Do I Have to to Rent to You?

Over my 15 years in this business, I’ve met hundreds of applicants for my rental units.  Young, old, fat, skinny, black, white, hispanic, asian, disabled, married, single, gay, straight, transgender, atheist, saved, fastidious, filthy, polite and rude . . . you name it, I’ve seen it.

When I consult with a person who is new to real estate investing and landlording, I’m often asked about tenant selection.  How do you find good tenants?  There are several things I do when I have an empty unit:

  • Put a sign in the yard.  Include the number of bedrooms on the sign.  This will narrow the number of useless calls you receive.  Also include a number where you can be reached.
  • Place an ad in the paper.  I advertise in our local free newpaper which comes out once a week.  It’s inexpensive and is available in grocery stores and gas stations.  Many people don’t subscribe to the city newspaper because of the cost.
  • Post a flier in local grocery stores, barber shops, churches, etc.
  • This is my favorite . . . put a note in your best tenants’ mail boxes, giving all the details of your empty unit.  I often find great tenants through my other great tenants!  (If the tenancy works out well, I sometimes give a little perk, like a gift certificate to Wal-Mart, etc.)

Another question I’m often asked is, “How do you turn someone down, and what are some legal reasons to turn someone away?”  This is an excellent question.

Most of the time, the reason people don’t qualify is financial.  They just don’t make enough money to rent the apartment.  I like their take-home pay to be at least two- or two-and-a-half times the rent.  Another problem I face is people trying to cram too many people into a unit.  When they call about my two-bedroom apartment, I always ask “For how many people?”  If the answer is five, I kindly tell them we can’t put more than four people in a two bedroom place.  It saves all of us a wasted trip to the property.  Do as much screening on the phone as you can!

What if your applicant shows up and is just downright surly and argumentative right from the start?  They qualify in every other way, but you know in your heart you don’t want to rent to that person?  You don’t have to!  You can discriminate against people for their abusive attitude, when you feel the tenancy will be adversely affected by that attitude.  You may also disqualify an applicant for being filthy.  I’ve had families show up with their children in tow, and it doesn’t appear those kids have bathed in days . . . dirty little hands and bare feet, unwashed hair and clothing, yesterday’s lunch stuck on their cheeks . . . and I just know my apartment is going to look like that within a week of them moving in.  I don’t have to rent to them.

But in the above situations,  I don’t tell them the brutal truth.  My places don’t sit empty for long, so if these applicants call back to check on their application, the unit has almost always been rented, which is what I tell them.  “We had a lot of good applicants…” 

I never lie and tell someone the unit has been rented when it hasn’t.  If it’s still empty, I tell them we’ve had lots of interest and we’re still processing the applications.  In other words, I buy time, and it works out.  Chapter 7 (The Fine Art of Finding Good Tenants) in my book goes into discrimination in detail.  There are many areas where you cannot discriminate (race, religion, sex, etc.) but you’d be surprised by how much personal choice you have when you’re choosing a renter.  After all, this is your investment . . . it deserves your careful consideration!

So by all means, discriminate.  Or at least, be discriminating!    🙂

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