Q: I was listening to your show from May 14, 2006, and heard the story of the couple that purchased six investment properties in the last 2 years.
One thing they did not address, or maybe I missed it, was how they are finding renters for their properties. I assume they are renting to cover the mortgages since they mentioned their strategy is to buy and hold versus flipping.
I currently own two investment properties plus my primary residence, and want to buy more investment properties but I’m worried about finding renters. I prefer to buy and hold versus flippng as this fits with my long-term wealth accumulation strategy.
Do you have any advice on the best way to find and keep qualified renters? It seems to be so many people getting involved with this facet of the real estate industry that finding good renters is more of a challenge. Any advice or assistance you can provide is greatly appreciated.
A: The couple on my radio show (you can find the 5/14 show in the WSB Archives) didn’t share how they got tenants, but I will give you some of the advice I have gleaned from my own rental property plus those of other landlords I know.
- Try to underprice the market. If tenants smell a deal, they’ll flock to your door and you should be able to pick the best one.
- Underpromise and over-deliver. Your rental property should shine in comparison to other properties that prospective tenants are considering. If you don’t know what those properties look like, you should spend a few Sundays looking at them. If your tenants think they’re getting a great deal, they’ll stay.
- Market in creative ways. You’ve got to advertise where your market is. For example, if there is a local neighborhood paper that everyone uses to find a rental property, advertise there. If you have a multi-family property, talk to the other tenants about referring future tenants. Offer bonus to listing agents if they bring tenants or to your friends and neighbors. Slip "for rent" signs into other rental buildings. Offer a cash bonus if the departing tenants find you a new tenant. If you live close to a college, work with their housing department.
- Offer discounts to long-term renters. For example, give a month free for every two years of rent. Offer two months free if they sign a three-year deal. Offer free parking (if that isn’t something that normally comes with the unit).
- Use the Internet and Signage. Get your listing up on every available website. And, if it’s a single family house, stick a big sign in the front yard with your phone number.
- Hold an open house. Pick a Sunday or a Saturday and hold an “open house” for prospective tenants.
I think finding tenants has become pretty tough, but with rising interest rates, people will again think that they can get a better deal renting.
By the way, a book I like is Robert Shemin’s “Secrets of a Millionaire Real Estate Landlord” or anything by Bob Irwin.