in with them on a pretty regular basis. Maybe every couple of months, see how they're doing, see if they need anything from you. And when you do hear from them. Please make sure that you address their concerns as quickly and as promptly as you possibly can. That is going to be the main deciding factor between longevity in your unit and moving on to another unit. What tenants want to know is that they can come home they can relax, they can have a nice property that is well cared for. They want to not have issues with the neighbors, they want to not have issues with other tenants in the building. They just want to have a nice home to come home to and if you can create that environment for them by dealing with any kind of maintenance issues that come up. If there's any issues that happen with other tenants in the building or even with the neighbors. If you can address their concerns in an appropriate manner, you're going to find that your tenant will be a lifer with you and that's ultimately what you really want to try to find. Because that has a drastic impact on your actual net income. So I hope you got a lot out of today's show about finding and keeping the best tenants and until next time, take care.

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For more information about how Jennifer can help you plan, develop and manage a strong real estate investment portfolio visit growingempires.com