Do you know who will be an acceptable tenant for your rental property? If you don’t know, how will you recognize him or her when the applicant who you will keep and show as the ideal tenant shows up? Every property is different and the kinds of renters each property attracts are different. Your resident demographics can differ markedly from Joe Landlord’s on the other side of the freeway. Those demographics can differ even more from Susie Landlady’s whose properties are three miles down the road across from the city’s halfway houses. Accordingly, you need to have a specific idea of who the acceptable tenant is for each of your properties.
That is one of the uses for the “Property Data” form found on page three. As you can see from the form, it is in two sections. The first one has to do with the characteristics of the people who have rented this property in the past. That tells you who the people are who will probably want to rent the property from you. The second section has to do with the features of the property. That gives you the information you need to create an ad and to answer questions from prospective renters about the property and turn features into benefits.
As I noted above, different properties attract renters with different characteristics. Obviously a $300 a month studio apartment in a bad part of town is going to attract a much different tenant than a 3500 square foot home with a 360 degree vista overlooking a valley, a swimming pool, hot tub, sauna, three-car garage in a prime neighborhood that rents for $3000 a month. You can’t determine who the likely successful applicants will be without knowing the characteristics of the tenants and the property.
Use the information on the form when you are writing your ads and when you are creating phone scripts for answering ad calls. You want the information right in front of you to be sure you remember everything correctly.
To use the form properly pick one of your properties, possibly one that is available now. The physical characteristics of the property are easy. You can go over, look and measure if need be. Tenant characteristics are harder.
Remember the tenants who’ve rented the unit. Think about their income, the number of people living in it, the family composition, debt ratio, credit problems, rental history, reason for moving out of their previous rentals, number of vehicles, hobbies and interests, and anything else that comes to mind about the demographics of previous tenants. Use old rental applications and your own memory. It doesn’t have to be exact. You have no need to create an Excel spreadsheet and enter all the data in, find the mean, median, and standard deviations of each piece of datum. Instead, come within $50 to $100 of rent, $1,000 or $2,000 of income and one or two people of number of occupants.
What I am referring to by “marital status” is whether you usually get single people, families or roommates in the property. That is not an invitation to discriminate against families with children if your renters are usually single. It is merely information you can use for your marketing. Obviously if you have never had a family living in the unit and in fact have had couples or single parents with children consistently reject the property for one reason or another after looking at it, that demographic is not one you are likely to attract as actual applicants. That would mean you would tailor your advertising and marketing to promote the features and benefits that attract single tenants with no families.
If you just bought the property, or otherwise acquired it, you don’t have that information. Possibly the previous owner can help.
That failing, if you have similar properties in the same neighborhood and of the same characteristics, they might be a guide for the one you are working on in that they will attract the same kind of tenant.
Even if you can’t get help, you can still create criteria, even though it may not be as fine-tuned. Look at the current renter, if there is one, delete all the bad characteristics and leave the neutral or good ones. That will be your acceptable tenant.
For example, say your property is a well-maintained duplex in an upscale part of town. A single man, Bill, 29-years-old, lives in one side– a two-bedroom, two-bath unit. He uses one bedroom for a bedroom and the other one for an office/ guest bedroom for some of his friends who are too drunk to go home. Bill has a job as an electronics store manager and earns around $35,000 a year. He drives a Nismo 370Z, the one that starts at $39,000, because he can—after all, no kids to pay for. He tends to be neat and careful of his possessions. Because he works in an electronics store, he has all the toys.
What with the 52-inch High-Definition TV with 7.1 Dolby digital sound, the home-theater sound system, the Blu-Ray DVD player, all the Direct-TV sports packages and the stereo to go along with all that, he is well-equipped to have lots of friends over. And he does.
Every Sunday during football season his living room is packed with his buddies, some of whom are not as quiet as you would prefer. And when the football games are over, sometimes the sports day degenerates into party. Of course, each of those people drives his car over. That can create some parking issues in the neighborhood.
The flip (good) side is that since he manages a retail store, he is rarely home. Add to that during racing season he goes to about every car race in the area (Sundays), and you can expect that most weekends will find his home empty. That’s always a plus with tenants. Those who are not there don’t inflict as much wear and tear on a property—usually. You also get his rent check no later than the last day of the month before it is due. He has it set up as auto-pay with his bank.
The demographics should be obvious. What you will be looking for to rent the other side of the duplex is someone similar to Bill. A family would probably take exception to Bill and his friends, unless the husband liked all the same things as Bill and spent his fall Sundays at Bill’s instead of home with his family. Of course, that could result in an early vacancy what with a wife who either takes the kids and leaves her husband or drags him kicking and screaming to a new place to live.
If the family took exception to Bill, you would field complaints weekly about the partying going on. No fun.
If Bill moves out, heaven forbid, your demographics would change, though. At that point you could look at other properties in the area to see whom they attract as tenants. But for now, you know who will probably do best living there.
Creating the demographic will take some time and work, but the payoff can be phenomenal. You will have started a database of the characteristics of each of your properties, this being the first. Later you can do one for each as they come available or you have the time.
At that point you can look at whom each property attracts and see if that is the best tenant who would want to live in the property. If it isn’t, what can you do to improve the quality or change as far as marketing.
Until you know where you are now, though, you have no chance of creating a plan to improve the situation or keep it as it is. A big mistake for a landlord is renting a property to someone whom it will not work for. Chances are you won’t keep the tenants long. Then you will lose at least a month’s rent.
Keep the property data form for each property in the property file, together with the ads you have written for the property, marketing materials and other appropriate information that will help you select a tenant the next time the need arises.
