We did it. A big sigh of relief. Receiving signed leases and the first month’s rent was the next step to our investment road and we can finally check it off. It’s always a little scary when you think about the tall task of paying two or more mortgages. And you should never buy an investment property if you can’t take on that liability.
However, if you do want to take that risk, then be prepared. With (passive) investment property in hand, you really have two options to find a tenant. Either pay someone else or do it yourself. The first option can be done through your local real estate agent or via property manager who will utilize an agent to market your property on the Multiple Listing Service, MLS. However, they can usually charge you a month’s rent or more. With some real estate experience in hand, I decided that I can do the work on my own. I do have my real estate license, but these methods can be accomplished without an active one. In today’s world, information is at people’s finger tips. And as you utilize the interwebs and these tips to your advantage, most prospective tenants find a property online on their own, and hopefully it’s yours!
Not only should you take pictures during the day with all the lights on, make sure you clean up and remove personal items like pictures or other embarrassing items. Like any home staging, act like you’re a listing agent or prospective tenant and ask yourself what would you like to see about a home that you’re searching for. For our home, we took pictures in the morning with the best light and got at least two shots of each major room, and made sure to show the exterior, and included washer and dryer. Don’t forget to open the window blinds or curtains!
2) Market Online –
Nowadays most property owners don’t need the help of a real estate agent to list online. But yes, you do need a proper agent to list on the MLS, but sites like Trulia, Craigslist, Zillow, and others can list your property for free. That’s right, no charge even for renewing the listing. So I took my pictures and posted them on Craigslist, Trulia, and Postlets, which publishes to all the Zillow-family sites. I wrote a true description with nearby attractions, amenities, and highlights of what the home has to offer. I personally ordered the pictures in a logical order with the open, spacious kitchen as the starting shot since that’s one of the best features. Once you have your listing online, don’t worry, you may not get an inquiry the first day but if you described the place well, showed great pictures, and priced it accordingly, you will get interest. Speaking of price, make sure you do a little research and find out what similar properties are renting for in your area. If you did your proper investment research you should already know the range.
3) Schedule showings quickly and efficiently –
Now that you have inquiries, they will call, email or even text you if the property is still available. Your first response should ALWAYS include “When are you looking to move? Let’s schedule a showing. When are you available?”. Don’t waste time answering too many questions but you can do initial screening such as pets and their potential move-in date. I was able to schedule times convenient for me or Bernadette after work or during the weekend. Don’t forget, they want to see the property just as much as you want to show them. So don’t fret about scheduling, but the faster the better.
4) Screen your tenants for financial and credit feasibility –
This is uber-important. As you do the showings, you can start screening them by asking some relevant questions and letting them know your criteria ahead of time. e.g. minimum credit score, annual income, any pets etc. You’ll get plenty of “yeah, I’m interested, please send me an application”. As you build the excitement, you come to find out they have bad credit or a criminal history. Don’t listen to their sob stories either. I know it’s tempting to want to help someone out, but this is your investment and the risk isn’t worth taking. I use LeaseRunner.com to have the applicant apply online, and it provides a simple report of credit history and background check. The website is an all-in-one service for landlords and is also inexpensive. There are plenty of tenant check sites out there, just make sure you use one.
5) Follow Up and Close! –
After the showing, make sure you follow-up with each person to gauge their interest. Most people will tell you whether they are interested or still looking. Listen to their feedback, too. It may get you to change a few things to get it rented. Once there is mutual interest and the application results look strong, make sure to schedule an interview to ask any questions that weren’t covered. Plenty of online tips on these as well including verifying the tenant’s income, any pets they have, etc. If you’re satisfied, a site like LeaseRunner.com has standard and state-specific lease contracts you can modify and apply to your terms. Go over it closely with the tenant so they understand the rules and obligations. A good idea is to setup a time to meet at the property, go over the lease and do a final walk-through. Now sign those leases and collect your first month’s rent and deposit.
Congratulations, you’ve rented out your home without a Realtor! Now you’re equipped with a few tips to get started. And just remember, things have only just gotten started. Maintenance and other challenges are ahead. If you’ve screened your tenant right, hopefully you won’t have many issues. Good luck and please share any lessons learned. Did we miss anything?