Why am I getting low quality rental applicants?
Real Estate Agent · Salt Lake City, UT · Member since 2017 · 13 posts · 8 votes
You will get better and better at this over time Kenya! There are lots of tips on BP for the overall process. Here are some quick, general ideas.
Some good news:
1. The place shows well (I might take down a few photos and the cat tree but otherwise looks good).
2. Interest is high (so the ad and marketing is working)
3. Your application or process is screening out those that are not a good fit (actually good news, more than bad; bad news being they are getting through and becoming your problem tenants).
Some Ideas:
1. Check the "all in" costs of comps. The ad would seem to pre-screen tenants some financially with the terms: deposit (2.4K) and rent amount (1.5) or $3,900 to move in. Decent chunk of change for your target market I would guess. But I might double check if that is common for the move in cost for comps. It could be that the very best, most creditworthy tenants are getting the better deal or lower move in costs (savvy shoppers) and know the opportunity costs of money. Or you could add more specific screening criteria up front in your post if you want to narrow the funnel more (you do state credit and background check, so maybe they are not reading it all; so less could be more in the info on the listing, or position it higher/more prominent/ALL CAP CREDIT CHECK, etc).
2. Be realistic, but don't settle. Renters in general are financially fragile in America (see this study for example:
http://www.finra.org/newsroom/2014/finra-foundatio...).
So you want to be realistic, without settling. That is, get the best possible renter for your market and your property. But keep in mind those with ideal credit and work history may well own or be buying (like you!). Make sure your process and criteria can realistically and reliably produce people who pay the rent and respect the property. They need not be perfect.
3. Vacancy beats a deadbeat any day. I would keep marketing, maybe try a new channel or two with a different demographic, keep polishing the place up, and accepting applications until you get someone who meets your criteria. A strong tenant could be your next call.
4. Keep Improving the Process:
Best of luck
Compare other comparable rentals to your property in your area. Are they renting for $1/sq ft and similar build quality? If so, you're OK with the price.
I don't list a ton of rentals but I just had one in downtown Phoenix that I leased for an investor of mine and I have a list of about 50 people I talked to and there had to be 20-30 that never made it to my written list. Out of the whole list, I think about 10%-15% actually qualified. I had it rented twice but one found a cheaper place and one changed areas they wanted to live at the last minute. I forgot how flaky some renters can be. You haven't had it listed that long so it's just a matter of weeding through the applicants until you find one.
@Jeff Schneider @Marian Smith thanks to you both for your advice.
We were seeing rent prices right about $1/sq ft when we first listed but I just started looking around again this afternoon and it looks like there are a few competing properties that are listed a little lower. I may have to do a little more research. Does it make any sense that a higher price would result in lower quality applicants? The only logic I can subscribe to that idea is that financially responsible people shop prices better. Otherwise, I would expect lower rent to attract lower quality applicants.
It's been an eye opening experience so far to see how many under qualified applicants we have received. It sounds like I may need to be a little more patient. How long does it usually take you to fill a vacancy? I was hopeful that with winter ALMOST behind us the rental market would be picking up.
You usually get low quality applicants when the price is low not high. Chances are it is simply the market you are in.
If it is a SFH that may be the cause as often low quality tenants try to target mom and pop landlords thinking they can take advantage of them.
You will get better and better at this over time Kenya! There are lots of tips on BP for the overall process. Here are some quick, general ideas.
Some good news:
1. The place shows well (I might take down a few photos and the cat tree but otherwise looks good).
2. Interest is high (so the ad and marketing is working)
3. Your application or process is screening out those that are not a good fit (actually good news, more than bad; bad news being they are getting through and becoming your problem tenants).
Some Ideas:
1. Check the "all in" costs of comps. The ad would seem to pre-screen tenants some financially with the terms: deposit (2.4K) and rent amount (1.5) or $3,900 to move in. Decent chunk of change for your target market I would guess. But I might double check if that is common for the move in cost for comps. It could be that the very best, most creditworthy tenants are getting the better deal or lower move in costs (savvy shoppers) and know the opportunity costs of money. Or you could add more specific screening criteria up front in your post if you want to narrow the funnel more (you do state credit and background check, so maybe they are not reading it all; so less could be more in the info on the listing, or position it higher/more prominent/ALL CAP CREDIT CHECK, etc).
2. Be realistic, but don't settle. Renters in general are financially fragile in America (see this study for example:
http://www.finra.org/newsroom/2014/finra-foundatio...).
So you want to be realistic, without settling. That is, get the best possible renter for your market and your property. But keep in mind those with ideal credit and work history may well own or be buying (like you!). Make sure your process and criteria can realistically and reliably produce people who pay the rent and respect the property. They need not be perfect.
3. Vacancy beats a deadbeat any day. I would keep marketing, maybe try a new channel or two with a different demographic, keep polishing the place up, and accepting applications until you get someone who meets your criteria. A strong tenant could be your next call.
4. Keep Improving the Process:
Best of luck
Just went back and looked again. The K&L listing format did not make some key things jump out readily. I studied it more.
So I would probably post on another site, too. If it did not jump out to me, some other readers may be missing key points, too.
For example, the small dog/big dog I thought prohibited the big but actually allowed them both with a weird two category thing.
The yard (fenced!?) I would sell and picture more. That could be a good point.
The 4 bedroom seems a good family size selling point. Parking looks decent, too. Storage/garage might be interesting to show more.
The no smoking is there. They just may be missing it.
So on my second read, I think I would take my very best 3-5 things in really plaster them up front to jump out in your listings--so a busy mom or dad looking at a hundred rental on a Saturday morning can focus on the key differentiators:
) Affordable/Family friendly
) 4 BR with Garage
) Pets on Approval
) Fenced Yard
)Etc.
And we want them to picture their family there (not yours) so I might look at that. There were more photos than I thought.
Good luck
2 quick things you can do minimize low quality applicants from applying
1. Do you charge an application fee? Charge at least $25 if you want.
2. Do you have minimum qualification requirements that you pre-screen interested parties for before you schedule a showing? This is a huge time saver for a landlord.
The price for your rental seems right in line with what I've seen and what I have a SFH rented for. Your security deposit seems really high to me though. I would guess that is what is making you less competitive.
@Kenya Arnett Jumping out - security deposit is high. That'll require almost 3 months rent upon lease signing.
Is thatwebsite the best way to rent your property? Lately, I've had terrible luck with craigslist and a great response with hotpads. Before that, CL worked wonders for me. You've got to figure out which form of advertising targets your desired tenants best.
Also, consider your demographic. As I tell my clients, 3x income/rent ratio is reasonable for certain classes. But in certain areas working class folks dedicate a larger portion of their budget to their housing expense. Could it be that your requirements essentially exclude most people who would be interested in living where your property is located?
While I agree with others that being vacant is better than having a squatter tenant, I disagree that being vacant is better than flexing your requirements. If your unit is vacant @ $1500/mo, you'll have burned through the difference of lowering the rent to $1400 and renting immediately in just 30 days. Or, with that 30 days vacancy loss you could have hired an agent to rent it (assuming the commission is the 1st month's rent). Would lowering your rent slightly get you a better selection of applicants like you desire?
If the rent is market for the area, fine. If anything, having rent below-market can attract unqualified applicants. I think you've implemented many good strategies for getting qualified applicants, but if the following are allowed in Utah, I would...
1. Add a nominal application fee.
2. If allowed, I would also state your credit and income requirements up front.
3. State your rental history and bankruptcy requirements.
3. Include your security and pet deposit, as well as your rental history and bankruptcy requirements in the description, because many people don't read past the first paragraph or so on an online listing.
None of this will scare off qualified applicants, but those that don't meet your qualifications will move on.
Craigslist is brutal. That is asking for bad tenants. We are a management firm and have totally given up on Craigslist. Now we use Zillow, Trulia, the MLS, rent.com, etc. We type in the listing what the financial requirements are. We want to weed out any problems before they even think to respond.
@Kenya Arnett I thought id offer my feedback from the point of view of a well qualified renter (at least I hope I'm a well qualified renter) currently looking for a rental property in Davis County Utah. I consider our family of 7 ( wife 3 young children and 2 golden retrievers) well qualified renters because my wife is a high income earner and we have high credit scores. I have looked at more rental property listings in the last couple months than I can count. I can tell you from my own experience that I am looking for a property that is professionally managed and if I came across your property and an identical property that was professionally managed and charging $100 more a month for rent id choose the professionally managed one. I believe most well qualified renters probably would as well because of all the conveniences that are offered. The prescreening process is more streamlined, most pm companies now have a link to let the tenant pay online, and i believe that if there were any maintenance issues I would be able to contact the pm company easier and the issue would be resolved sooner in most cases. Plus going through a property management company I could look at more homes in less time than contacting individual landlords to look at different properties. The only thing I would say about your listing is I found the pet deposit is right inline with what ive been seeing but your pet rent per month should be more in the $100 per pet per month range that's what ive been seeing as a set rate in everything I looked at and I would charge a 25-35 dollar application fee as that is also a standard thing ive been seeing. also you have listed 1500 as the deposit with 1400 dollars being refundable. I would change that to just a set 1500 refundable deposit with a 350 dollar non refundable pet deposit to clear it up a little bit. just my 2 cents. good luck
A few suggestions.
Are you marketing a property in February for an April 1 move in date? That is a lot of lead time. Everyone locally knows KSL, but it is unknown to out of area folks. When we have 6 weeks to rent a place, Craigslist can be effective because you may get hits from people moving to the area. Although many people need to give 30 day notice, a remarkably high percentage of rentals fill with a lot less lead time.
I agree with @Todd Summers about charging for screening. Use a service like SmartMove and make tenants pay for it. Tell them that you do income, credit and criminal background checks when scheduling showings. You don't need to show your home to tenants who know they won't qualify.
I don't see any reason why this house won't rent. My thought is that you're not pre-screening your showings enough so you're talking to everyone in the county who needs a place to live. And this is giving you a sense that no one is qualified. Remember you only need one qualified tenant and you have a whole month. Don't worry.
You could add to your listing income and credit requirements. and list maximum number of occupants for this house, so your hitting the renter pool you want closer.
You could do a move in special 1 month free with 13 month lease or 1/2 month free..
One thing that I noticed is that it's not available until 4/1. From my experience, most people are not looking for a place to move into in 4-6 weeks, they're looking to move in a couple of weeks or less so be glad you have plenty of time to find your perfect tenant.
I would echo the advice already stated that you should definitely have an application fee of $25-$30 per adult and let your potential applicants know up front and stated clearly what the requirements are before they even come look at it to save yourself and them a lot of wasted time.
There are a lot of low quality tenants out there and they have a hard time finding a place to live so it's not unusual to get a lot of low quality inquiries. Just weed them out as efficiently as possible and stick to your rental requirements. With a whole month to find someone and the strong rental market that we're in you should be just fine.
If a couple more weeks go by and you're still getting the same results then maybe relist it at a little lower price. I don't mind being slightly under market value if it means I can set my requirements high and still attract a higher quality tenant.
Is this the only site you are using to advertise the property? If so I would put it up on as many other sites as possible including zillow and craigslist.
Pre screen the folks that are calling and add a application fee.
The other thing to remember is there is absolutely a population of prospective tenants that may have some credit dings or otherwise on paper cant call themselves a high quality tenants. However that does not make them bad tenants either. Sometimes is just a gut feeling after all the due diligence on your part is done. I would install 5 non-negotiable standards for example 1. no smoking 2. no evictions 3. monthly income is __ of monthly rent. 4. what ever and 5. so on... You need these to show that you don't discriminate should it ever come to it but at the end of the day you just have to make a judgment call with the information you have gathered.
@Kenya Arnett Here in Utah, KSL is likely the only one you really need, the others tend to pull in calls from scam locations in Africa. One thing I am noticing is that you said your tenants need 3X rent. That is more strict than both the FHA and conventional requirements to buy a house. A good tenant by those standards isn't going to rent from you, they will buy their own home. The deposit seems a bit high too.
If it was me, I would be very firm about the no smoking, and the unreliable rental history, and illegal immigrants but be a little more lenient on the bankruptcy and drop it to 2X income. Here in Utah you are often looking at people with 4 small kids so mom doesn't work. That makes it tough to earn over $4500 a month on just one income. But they never go out so costs are low and they make it work. Listen to the bankruptcy stories. Most of these people are good people who finaly broke. And keep in mind, if they have already filed bankruptcy, they can't do it again for 7 years and they just lowered their expenses to be able to afford your rent if they learned their lesson.
@Kenya Arnett Hey welcome to bigger pockets. Your getting some great advice. I pulled up your rent amount on rentometer and your about $50 higher than your market I find a $1495 looks a lot better to renters. Also most "good" renters move in the spring and summer so this time of year are the renters who need a little help and have some form of a back story. With my rental in West Jordan I found a group on facebook called for rent by owner got me the most traffic. I didn't have to sift through a lot of applicants to get ones I would accept. My biggest advice is to not feel rushed to pick a tenant. It's better to have a month vacant than have a tenant who you have to evict and lose a few months in eviction time. On you add title I would say pet friendly those with pets have a hard time finding a place.
Photos, Photos, Photos... If I was looking for a rental, I would skip this based on the photos. Look from a renters point of view... Why not a full pic of the shower (just the top half), why a pic of ceiling? Why not more "room" shots. Is the landlord hiding something?
I know this is tough when you are occupying the home, but take some time to "declutter" (note, your home seems far from cluttered... from a marketing standpoint, declutter means "remove personal items like family photos and cat tree") and try to take photos of the home as if you were selling it (full rooms, yard, patio, garden, etc).
The home is beautiful but you need to show it off! Ask a friend or two "What do you love most about my house" and make sure to photograph that and feature it!
Finally, look for more websites to add your rental to (zillow, hotpads, etc). I also love the idea that @Becca Summers suggestions about the price.
You got this!!!!
I was skimming through and seeing a lot of solid advice above.
As someone who is still fairly fresh to rentals, going into my 2nd year and 2nd 4-unit, I'm happy to share something that has worked REALLY well for me, in weeding out a large amount of low-quality renters.
I started out by just posting a listing and doing showings and apps as the calls/emails came in... and like the trouble you're having... you can often get a lot of under-qualified applicants coming though.
Something I stumbled into, and others do some variation of this, it's not reinventing the wheel or anything... but for me, it's helped A LOT.
When I make the post/listing now, I will usually now add somewhere that the space is available on "x date" for showing (and make that date 3-4 etc days out). As you start getting you inquiries, by phone, text, email etc, let them know, in case they missed, that the unit isn't ready for showing yet, it will be available "x date" for showing, and right now you are in the process of collecting applications. Get their e-mail address, so you can send one over.
Then email them an application. I use a basic app from Zillow... It's ready to go, and has the main important info. When I send the app via email, I generally have some basic message with it, usually mentioning the fact that you are gathering applications, the ready-to-show date again, that there is no fee due at this time, but after viewing, before moving forward, there would be a basic background/eviction/credit check, which runs $25. Then I usually end it with feel free to contact me with any questions about the space or the application etc...
Even though you're not charging that $25 right then, it tends to weed out A LOT of under-qualified applicants, just because you're making them aware that the background/eviction/credit check is a part of the process.
Now, I'll admit, not everyone will fill out and return the app... but the one's that do... give them the first viewings, if they meet your criteria... you know they're serious. If you don't get a tenant from the people that turned in apps, or sometimes I'll do this right away, but set their showings starting a day after those who did... I send out a mass email to everyone else that has contacted me, letting them that the space is ready to view, and to contact me, if they are still interested...
The cool thing is, for the most part, the one's who are under-qualified still won't jump in, because you've already mentioned that background/eviction/screening check... But, with the others, that maybe just didn't fill out an app because they were uncomfortable/afraid to put their social security number out there or whatever, you've just created a huge "sense of urgency", because they just saw in your email a list of 15 or however many people also included.
You generally get a 2nd wind of apps, and more people (even if they haven't sent an app) wanting to schedule to view it, who are now also worried about those other 15 people getting to it first...
I've had MUCH better success finding tenants, as I've been going about it this way. It helps to pre-screen the bad eggs as well as creating that sense of urgency among the good eggs.
Like I said, nothing I mentioned above is by any means reinventing the wheel... Just coming up with a process that works for you, and makes life easier, through some combination of everyone above's points.
Weeeellll... I didn't intend to write such a novel... But, it was my first response on a BP forum, and for whatever reason, I guess I was a little excited to jump in, lol!
Good luck!
Wow! You guys are awesome! What a great first time experience with posting on BP. Thank you all for taking the time to offer your thoughts, suggestions, and encouragement.
I did lower the deposit amount as suggested from $2500 to $1500. I was originally thinking that $1500 of that deposit would potentially be applied to the last months rent. I saw this strategy on a rental lease agreement that a real estate attorney friend gave to me but I wonder if that's an outdated practice? (She used that lease for her own rental in like 2003.)
@Michael Boyer Thanks for the thorough analysis and ideas. That FINRA article was very interesting and offers an important perspective that I will keep in mind.
@Becca Summers It's nice to run into you here on BP! :) Thanks for the advice.
I really appreciate everyone's suggestions. I can see a lot of areas where I can improve now and now have a few things I need to look into and consider. This sure has been a good learning experience so far. I think in the future (when I have more properties), I'll consider a PM company, but for now, I'm really enjoying the experience and education I'm gaining from trying to manage it myself.
@Account Closed what questions do you ask with the Zillow app?
@Kimberly H. The Zillow app has the core basics: Personal info, rental history, employment history, credit history, references, "have you evers"(been late on rent, evicted, filed bankruptcy, etc) Do you smoke? Do you have pets? List type/breed. Why are you moving from your current address, and so on.
3 things that I ask that aren't in Zillow's app, that I include in the email message that I send along with the app is:
Desired move in date?
Any roommates or significant others?
Is there any other verifiable income that you include, not already listed in your employment history.
I've noticed several apps that already include those 3 questions. I love Zillow's app for the convenience of being easy to send/fill out/send back, and it's a name everyone knows... But those are just 3 things they didn't happen to include, that I like to know, going in.
Especially desired move-in date... It's tedious enough screening tenants... It's awful to get past the initial stages, get through the showing, they're interested, you're feeling solid about them as tenants, you're getting ready to get everything together for the background/eviction/credit check... and right at the very end, they say "Yeah, I looove it!.... Are you able to hold it until (3 months away)??"
So, it's always good to just go ahead and get that out of the way early, lol.