I hear troubling things. Landlords’ vacancies are not attracting nearly the numbers of good tenants they did just two years ago. In fact the number of applicants they would just itch to sign up has slowed to a drip in many places. The applicants they get are, at best, ones they would have accepted only in a pinch before.
Looks like we’re all being pinched a lot more now.
The good tenant pool shrank in direct proportion to the decline in interest rates. The tenants who religiously paid their bills on time, especially their rent, went and bought their own home. The nerve.
What’s left are the people who rent by choice; the people didn’t know interest rates were low or who never got around to buying a house; and the people who would have trouble qualifying to buy a Barbie-doll house at Toys ‘R’ Us.
The first category, renters by choice, will continue to be our best tenants. The second category, those who didn’t know about low interest rates, miss a lot of other things too, such as leaks in the roof, doors that don’t close quite right, and plumbing leaks. We have all had some of them as tenants.
The third category, renters cuz they hafta, are becoming an increasing percentage of the tenant population, with the home buyers abandoning tenantdom. They are the ones who require constant attention from us.
To ensure a return on our investments it means that we, as landlords, have to start working a little harder and smarter. We have to start paying a little closer attention to our tenants and to our properties. Let’s ramp up our management activity a notch.
Some of the things we will have to do are:
Attract the best tenants by making sure our properties have sparkling curb appeal—that they make prospective tenants stop their cars to admire the way our property looks and think to themselves, “I wouldn’t mind living there.”
Lower our credit standards a hair. We still won’t accept tenants who have been evicted, been convicted of drug sales, domestic violence, or another felony. And most important, we still have to be able to verify absolutely everything and be alert for red flags on their rental applications. But we might accept applicants who didn’t pay JC Penney as often as Penney’s would have preferred.
Do exterior and interior inspections more often. The exterior checkups are easy, you just drive by or walk around. Interior ones require a little more effort in that you have to give notice to the tenant that you are going to be doing an inspection. But it is essential that we do them to make sure the tenants are taking care of our investments.
Require strict adherence to the rules. With good tenants that isn’t even an issue. With the less-qualified tenants we have to pay closer attention. Let’s get those notices ready. We’ll be sending notices to our tenants that say “here is the rule you broke,” clean it up, stop doing it, start doing it or move. You can get them from your local landlord, apartment or rental owners association.
Send delinquent notices immediately when the rent is late. If the rent is due on the first and late on the second, and there is no built-in grace period in your state law, the pay-up notice needs to go out on the second of the month. Check your state law and send the late-rent notice the first moment you can legally do so.
Report delinquencies to credit reporting agencies. If a tenant moves out owing you money for rent or damage, it needs to show up on the tenant’s credit report. You can report it through companies such as RealChek America. Some rental owners associations also have the means to do such reporting.
All those good tenants who aren’t tenants anymore won’t be coming back. As a new crop of tenants comes of age, it is up to us to train them to be civilized in our rental properties. We will improve the quality of tenants as long as landlords help each other by reporting bad behavior both as references and to credit agencies. If we all do that, then we can all more easily see who the best of a less-than-ideal lot are.