Turning your home into a rental property can be a great option for covering your ownership expenses while allowing your house to appreciate in value. Rental income is considered “passive” income, which means that it’s regularly received and requires little effort to maintain. Sounds great, right? Even though the rental income may not require much effort once the house is occupied, you still have to rent it before any income starts coming in. The leasing portion will take up the majority of the time involved with the rental process but it doesn’t have to drive you to pull out your before finding a great tenant. Here are 8 tips to help you streamline the leasing process while maximizing the hairs left on your head:
- Safety first!
Before you start showing your rental, take your personal safety into consideration. Realtors, property managers, and landlords get hurt, sometimes fatally, every year by people who they were showings houses to. When you receive an inquiry about your rental, ask for the person’s full name so that you can run a quick background check on your state’s public record website. If the person has a common name like John Smith, try to get their current address and date of birth. Here in Maryland, the public record’s website can be found by Googling “MD Judiciary Case Search” or you can click here. The way someone sounds on the phone doesn’t always reflect who they really are – you’d be surprised to see what lurks in a person’s past!
Real estate professionals and landlords are targeted more than you would think. In 2012 alone, there were 50 fatalities that were related to the Real Estate industry according to an article written by Andrea V. Brambila from InMan.com. It’s always easy to think that it won’t happen to you, but it’s simply better not to take the chance!
- Pre-qualify, Pre-qualify, PRE-QUALIFY!
Somewhat related to Tip #1; always pre-qualify potential renters over the phone before even scheduling a showing. This will save you time, energy, and gas money and will ensure that you are only showing the home to qualified applicants. When someone calls wanting to schedule a showing, let them know that you have to ask them a few questions to make sure that the property would be a good fit for them. Your parameters may vary, but I always ask about their credit scores, time frame for moving in, and whether or not they have pets. I also let them know exactly what I am looking for so that they aren't surprised when they submit an application.
Always treat each potential renter exactly the same and apply the same parameters to each caller to make that you aren't violating any Fair Housing laws – before you start advertising the property, come up with a list of qualifications that you are looking for in a renter. This can be credit score, move-in date, pets versus no pets, no smoking, etc. Even as a private landlord, Fair Housing laws still apply and it’s very important to educate yourself about what is expected. Go to the Dept. of Housing and Urban Development (HUD) website to learn more about the Fair Housing Act. Each state or local government may also have its own set of Fair Housing laws, so make sure to do some research about the laws that apply to your specific area.
- Schedule showings in a block
Lucky you! You started advertising your rental and now you’re getting tons of calls! Instead of doing showings every day at all different times of the day, try to schedule a block of showings on one or two days of the week, if possible. I usually schedule showings in 1-hour blocks, 15-minutes apart. If you’re REALLY lucky and have so many showings that they don’t fit into a 1-hour time frame, double up! The possibility of doubling up your showings will depend on the size of your home – if you have a house that doesn't accommodate multiple people at once very well, doubling may not be the best option for you. Having potential renters see other renters coming in and out of your home will indirectly tell them that they need to make a quick decision if they are interested in moving forward. It also shows a high demand and they will be less likely to try to get you to lower the price. Either way, block scheduling will save you time and gas money without compromising the visibility of your rental.
- Confirm scheduled showings 3-4 hours ahead of time
This technique alone has saved me an invaluable amount of time. Even when you have pre-qualified someone on the phone, sometimes their priorities change or they forget and as a result, they don’t show up for the scheduled appointment (and usually don’t call). Instead of burdening yourself with a string of no-shows, call each scheduled renter a few hours before the appointment to confirm. When I get the voicemail, I always leave a message stating that I have to hear from them by a certain time (usually an hour before the appointment) or I assume that they won’t be able to make it. It’s easy to feel like you have to show up even if they don’t call back, but I can guarantee you that if they plan to be there, they WILL call you back. If not, don’t sweat it!
- Show up early and primp
So you’ve pre-qualified and confirmed your appointment – now it’s time a make a great first impression. Arrive at the rental 5-10 minutes early to turn on all of the lights, open the shades and curtains, and to do some last-minute dusting. The details may seem small in the grand scheme of the process, but they make a huge difference. Imagine you’re a renter and you enter into a dark home with cobwebs in the corners – what would your first thought be? Probably not a good one. The 5-10 minutes that it takes to primp the house will allow the potential renter to see the positive features of the home rather than focusing on trying to find the light switch in each room that they stumble into.
- Stay out of the way!
Potential renters prefer to tour a home at their own pace – it allows them to take it all in at their speed so that they can make an educated decision. When I was a renter myself, I remember when the professionals would walk me around to each individual room while talking about all the great features of each room. All I was thinking the entire time was “All I want is a quiet moment and 15 minutes to walk through this house.” You want the renter to focus on the features that THEY see as special instead of being rushed around by someone else. Some renters breeze through and others like to take their time, but regardless of the time it takes, you want the renter to remember the house and not the person showing it to them.
If your rental is occupied and you’re concerned about security, walk behind the renters to each floor of the home to observe them from afar – this allows them to still see the home at their pace without you having to compromise on security.
- Ask for honest feedback and have applications on hand
When the showing is over, casually ask the renters what they honestly thought about the house. As the landlord, you want to hear the good AND the bad. Good feedback is a great thing, but you want to know the bad feedback so that you are able to make adjustments where needed in order to make the house more appealing to potential renters. Sometimes the negative feedback is very simple items that can be easily addressed, but other times it will be items that you really can’t control, like location, parking, and size of the house. If you get negative feedback, DO NOT argue with the renter! Their opinion may be completely different than yours but in the end, they would be the ones living in the home. Instead of bickering, just thank them for their honest feedback and let them know what you’d be willing to do (if anything) to counteract their concerns. It may not make a difference, but at least you have proposed a solution rather than making the situation worse.
Always have applications on hand and give one to the potential renter on their way out, even if they don’t seem very interested. Some people don’t show emotion as much as others so it can be hard to tell which renters are interested. By giving them an application regardless of whether or not they ask, you are making it easy for them to simply fill it out and send it in if they decide later that they want to move forward.
- Follow up
A day or two after the showing, send a follow-up email or call to make sure all of their questions were answered. This is more of a courtesy than a sales pitch, so keep the conversation short and sweet. Let them know that you’re available if they have future questions and wish them luck with their future home search. No one wants to hear another sales pitch but kindness can go a long way in the real estate industry.
So there you are – 8 tips to hopefully save you from going bald during the rental process. Having rentals can be a great way to set yourself up for retirement or to have a reliable income to fall back on, so enjoy it!
