10 Keys to Finding and Owning a Perfect Rental Property

Knowing what to look for in a rental property -- and how to find great tenants -- can help ensure your moneymaker doesn't turn into a money pit.

5 ways to get good tenants

If you’re using a property management company, it will likely be responsible for finding good tenants for your property.

If you’re doing it yourself, here are five tips to help find decent renters:

  1. Perform reference, background and credit checks: It’s not enough for a potential tenant to simply provide references. In addition, you need to call and speak with those people to confirm they do indeed have good things to say about your applicant. Also, while it may cost you a little money, you’ll want to run a criminal background check and perform a credit check to look for potential red flags.
  2. Have a face-to-face conversation: When taking rental applications, arrange to meet potential tenants and take them on a tour of the property. It offers the opportunity to have a conversation without the pressure of a formal interview. Another tactic could be to meet applicants at their current residence to see how clean and well-maintained they keep it. However, be careful not to run afoul of the law. Under the Fair Housing Act, landlords are prohibited from denying a rental application for reasons such as race, religion or the presence of children.
  3. Require a deposit: Requiring a deposit serves as a form of insurance for your property and can also weed out any applicants who may not be able to pay the monthly rent. State laws vary, but it’s not uncommon in some areas to require both the first and last month of rent in advance along with a security, or “damage,” deposit. If you’re renting to someone with pets, you might want to charge an additional amount to accommodate any pet-related damage. You can visit legal site Nolo.com to find the security deposit details for your state.
  4. Have a formal lease agreement: A handshake is not enough to protect your investment. You need to have a formal lease agreement drawn up. A good agreement goes beyond listing the rent and deposit. It should spell out who is responsible for what and what’s included in the rental price: utilities, yard work and so on. Before you pay big bucks for a lawyer to draw up this agreement, see if there is a rental housing association in your area. These groups may provide their members with standard forms for the lease agreement, lease application, pet addendum and more. They may even run background checks for you.
  5. Complete a prerental checklist: Finally, before your tenant moves in, take one last tour of the property with him or her. This time, bring along a prerental checklist. Use this checklist to note any existing issues to the property, such chipped drywall or scratches on appliances. Both you and your tenant should sign the checklist. That way, you can refer to it later if there is any question about whether damage was caused by the renter.

That’s a quick overview of buying and owning a rental property. Do any landlords out there have anything to add? Leave a comment below or on our Facebook page.

Maryalene LaPonsie
Maryalene LaPonsie
After 13 years as a staffer for a Michigan legislator, I decided it was time to quit the commute and work from home instead. For the past three years, I’ve been penning ... More

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