1st rental property gets 10 interested on Craigslist. Now what?
Dallas, TX · Member since 2014 · 517 posts · 106 votes
I placed my first rental property on Craigslist 3 days ago and 10 responded so far and are interested. Here is my plan, followed by a few questions, what do you advise?
Here are some of the questions I have:
Q1: During my telephone screening today, one guy said that they recently filed for bankruptcy. but his wife is a Registered Nurse and they have no children, no animals, and are not smokers. They earn about 7X's the monthy rent. Do you all consider tenants with bankruptcy or should I totally avoid them?
Q2: What if I have several families 3 or 4 who complete applications, do I need to collect an application fee and run background checks on all? Do people get upset if they pay application fee but are not selected?
Q2: Is my application fee of $50 per adult in the family a reasonable fee?
Thank you all for your insight...
In my experience when filling rentals you need to capitalize on qualified tenants interest as soon as possible. Why? Because they have other options.
Have your screening processes in place so that your turn around time from inquiry to appointment can be sooner rather than later. Remember that people are often not just calling you to rent an apartment, they are probably calling on other places too. You have to act fast when you have the opportunity to reel in a rockstar tenant.
I placed my first rental property on Craigslist 3 days ago and 10 responded so far and are interested. Here is my plan, followed by a few questions, what do you advise?
Here are some of the questions I have:
Q1: During my telephone screening today, one guy said that they recently filed for bankruptcy. but his wife is a Registered Nurse and they have no children, no animals, and are not smokers. They earn about 7X's the monthy rent. Do you all consider tenants with bankruptcy or should I totally avoid them?
Q2: What if I have several families 3 or 4 who complete applications, do I need to collect an application fee and run background checks on all? Do people get upset if they pay application fee but are not selected?
Q2: Is my application fee of $50 per adult in the family a reasonable fee?
Thank you all for your insight...
Q1 - Why do people rent and not buy? Remember that you're not selling a house, just renting it. Personally I'd concentrate on monthly rent multiple, and it doesn't get better than 7x.
Q2 - You could collect multiple application fees and process the whole lot, and then run a beauty contest. But personally, this is a low thing to do. We run 1 application at a time, and the first one that qualifies gets the offer of a lease, the rest get refunded or checks sent back.
Q3 - Sounds fine.
To be honest though - showing the property multiple times is part of the business. I prefer to show ours individually, than spend my Saturday sitting around wondering if people will turn up.
Great questions you asked. Now I know what to do. Thanks =)
Q1: During my telephone screening today, one guy said that they recently filed for bankruptcy. but his wife is a Registered Nurse and they have no children, no animals, and are not smokers. They earn about 7X's the monthy rent. Do you all consider tenants with bankruptcy or should I totally avoid them?
A1: No ~ A bankruptcy does not entirely rule them out. Depends on what it was for, whether it was discharged or not, and how long ago it was. Obviously, if the applicant is in the midst of one, and it has yet to be discharged, that would rule them out.
Q2: What if I have several families 3 or 4 who complete applications, do I need to collect an application fee and run background checks on all? Do people get upset if they pay application fee but are not selected?
A2: I run 1 application at a time. No 2 applicants are alike ... While I don't follow the "first come first serve" rule of thumb, it plays a small part. There will always be a standout or two application. I start there before I process the rest.
Q2: Is my application fee of $50 per adult in the family a reasonable fee?
A1: Depends on the area of the country? It sounds relatively high for my area, but it my be just right for where you are. My application fee is 100% a passthrough expense. I don't make anything on this fee, and it goes direct to the agency I use for credit/background checks. For the record, I charge a $30 application fee PER adult :)
Congratulations on your initial success with attracting potential tenants. I would just say to remain disciplined in your assessment.
If your experience with Craigslist winds up being like mine in the past, of the 10 inquiries you had, maybe 5 will make it to your open house, two of those will almost immediately not meet your 'sniff test' based on general conversation, only 2 out of the remaining 3 will fill out the application and pay the application fee, and maybe 1 (or 2 if you are lucky) will meet your criteria (with occasional blemishes in the credit history / background check).
Good luck!
Here are some of the questions I have:
Q1: During my telephone screening today, one guy said that they recently filed for bankruptcy. but his wife is a Registered Nurse and they have no children, no animals, and are not smokers. They earn about 7X's the monthy rent. Do you all consider tenants with bankruptcy or should I totally avoid them?
Q2: What if I have several families 3 or 4 who complete applications, do I need to collect an application fee and run background checks on all? Do people get upset if they pay application fee but are not selected?
Q2: Is my application fee of $50 per adult in the family a reasonable fee?
Thank you all for your insight...
Q1 - Why do people rent and not buy? Remember that you're not selling a house, just renting it. Personally I'd concentrate on monthly rent multiple, and it doesn't get better than 7x.
Q2 - You could collect multiple application fees and process the whole lot, and then run a beauty contest. But personally, this is a low thing to do. We run 1 application at a time, and the first one that qualifies gets the offer of a lease, the rest get refunded or checks sent back.
Q3 - Sounds fine.
To be honest though - showing the property multiple times is part of the business. I prefer to show ours individually, than spend my Saturday sitting around wondering if people will turn up.
Thank you for sharing your view on bankruptcy, application fees and the open house. I feel relieved that I dont need to run all of the applications and fees can be refunded. Open house is scheduled for 4 hours only, so hopefully it won't take entire day. I could call and ask exactly what time each is planning to attend to allot for separate showings. I willlet you know how it goes.
Q1: During my telephone screening today, one guy said that they recently filed for bankruptcy. but his wife is a Registered Nurse and they have no children, no animals, and are not smokers. They earn about 7X's the monthy rent. Do you all consider tenants with bankruptcy or should I totally avoid them?
A1: No ~ A bankruptcy does not entirely rule them out. Depends on what it was for, whether it was discharged or not, and how long ago it was. Obviously, if the applicant is in the midst of one, and it has yet to be discharged, that would rule them out.
Q2: What if I have several families 3 or 4 who complete applications, do I need to collect an application fee and run background checks on all? Do people get upset if they pay application fee but are not selected?
A2: I run 1 application at a time. No 2 applicants are alike ... While I don't follow the "first come first serve" rule of thumb, it plays a small part. There will always be a standout or two application. I start there before I process the rest.
Q2: Is my application fee of $50 per adult in the family a reasonable fee?
A1: Depends on the area of the country? It sounds relatively high for my area, but it my be just right for where you are. My application fee is 100% a passthrough expense. I don't make anything on this fee, and it goes direct to the agency I use for credit/background checks. For the record, I charge a $30 application fee PER adult :)
Thank you Steve for responding to my questions especially the response to bankruptcy. The guy said that they "just recently" finished going through and now have consolidated into one payment. Do I need any type of documentation of this or will this type of info appear on his credit report?
Congratulations on your initial success with attracting potential tenants. I would just say to remain disciplined in your assessment.
If your experience with Craigslist winds up being like mine in the past, of the 10 inquiries you had, maybe 5 will make it to your open house, two of those will almost immediately not meet your 'sniff test' based on general conversation, only 2 out of the remaining 3 will fill out the application and pay the application fee, and maybe 1 (or 2 if you are lucky) will meet your criteria (with occasional blemishes in the credit history / background check).
Good luck!
Thank you Matthew, it seems things are shaping up just as you predicted. I will keep you all informed of the outcome.
Congratulations on having such a desirable rental property! You are renting it out at best time of the year, at least in our area.
On rental app. fees, we charge $25 per adult, but higher might be more in tune with your area.
Wishing you much success.
Rhondalette,
First of all congrats on your first rental, life for you is about to get very interesting :) -- now on to your questions.
Q1: Steve M. hit the nail on the head - the reason a person files for bankruptcy is important and will give you an important piece of the puzzle in regards to evaluating them as a potential tenant. I have had success renting to tenant that had a bankruptcy - and from what you've said about your tenant, it sounds like a similar situation (they made more than enough to cover my rent, but apparently way less than they needed to avoid filing for bankruptcy). At the end of the day, landlording is all about risk mitigation, so do your due diligence. Run those background checks, to make this determination easier. Not only will you get an idea of whether not the person is honest (i.e. does the report you pulled reflect what they told you during pre-screening?), you will also be able to get a better sense of their financial history (i.e. do they have a history of paying their bills on time, do they have a steady job, etc).
Q2: You need to do an application and run background checks on anyone applying to become a tenant. This really could be the difference in you having a great tenant, and a tenant from hell. To avoid people getting upset about "loosing" out on the application, just be honest with everyone about your process. The way I do it is:
Q3: A $50 application is more than reasonable. I actually charge $45 per adult that will be moving into the property. Some people may think that $50 is high (because of your area maybe?), but you have to remember - you are weeding out tons of undesirables by having an application fee at all. PLUS your application fee should be covering the cost of your background checks. And if you are only charging $50, for a family with 2 adults, will that cover the cost of the fees? If yes, then you are good to go. If not, you may need to rethink that price and raise it, or charge it, per adult.
Hope this helps, and again, congrats on the new rental. I look forward to hearing more about your adventure!
In my experience when filling rentals you need to capitalize on qualified tenants interest as soon as possible. Why? Because they have other options.
Have your screening processes in place so that your turn around time from inquiry to appointment can be sooner rather than later. Remember that people are often not just calling you to rent an apartment, they are probably calling on other places too. You have to act fast when you have the opportunity to reel in a rockstar tenant.
I use https://biggerpockets.mysmartmove.com/ to screen my potential tenants. They can pay direct to transunion for the screening...i do not collect any additional funds.
Have you considered that perhaps your asking rent is too low? With that kind of response rate, it just may be.
You maybe right Mike. We are asking $1250 a month and it seems to be lower than others in a few mile radius. The closest rental is on the next street south of mine and they are asking $1295 but they also have 300 more in square footage. Would it be unethical to raise asking price once I have published it online at $1250 and have gotten 10 responses. Can I say we have raised the rental price after already telephone screening?
Rhondalette,
First of all congrats on your first rental, life for you is about to get very interesting :) -- now on to your questions.
Q1: Steve M. hit the nail on the head - the reason a person files for bankruptcy is important and will give you an important piece of the puzzle in regards to evaluating them as a potential tenant. I have had success renting to tenant that had a bankruptcy - and from what you've said about your tenant, it sounds like a similar situation (they made more than enough to cover my rent, but apparently way less than they needed to avoid filing for bankruptcy). At the end of the day, landlording is all about risk mitigation, so do your due diligence. Run those background checks, to make this determination easier. Not only will you get an idea of whether not the person is honest (i.e. does the report you pulled reflect what they told you during pre-screening?), you will also be able to get a better sense of their financial history (i.e. do they have a history of paying their bills on time, do they have a steady job, etc).
Q2: You need to do an application and run background checks on anyone applying to become a tenant. This really could be the difference in you having a great tenant, and a tenant from hell. To avoid people getting upset about "loosing" out on the application, just be honest with everyone about your process. The way I do it is:
Q3: A $50 application is more than reasonable. I actually charge $45 per adult that will be moving into the property. Some people may think that $50 is high (because of your area maybe?), but you have to remember - you are weeding out tons of undesirables by having an application fee at all. PLUS your application fee should be covering the cost of your background checks. And if you are only charging $50, for a family with 2 adults, will that cover the cost of the fees? If yes, then you are good to go. If not, you may need to rethink that price and raise it, or charge it, per adult.
Hope this helps, and again, congrats on the new rental. I look forward to hearing more about your adventure!
Wow, thank you for your response. I especially like your views on bankruptcy and feel a bit more comfortable about this prospective tenant. Someone also mentioned to me that after someone goes through bankruptcy they receive papers signed by a judge describing the outcome. They also advised that if the judgement has not been made it is more risky to rent to someone who is still in the process. Overall, life for me has already gotten interesting ;)
I use https://biggerpockets.mysmartmove.com/ to screen my potential tenants. They can pay direct to transunion for the screening...i do not collect any additional funds.
Thanks, I may follow in your footsteps.
Glad to hear your screening over the phone first! Don't drive all the way over there to meet someone, only to find out they smoke, or have pets and aren't really interested anyways. Also make sure you are adding lots of pictures to your ad so that they have a REALISTIC idea of what the property looks like. It can be annoying when you take time out of your day to meet someone and they don't even like the way it looks and aren't interested. I like to provide realistic pictures, not "photoshopped" ones that don't represent the property well. Take a video tour and upload to YouTube and include the link in the ad too, then when people call make sure they have seen the video before they want to see the house.
I rent to a lot of people with bankruptcies, it's not always a red flag. Look at the other criteria of the application and consider the whole picture.
I process applications in the order received, and accept the first qualified application. I only stop accepting applications once I get a deposit and signed lease. My application has a box they have to check that says "I understand that the application fee is non-refundable"
$50 is definitely on the high end if you are talking per adult. Most common I see is $25 - $35 per person.
Glad to hear your screening over the phone first! Don't drive all the way over there to meet someone, only to find out they smoke, or have pets and aren't really interested anyways. Also make sure you are adding lots of pictures to your ad so that they have a REALISTIC idea of what the property looks like. It can be annoying when you take time out of your day to meet someone and they don't even like the way it looks and aren't interested. I like to provide realistic pictures, not "photoshopped" ones that don't represent the property well. Take a video tour and upload to YouTube and include the link in the ad too, then when people call make sure they have seen the video before they want to see the house.
I rent to a lot of people with bankruptcies, it's not always a red flag. Look at the other criteria of the application and consider the whole picture.
I process applications in the order received, and accept the first qualified application. I only stop accepting applications once I get a deposit and signed lease. My application has a box they have to check that says "I understand that the application fee is non-refundable"
$50 is definitely on the high end if you are talking per adult. Most common I see is $25 - $35 per person.
Tyson, thanks for the tip on posting a ton of pictures so they can get a true sense of what the place looks like. I took photos with my phone and they are not photoshopped, actually the prospective tenants will probably be pleasantly surprised when they see the place that looks better than the pictures since I am not a good photographer ; ).
Everyone has said that I should not be afraid to rent to the bankruptcy couple so I am looking forward to meeting them on Saturday. I will also consider using tenant screening that BP suggests (mysmartmove) and looking at the fees and adjusting if $50 each is too much. Thank you so much for your suggestions. I will keep you all informed.
Have you considered that perhaps your asking rent is too low? With that kind of response rate, it just may be.
You maybe right Mike. We are asking $1250 a month and it seems to be lower than others in a few mile radius. The closest rental is on the next street south of mine and they are asking $1295 but they also have 300 more in square footage. Would it be unethical to raise asking price once I have published it online at $1250 and have gotten 10 responses. Can I say we have raised the rental price after already telephone screening?
I think it would be unethical to raise the rent outright. Also, for $50/mo., it's probably not worth the headache and possibly prolonged vacancy. If further research suggests that you can get another $100 or more, it might be worth turning down your ten interested parties (without breaking any discrimination laws) and re-listing.
Good luck!
Have you considered that perhaps your asking rent is too low? With that kind of response rate, it just may be.
You maybe right Mike. We are asking $1250 a month and it seems to be lower than others in a few mile radius. The closest rental is on the next street south of mine and they are asking $1295 but they also have 300 more in square footage. Would it be unethical to raise asking price once I have published it online at $1250 and have gotten 10 responses. Can I say we have raised the rental price after already telephone screening?
Go with your current potential applicants at the current rate - unless it is 10% or more below market. If you get multiple strong applicants at the same time, you might ask which one(s) would sign a 2 year lease(with a reasonable increase for the 2nd year) and process those first.
One thing you could do to emphasize your good price(if the market supports it) it raise the price slightly on your listing the minute the open house starts - open house ads should continue to mention the current rate. This way you are giving a "discount" to anyone who fills out an application at that point.
I just wanted to share my experience with you since this is all new to you. I've learned that when first listing a property for rent, 99.9% of the people that apply in that first "rush" end up being unacceptable applicants for multitudes of reasons.
I've heard the reasoning for this being that there are those tenants out there, with evictions and bankruptcies and bad credit and felonies and on and on and on, that are just waiting for a new property to pop up so that they have some prayer of convincing a newbie landlord (or any landlord) to take them in. They are hoping to find someone who won't do due diligence and check their background and verify their information. These people are out there just waiting to pounce on a property the minute it is listed. This happens to me EVERY time I list a property. And EVERY time I get all excited at the great response, then after due diligence I remember "this happens every time".
From one landlord to another, my best piece of advice is to weather the storm and wade through this first round very carefully, even if that means turning down every one of them and waiting for a real, qualified, interested applicant to come along. For me, that usually takes a couple of weeks and at least a round or two of showings, but it's been worth it in the long run to find great, respectful, qualified tenants.