Five Reasons To Get Tenant Referrals from Your Neighbors

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How you find the tenants that rent your houses can determine how well you do as a landlord. The longer they stay and how well they take care of your house directly affects your bottom line; you lose money on the turnovers and repairs.

When you buy a house you are not just buying a house, you are buying a piece of a neighborhood. The same goes for renters; they are not renting a house, they are renting a neighborhood. Since tenants will look like your houses, I am very picky where I buy my houses. The quality of the neighborhood trumps all other buying factors since I am trying to supply a quality product for my customer, the quality tenant.

One of the reasons that my average length of tenancy is 6.5 years (which is way above average), I believe, is I get most of my tenants form local referrals. When I have a vacancy, I focus on the neighbors supplying me with their friends and family members as potential applicants. I paper the surrounding blocks with flyers that highlight all the home’s amenities and talk to my neighbors. I want them to fill my house with somebody they know.

Besides finding tenants, walking the streets and knocking on doors accomplishes three things:

  1. The neighbors, who will become your friends, appreciate your effort and will soon be your eyes and ears should something go wrong. I buy in primarily owner occupied neighborhoods. Since you are upsetting the balance of the neighborhoods by throwing renters at them, the neighbors appreciate that I care on who I put in my houses
  2. You will find deals. In an easy, get-to know-you way, let them know that you are in the house buying business. If you knock doors, it will not be long before you find the “mayor” of the neighborhood who knows everyone’s business. They can tell you who is getting divorced, falling into foreclosure, becoming bankrupt or who just died. This is how you buy houses below retail value.
  3. You will find local talent. A plumber, handyman or a carpenter down the street will probably give you a great rate and alert you to any potential repairs. They have a vested interest in keeping your house in good shape and can also keep an eye on things.

 When you get a referral form one of these sources, it is hard to go wrong if they qualify financially. Here is why tenants referred locally stay the longest, are the easiest to get, and are the most stable:

  1. Family members like to live closer to one another. Mom and pop like to have their grandkids close by so your tenants will likely have a built-in baby sitter.
  2. A son or daughter can keep an eye on their aging parents.
  3. Local referrals probably know better than you, the schools, the neighborhood and the community. More than likely they already go to a local church, have a nearby job and have a local support network.
  4. If there are financial problems, a local friend, family member or pastor may be there to bail them out
  5. Friends like to party with each other and kids can hang out. Walking down the street to a BBQ, dropping over for a little chat or getting the kids to come over becomes much easier if everybody lives closer together.

Remember the flyers I told you to pass out? Those are the same ones you put into the flyer box on your front yard “FOR RENT” sign. Drive by traffic, walkers and local residents will pass them on to people they know. Soon you will find that you find out that your problem is not finding renters but finding the best of the best tenants that will pay off our houses and make you rich!!

Photo: Edwin & Kelly Tofslie

About Author

Steve is the author of three books, is an invited expert commentator for CNN/Money, CBS Radio, Fox TV and numerous other newspapers and media outlets, has been a distinguished speaker at the Harvard Business School, Harvard Law School and their Graduate School of Design, and teaches courses in investing and real estate finance at colleges across Southern California. He is also an active real estate investor and owns 27 investment houses in Southern California and around the country.


  1. MH- Thanks for the comment! I have to simplify everything so I understand it. I think that you make the most money over time with management. Not as sexy as finding a killer deal, more overlooked because people think of it as a time suckiing chore….but it is not, it is fun!!y
    Wagner- so many people miss how easy PM can be, dont you agree?

    • Thx so much for commenting! That is good, also pay them a spiff, if you rent to their referral. At the top of the flyer that descirbes the benefits of your house inthe most positive light, put a banner headline that says “PICK YOUR NEIGHBORS” Local referrals are the best!!!!!!

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