Potential Renters Don't Follow Through in Rental Process
Hello! I own a duplex, live in one side and rent out the other. I had the previous side rented WAY under value ($850 with utilities included) for the past 2 years. My previous tenants moved out and I currently have the property listed at $1,100/month utilities paid by the tenant (which is in-line with it's market value and worth). I have had so much interest in it it's hard to keep up. I have a thorough pre-screen process and ask questions prior to scheduling a tour. About 90% of the time after the showing the potential renters are interested and do the application and background check but when it comes time for the deposit to hold (I state the entire process and qualifications in the pre-screen and go over it with them in person so my expectations are clear), nobody follows through (non-refundable deposit to hold is half of security deposit at $550 and the rest of the security deposit ($550) is to be paid at lease signing). It is extremely frustrating and time consuming.
My question is: How do I ensure these potential renters will follow through? Is there a way I need to be more direct with them in the process? I feel like they are all duds and say they can pay everything on time but then they don't, obviously I don't want renters that don't pay on time anyways but it just wastes so much time and money. Everyday my unit is not rented out it's costing me. Give me your advice!
@Winter Heintz
I wouldn’t be concerned about a potential renter not following through. In my experience, when a tenant is interested you will KNOW! If they are not following through it’s because of 1 thing. They are NOT as interested as you thought they were or that they portended to be. Sometimes the unit shows better online than in person. Sometimes the tenant doesn’t like YOU, the area etc. Regardless, it doesn’t matter. You only want renters that WANT to live there. They stay longer and respect the relationship.
I find it a little odd that you're telling them to give you half the deposit to hold it and then another half to sign the lease. Why not tell them to give you the whole deposit and sign the lease at the same time? Dont give them the keys until you get deposit and first month.
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@Winter Heintz if you are in a rural or semi rural area you may be talking to everyone looking for your type of unit and if you are basically the least expensive of that size unit you will get people on the edge. Aside from the open house consolidated showings and other suggestions I have found a nice video tour also limits who comes in person to those who find the unit meets their needs to begin with. I send the video tour before showing not in place of it. Prescreen before open house type showing too.
Quote from @Andrew B.:
I find it a little odd that you're telling them to give you half the deposit to hold it and then another half to sign the lease. Why not tell them to give you the whole deposit and sign the lease at the same time? Dont give them the keys until you get deposit and first month.
Because one of the most asked questions is: Can I pay a portion of the deposit to hold the unit? I don't see why not if that is more attractive to potential renters. It's non-refundable for the 14 days I can hold it. I then will collect the rest of the security deposit, 1st month's rent and fees at lease signing.
What does your process look like?
Quote from @Colleen F.:
@Winter Heintz if you are in a rural or semi rural area you may be talking to everyone looking for your type of unit and if you are basically the least expensive of that size unit you will get people on the edge. Aside from the open house consolidated showings and other suggestions I have found a nice video tour also limits who comes in person to those who find the unit meets their needs to begin with. I send the video tour before showing not in place of it. Prescreen before open house type showing too.
I do have a video tour but I haven't been sending it out with the prescreen. That's a good idea !
@Winter Heintz. Not only in rental process. I had someone on Friday not show up for a closing! By buyer signed, money was wired title and they don’t show up, then want earnest money back. Commitment is waning throughout society
Quote from @Winter Heintz:
You can't force them to do anything.
When an application is approved, I give them very clear, written instructions on how to pay the deposit and secure the rental. If they don't pay within 24 hours, the property is offered to the next approved applicant or stays on the market. That's their choice. It's a frustrating process, but you can't force them to rent your place any more than a grocery store can force them to buy the loaf of bread in front instead of digging back three rows.
EDIT: I just saw that you take the deposit in pieces, which I think is bad practice. I take the full deposit within 24 hours of approval and send them a "Holding Agreement" that says I am accepting the payment, will hold the property until [DATE], and if they change their mind or fail to perform then the deposit is forfeited. I require payments in Money Order, cashiers check, or direct deposit so I don't have to wait for a check to clear. If people don't want to commit, neither should you.
Quote from @Nathan Gesner:
Quote from @Winter Heintz:
You can't force them to do anything.
When an application is approved, I give them very clear, written instructions on how to pay the deposit and secure the rental. If they don't pay within 24 hours, the property is offered to the next approved applicant or stays on the market. That's their choice. It's a frustrating process, but you can't force them to rent your place any more than a grocery store can force them to buy the loaf of bread in front instead of digging back three rows.
EDIT: I just saw that you take the deposit in pieces, which I think is bad practice. I take the full deposit within 24 hours of approval and send them a "Holding Agreement" that says I am accepting the payment, will hold the property until [DATE], and if they change their mind or fail to perform then the deposit is forfeited. I require payments in Money Order, cashiers check, or direct deposit so I don't have to wait for a check to clear. If people don't want to commit, neither should you.
Interesting. You make valid points. I think I will stick with the entire security deposit up front. I have been doing the 24 hour to pay the hold fee. If they pay it , awesome, I'll hold it for them. If not, I'll move on.
Thank you for your input. I think it is less confusing to just say "Pay security deposit up front as your hold fee. Pay the rest at lease signing."
Quote from @Winter Heintz:
Hello! I own a duplex, live in one side and rent out the other. I had the previous side rented WAY under value ($850 with utilities included) for the past 2 years. My previous tenants moved out and I currently have the property listed at $1,100/month utilities paid by the tenant (which is in-line with it's market value and worth). I have had so much interest in it it's hard to keep up. I have a thorough pre-screen process and ask questions prior to scheduling a tour. About 90% of the time after the showing the potential renters are interested and do the application and background check but when it comes time for the deposit to hold (I state the entire process and qualifications in the pre-screen and go over it with them in person so my expectations are clear), nobody follows through (non-refundable deposit to hold is half of security deposit at $550 and the rest of the security deposit ($550) is to be paid at lease signing). It is extremely frustrating and time consuming.
My question is: How do I ensure these potential renters will follow through? Is there a way I need to be more direct with them in the process? I feel like they are all duds and say they can pay everything on time but then they don't, obviously I don't want renters that don't pay on time anyways but it just wastes so much time and money. Everyday my unit is not rented out it's costing me. Give me your advice!
My process and was able to get great tenants in 1 week and above market rents, and they pay on time always.
step one of process , pre screening applications (eliminating unfit candidates)
step two of process, candidate selected pays for transunion history check, all persons that will be on lease as payees needs to do this. (if they end up signing lease down the line, I like to refund their transunion cost)
step three of process, once they are awarded the lease signing, they have exactly 3 Days to bring in deposit or they lose their spot, no grace period for this. (your goal is to acquire make it happen personalities)
(All these steps of the process I state them on all websites and all inquiries about the property, and during showings, etc to the applicants)
Best wishes, good luck.
The bottom line is you don't want to lease up someone whom is not completely thrilled about your place, but at the same time I have realized that if I don't do a certain amount of "selling/pitching" to applicants, I will never rent my place out.
I think a certain amount of "scarcity" will also tip people towards following through.
I always hold showings of pre-screened prospects in consecutive, 15 minute intervals. That way, they see the people leaving before them, and see people showing up as they leave. I hold showing "clumps" every few days, so I have that "critical mass" for efficiency, but also for the perceived competition. If the docket is light, I will also add folks who meet the minimum qualifications in between the stronger candidates to fill my dance card.
Right after the showings while the experience is still fresh, I sit down and fill out a T-chart for all the prospects I would consider. Afterwards, I have a pretty good idea whom is my "ideal" candidate, and I go after them. Every response in my marketing funnel is boiler plate, but I try to make every communication for the strong candidates personal.
I send every good candidate that did not apply at the showing this email:
It was very nice chatting with you and your husband Steve during the viewing this afternoon.
Please feel free to reach out if you have any questions about our application process or if I can be of further assistance to you in your search for housing.
Every good candidate that submitted some materials at the showing I send this:
It was very nice chatting with you and Molly during the viewing this afternoon. Your dog, Winston, sounds adorable.
In order for your application to be complete enough for consideration, I still need the following:
· Name, address, and phone number of current landlord
· Supervisor work email and work landline
· Previous employment, including supervisor name, work email, work landline, salary, and dates of employment
· Etc
Please feel free to reach out if you have any questions about our application process or if I can be of further assistance to you in your search for housing.
If a strong prospect has completed an application at the showing, I start doing some preliminary due diligence to find any major red flags (I don't get too deep as it turns out to be wasted time unless they put down their cash.). If I don't see anything, I reach out with this:
It was a pleasure meeting you this evening, and I again thank you for your interest. Your application appears to be complete and we are prepared to proceed with the process if you are interested.
The next step would be for you and I to cross paths in the next day or so to sign a binder agreement. This "contract to hold" gives you exclusive rights to enter into a rental agreement for the apartment for the next 5 days with your non-refundable binder payment equal to one month's rent ($xxx, including pet rent) as consideration, which I would collect at our meeting. At that time we would begin our business due diligence (background and reference checks). Please let me know your availability if your desire is to proceed.
As a matter of information, the binder payment must be in cash or a personal check from your own account that is drawn on a local bank. I’ll provide you with a receipt in either case. Third party checks are not accepted.
If you have any questions about the process, or if you would like to proceed with your application, please reach out. As a courtesy, I’ll wait approximately 24 hours before making this same offer to other qualified applicants.
Note how I create the "scarcity" with the last sentence, even though they might be the only candidate I would even consider.
I continue doing these showing batches until I have collected a deposit to hold. During due diligence, I continue to set up showings (for a date after the contract to hold expiration, in anticipation of a lease signing), and once the lease is signed, I cancel any pending showings.
Good luck!
I have been using Innago. In my opinion is everything you need in a free property management software.
@Quincy Lockett nailed it. An interested tenant knows within 5 minutes of walking in the door if they’re going to rent your place or not.
The problem you have is accepting less than the first month + security deposit to move forward with an application for move-in. Totally fine that you have 20 people apply for the place and go through screening, but if 5 of them come back as approved by your formal written standards, you should have it documented whether you are taking first person with a check in hand (parallel processing) or the type of system that @Nathan mentions (serial processing) where you give one applicant a specific time frame, and then move on to the next.
if you’re getting swarmed with interest, that also tells you one of two things:
1) your rent is too low for the market or
2) you’re not prescreening folks enough up front and wasting your time with window shoppers that are never going to move forward with their applications anyway
Consider switching to an open house where you generate demand by allowing folks to see how many other people are interested in the space. Alternatively, automate the entire process and get out of the game of meeting people at the property so you can turn over more people seeing the place in order to narrow down the 10 to 1 ratio you need to find your ideal tenant.
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@Winter Heintz NEVER represent a Holding Fee as a deposit! If you do this, it makes it refundable if applicant disappears.
Quote from @Drew Sygit:
@Winter Heintz NEVER represent a Holding Fee as a deposit! If you do this, it makes it refundable if applicant disappears.
It's a NONREFUNDABLE holding fee for 14 days that turns into a security deposit once all other move-in requirements are complete.
EVERYONE:
I had a showing on Friday that I thought went TERRIBLY. The people were so quiet, I had literally just pulled up after work and was not expecting them to be there 15 minutes early. Nonetheless, I introduced myself and gave them the tour. They did not say a word. Their kids were even silent. By the end I gave them my speel and asked if they had any questions to which they said "It's a nice place.". Then they lingered for a few minutes and left.
I went home, defeated, thinking I'm going to have to change something to actually get a bite. I went to Kansas City for the weekend and planned to post a free first month of rent when I got back. As I posted the update, I received an email from these quiet potential renters that asked for an application. They have signed the non-refundable holding fee agreement and are waiting on bank verification through turbo tenant to send the holding fee OR will drop off a money order tonight if it doesn't get verified by the end of the day.
What's more, their background and credit checks came back AMAZING. Their income is 4X the rent and they have excellent references.
I'm thoroughly surprised and impressed! Let's see if they actually pay it...
Hello Winter,
From what I have gathered you are looking to learn, I can share what I do as a property manager. First, is going with what others have explained and have a set showing time/ open house that works for your schedule and let them do a walk through. Also, something that you might be interested in as you grow your real estate experience would be completing your own screening process. This can include possible tenants to provide their information that a screening website would be looking for anyways.
Good luck!