The mister and I waited years before buying our first rent house. Of all the various and sundry reasons for staying out of the game, our biggest obstacle was a severe case of Tenant-phobia– the crippling fear of Landlording. To make matters worse, anytime the subject came up, helpful friends and relatives regurgitated the same horror stories over and over… tenants trashing houses, refusing to move out, paying late, cooking up drugs in the garage, selling off the fixtures for booze and worse.
One day it occurred to us that once upon a time, we were tenants-and we never paid late, or trashed anything, or refused to move anywhere or cooked up anything in the garage. Come to think of it, none of our friends had that much fun either. As the dawning light of reason broke forth, the answer to our dilemma became immediately clear-we needed to target ourselves.
The Part Where We Clone Us
For the sake of simplicity, let’s call our target Cab (for Connie Always Broke). How do we lure Cab over to our lovely rentals so she can pay off the mortgage for us?
- For starters, Cab doesn’t do drugs, so she doesn’t want to live in a drug-infested neighborhood.
- Also, she’s not so tough… in fact, she’s a big weenie, chicken-baby so high crime areas are out too.
- Cab’s trying to save enough to buy her own house. She’ll pass on a larger brick home with central air and heat to live in a smaller frame home with window units to save $100 per month.
- Without exception, Cab will pick the cleanest house or apartment in the best condition in her price range. She’ll head right out the door at the first sign of filthy carpet, dingy paint, roach droppings, broken drawers and/or other signs of delayed maintenance.
- Cab follows the rules. She wants to know what’s expected from the beginning. A clear, logical, understandable lease makes her feel secure.
- Cab wants to be treated with respect. If her landlord is jaded, angry, bitter, money-grubbing, and/or heavy-handed, she’ll find another place when the lease is up.
- Not surprisingly, Cab and her friends are very much alike. She always asks the people who share her values for referrals because they understand what she’s looking for.
- Cab likes puppies. And gardening. And painting every room a different color. And because those things aren’t landlord favorites, she’ll eventually figure out a way to buy her own place. But if the landlord realizes what a great tenant she is and eases up on some of those restrictions, she just might stay a few years longer. Maybe.
Some folks can handle problem tenants. Some people *are* problem tenants. And some of us just like a little peace and quiet.
The Part Where We Ponder and Stuff
In general, I look for single family homes or duplexes in quiet, stable neighborhoods where the yards are well maintained. We check backyards for the presence of fighting dogs and the absence of swing-sets. Lawn chairs and rockers on the porch are good. Large groups of able-bodied men hanging out during working hours is not-so-good. And with every house and every neighborhood, we ask-
What type of tenant will this place attract?
Finding great tenants begins before you buy your investment property. Learn your local market, target neighborhoods that will attract the type of tenant you want to deal with and solve the majority of tenant/landlord issues before you start.
It’s funny– we’re landlords now and still hear the same horror stories…and it’s only recently that I noticed that all those stories are told by people who aren’t landlords.
Interesting, huh?
Before: When good little houses go bad, they attract all sorts of bad things.
After: Much better. Now it’s ready for Cab and company.
Article Author:
Connie BrzowskiConnie has written 12 articles for us.
Visit Connie's Website: http://www.conniebrz.com/
Joshua Dorkin
Charles Feldman
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I was really skeptical about my first tenants too, but if you give them a good background check and make sure that you talk to them and like them then half your work is done.
What if you bought, let’s say a 4plex, with established long term tenants already paying great rent regularly? Only $160k purchase price and enjoy $500 mo positive Cash Flow. Rob
Not really enough info in your comment to give an opinion. Personally, I’d need higher cashflow than that to consider any 4-plex, no matter the location.
Everyone’s tolerance for aggravation is different. I know of someone who’s making $$ hand over fist collecting rent in a bullet-proof vest. Just not my idea of a fun Saturday afternoon.
When we look at a building with tenants in place, the question is the same: What type of renter will this property attract if the current tenants leave?
wow nice job fixing up that place. I would have put some cover between the two sections, would make a sweet barbecue area or something.
Thank you Ed~ yeah, it really would
We had some roof issues when we replaced the covered walkway which would’ve made that difficult and the house and garage are further apart than it appears in the picture.
Maybe in the future we could put a carport in front of the garage for grilling (oh, and cars too I guess- ha!
Connie,
Great list of qualities to look for in tenants!
“Cab likes puppies” reminded me that many tenants have dogs but many landlords don’t allow dogs. It pays to make accomodate people who like to have pets.
I’m looking forward to future posts.
Thanks Terry
I think that’s one of the reasons the mister prefers ceramic tile on the floor.
We tell prospective tenants that ‘dogs are considered on a case-by-case basis’ and then screen the pets as carefully as the people. By allowing pets, we’ve gotten some very good long-term tenants (and a little extra on the rent.)
Connie,
This is a great list of qualities to look for in tenants!
Thanks again for sharing the information, I’m looking forward to future posts.
A few years back my grandmother owned 2 4-plex units, and I can’t count the amount of issues she had with many of her tenants. My grandma, being the sweet old lady that she was, was a huge pushover and her tenants would regularly take advantage of this.
I would have to go knock on many of the tenants doors, a week or so into the month, looking for the rent money. Tenants always paid late, many wouldn’t bother switching the utilities over to their own name, Mexican immigrants would have 10 or more people crammed into a one bedroom, and so on and so on.
There were a lot of headaches caused by the rentals, but on the same note they did bring in residual income.
Thanks Madison
RJacobsen–Personally, I like SFH’s. I’m sure its just a personal preference, but in general, tenants tend to stay longer, turnover is less and re-rent is quicker (that’s comparing with people I know who prefer multi’s
LOL)
I do think you need a certain mindset… I’ve met some sweet old ladies that can rock-the-house with their mad landlording skillz. Mr. Brz is a natural, but I’ve had to learn as we go
I have one rental and I am now looking for more, but my first tenants made me not want to own anymore rentals. The money can be too good to not want to own a few of them atleast. I have been a little more cautious about what I buy and what type of people I will ultimately rent to. This is a very informative article.
Rick Marnon, Howell
Thats a neat little house.
We have just purchased our first investment property in Australia. We exchange contracts next week, it needs work so we will certainly “suffer” a bit like you did. I hope the hard work will prove rewarding.
Rick– glad it helped. Hope things go more smoothly in the future~!
Dart Shop– congratulations on your first purchase! Yeah, we think so too… its coming together very nicely
Nice job on the reno…night and day difference and I bet the inside is just as nice. Now…make the jump to multifamily and really show those nay sayers you know what your doing!!!