The Rookie Landlording Mistake Most New Investors Make

by | BiggerPockets.com

So, you just bought a rental house or small multifamily property. Congratulations!

Now what?

Well, you need to probably fill that vacant unit with a nice family who is going to pay top dollar on time each month, never complain unnecessarily, and treat your property with respect.

So you place an ad on Craigslist, Zillow, or in the newspaper, or maybe you put up a sign in the yard. Quickly you begin receiving phone calls, and they typically look like this:

Landlord: Hello? 

Prospect: Hi, I’m calling about your property at 123 Main Street.

Landlord: Yes, it’s still available. 

Prospect: Great! Can I schedule a time to see it? 

Landlord: Sure thing. How does tomorrow at 6 p.m. work for you?

Prospect: That would be great. I’ll see you then! 

Landlord: Sounds good. Bye. 

Did you notice the rookie mistake in the conversation above? Here’s what it is:

They scheduled a time to show the property!

Wait, huh? I thought the goal was to rent the property out quickly.

It is, but here’s the problem: You’ll waste SO much time when you don’t prequalify the tenant.

rent-unit

Each showing takes, let’s say, one hour of your day, including travel and prep time. And most of them will never rent your property!

And don’t think I’m just picking on everyone else. I made this same rookie mistake for several years when I first got started. Maybe it’s because I don’t like sitting on the phone, or maybe it’s because I trust people too much. But the fact is, I wasted a lot of time that should have been spent finding more real estate deals or enjoying time with my family.

You see, for every ten appointments we made:

  • GraphFour would be “no-shows.” They wouldn’t call to cancel, they wouldn’t reschedule. They just would not show up. I would be sitting there, twiddling my thumbs, looking like an idiot for twenty minutes hoping they were just late.
  • Three would show up and clearly could never qualify. No job, terrible credit, seventeen people in the family for a 2-bedroom apartment, etc. I would have to explain to these people our requirements and try to make it clear that it wouldn’t work out.
  • Two will take an application and never return it, probably because they read all the information required and realize they will never qualify. Or perhaps they hated the neighborhood and just wanted to be polite.
  • One will show up, take an application, and return it with the appropriate application fee.

In other words, for every ten appointments I was setting, only 10% ever gave me a decent applicant. And even of those who applied, half the time they wouldn’t work out either. My funnel was broken.

Related: 10 Not-So-Obvious Ways to Thoroughly Screen Potential Tenants

Of course, your percentages might be slightly different, but the fact remains: Many, if not most, of the people whose calls you receive will never rent your property. So why waste all your time showing units to prospects who won’t work out?

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The Solution: Prescreening

Rather than setting up an appointment with each tenant, I would suggest asking a series of questions of the caller to get a better idea for whether or not they’ll qualify. These questions don’t need to be asked in a formal, serious manner but rather as part of the casual conversation.

When prescreening, I like to make sure I let the prospect know of my minimum qualifying standards. These standards include:

  • Income must be three times the monthly rent or greater
  • No prior evictions or felonies
  • Good references from previous landlords
  • 600+ credit score

I try to let the tenant know of these standards early in the conversation, as many tenants will simply hang up the phone (often mid-sentence) when the words “no prior evictions” or “good references” are spoken. Good! I just saved myself the trouble of showing a unit to someone who would never qualify!

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So rather than the conversation that you just read between the landlord and the prospect, here’s how our typical conversations go:

Landlord: Hello, thank you for calling Open Door Properties! How can I help you? 

Prospect: Yes, I’m calling about your property at 123 Main Street.

Landlord: Yes, it is still available. What can I tell you about the property? 

Prospect: Uh… I guess, how much is it? 

Landlord: The rent is normally $800 a month for that unit, but right now we’re having a move-in special, and it’s only $745 for those who sign a 12-month lease and meet our minimum qualifying standards. Do you have a moment so I can explain what those are? 

Prospect: Um… sure. 

Landlord: Well, we require that the tenant’s income be three times the monthly rent. We also do a background check to make sure there are no evictions or felonies on the tenant’s background and require that the tenant has a credit score of at least 600. Finally, we will call all previous landlords to make sure you have a great rental history. Does all that sound good to you?

CLICK. 

Dun… dun… dun… another one bites the dust! (And an hour of my time is now saved!)

Ninety percent of those who would just waste my time will take no more than a three-minute phone call. That’s what I call efficiency!

More Things to Discuss on the Phone

Of course, not all applicants hang up at this point.

For those who understand and agree that those qualifying standards will work, I will then go into more detail about the property itself. Of course, all the information is in the advertisement, but I will still explain the following points in detail:

  • The location, in detail
  • The total move-in amount needed
  • The number of bedrooms and bathrooms
  • The location of the property
  • The timeframe we are looking at to get it rented
  • Any quirky aspects about the property (no garage, very small rooms, etc.)

It’s important to cover these issues, as many tenants will decide that the property is not right based on this information, saving you both a lot of time.

For example, a few weeks ago we rented out a unit to some college-aged guys. Although we explained everything in detail to them about the property, when it came time to move in, the gentlemen showed up to the lease signing with no money. “We have to pay the rent AND the deposit? We thought that the deposit was optional?!” They left angry and never did move into the unit, and we lost hours of time with these jokers. Maybe we were not clear enough on this, or maybe they were just idiots. I don’t know. But this kind of thing happens a lot, and wasted time for my team is lost dollars from my bank account. 

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If They Still Want to See the Property

After all this is said and done and the tenant still wants to see the property, we are happy to show it to them! BUT… not yet.

Related: Landlords: Use These Tenant Deposit Policies & Reduce Lost Profit!

Typically, we ask the tenant to drive by the property first and check it out if they have not yet, knowing that people are particular about neighborhoods. If they want to get a personal tour, they can call back and set up an appointment.

After the tenant has driven by and STILL wants to see inside the house, then and only then will we schedule a showing. But after all this, we still encounter no-shows fairly often so we have begun doing group showings. Yes, that means we schedule multiple appointments at the same time (or within ten minutes of each other) to save time and increase both efficiency and competition among the applicants.

When my wife and I first became landlords, we spent hours and hours filling a vacant unit. Today, it can usually be done with just one single appointment and less than an hour of work.

Of course, at the end of the day, you’ll still encounter tenants who will waste your time. However, by following the tips in this post, you’ll save yourself hours of work with every vacancy you encounter, which means more money in your pocket and less stress in your life.

[Editor’s Note: We are republishing this article so those newer to BiggerPockets can benefit from it.]

Do you have a tip on saving time with vacant units? Or any questions on the above suggestion?

Please leave me a comment below and let’s talk!

About Author

Brandon Turner

Brandon Turner (G+ | Twitter) spends a lot of time on BiggerPockets.com. Like... seriously... a lot. Oh, and he is also an active real estate investor, entrepreneur, traveler, third-person speaker, husband, and author of "The Book on Investing in Real Estate with No (and Low) Money Down", and "The Book on Rental Property Investing" which you should probably read if you want to do more deals.

111 Comments

  1. Hi Brandon, Good points. I actually put all the qualifications in my advertisement (Craigslist or MLS), and say: “Please do not waste my time or yours by calling if you do not meet the minimum requirements.” It may sound harsh, but it cut the number of phone calls I receive by about 75%. I also (now) never put a “For Rent” sign in the yard… that is an invitation for numerous time wasting phone calls. I want calls from qualified applicants, and I never found one based on a yard sign (although I only tried that experiment once).

    • Brandon Turner

      Hah Steve, we actually do pretty much the same lol! Maybe not quite as blunt, but yeah – we state the standards very clearly in the ad and then say something like ‘If you don’t meet all of these qualifications, you will not be accepted.” Helps cut down the calls some 🙂

      • Kathryn Gingras

        I find the compete opposite… I have been complimented on my ads, the information I put in, the features of the home I include, and the way the ad is written. I draw folks in with my descriptions, however I do not add a phone number on my online ads, instead I respond to email inquiries with around 9 questions that I use to pre-screen… many do not write back, those are the ones I do not want to rent to… some write back and answer some of the questions, I do not bother responding to them… and a select few actually answer all the questions, and if the answers are to my liking, THEN I show the property. I am new to all this, just closed my second property and both were rented within a week of the ad going online. I showed the first property to 3 families before finding THE family, and the second place I showed to two.

        • Kathryn Gingras

          Hi, These are the questions I send out. They seem to really weed out those who I would prefer not to rent to. We are purchasing single homes rather than multi families and are just starting out. So far, and I know we are new to the business, but we have inserted two lovely families who were looking for long term rentals.

          1- Why are you moving

          2- When do you plan on moving in?

          3- Where do you work? What is your monthly income?

          4- Will you have 1st and last months rent upon move in?

          5- How many people will be living with you? Ages of Children?

          6- Can you provide references from your employer and landlords?

          7- Will you sign and consent to a credit and background check?

          8- Have you ever been evicted?

          9- How long have you lived in your present home?

          10- Do you have any pets? How many, what kind (including breed)?

          11- Do you have any questions?

        • Katie Rogers

          Those are reasonable questions, and none are invasive. I once had a landlord ask me for my mother’s maiden name. When I asked why she needed that, she said without it, my bank will not giver her any information. Obviously, her plan is to impersonate prospective tenants. She failed my landlord vetting.

  2. James Slaughter

    Great post Brandon. Being a new landlord I think I “knew” or would have guessed most of what you covered in your blog, but really enjoyed your breaking it down. My wife and I will defiantly be using this approach in the future Thanks!

  3. Curt Smith

    We LOVE LOVE LOVE applicant self elimination when I repeat the qualifications that I put in the ad. I get 80% of my responses over email or txt these days via craigslist and postlets.com.

    I only do rent to own, so I have to put alot of effort into pre-screening. I ask about their income, job (looking for job quality), savings, do they have a bank account (yes alot of my prospects don;t have a bank account which is a negative).

    Always a group showing 1pm Sunday. I love no shows too. I always have some fix up task to keep me busy at the house being shown so I’m ok with no shows. Yes I bite my nails as the end of the month nears. I do excellent marketing, if the renter isn’t out there, I force myself to be calm. All the better to have fix-it tasks to do if no one shows.

    Be sure to walk them out to their car and look in side. It HAS to be neat. Old, dented ok, but neat. Beer cans in the back seat,,, I hope you can imagine that will be your apartment in no time.

    A deceptively telling question is: “so tell me, why do you want to live here, in this place?” You want to hear: My dad lives 3 miles away, My kids middle school is a mile away, My job is a mile away. If your goal is long term renters, you need to be patient, say no a lot and wait for the “sticky” reasons why they want your place. Soft answers like: I like your place the best, your’s is cheapest, will change, probably before 12 months.

    I use a screening service that gives me their list of past rental addresses, a full credit report with on time 30-60-90 for each credit line, eviction notices. MrLandlord.com and ctcredit.net both give great reports for $25 after the al-a-cart choices and I charge $30 to the winning family. And typically do only one credit check of the folks that usually get the place.

  4. Amy A.

    Best Post Ever! I thought we only had this problem in Maine, it’s good to know it’s not just my market. The worst is when they know they don’t qualify but proceed to tell you their life story and think you’ll make an exception for them.
    One thing I often do is tell them I’m going to call before going to the property to confirm, and if they don’t answer that I won’t go. I should have made that arrangement today, but I thought she sounded great (works in health care) so simply agreed to meet her at the property. Sure enough, I was stood up again!

  5. Dawn Anastasi

    I routinely get no shows even though I go through the requirements. I also do open houses. The last time I had one scheduled, I had 8 people who said they were going to come. Not a single person showed up. So that was 100% of people who lied to me on the phone and I sat there for 45 minutes before heading home. This was an extreme case, usually only 50-75% of the people who say they will come do a no-show.

    Also one tip is to also mention any large negative about the property on the phone so you don’t get people to show up who really want a particular feature. For example, if the house doesn’t have a garage, state up front in the call that the house doesn’t have a garage. This way, if the person wants a garage, they know not to come out and look at a house they’ll never rent.

  6. Maggie Tasseron

    Good list, Brandon! Just wanted to add a little tip: Google Street View can be a big help if people want to get a feel for the area your property is in. I use it all the time when I’m checking out listings for possible purchase and it’s saved me a ton of time, especially when those listings are in a different town. Cheers!

  7. Jordan B.

    This stuff is golden to us new guys! How do you feel about “ghost credit”. Someone who has a good paying job, but has never taken a loan on anything or has had no credit cards. Not bad credit just no credit. They will not meet the requirement but probably would be able to pay easier than someone with other debts? Judgement call I suppose….

  8. Owen D.

    I also always ask what move-in date they are looking for and whether or not they have pets. The move date can save wasted time too, since you don’t want to waste time showing a vacant unit to someone who wants to move in 3 months.

  9. Mark Mahaffey

    Wow! I had to do a double take. I thought I was reading my own operating manual. I mean almost verbatim. I guess if you’ve been in the business long enough, you have a tendency to eventually stumble onto the best practices. Great post for newbies as well as a good affirmation for those of us who wonder how “everyone else” does it. Apparently, great minds do think alike. 🙂

  10. Chris T.

    Excellent Tips, thank you Brandon. My wife and I used to take it a step further and insist on visiting potential tenant’s current home to collect the deposit / sign the lease. So that we know how they take care of their home.

    But now we’re trying to get more rentals, we do not have the time to do that any more.

  11. John Lindemann

    Brandon,
    Great tips from your article and comments above. Thanks to you and everyone else for commenting.

    One suggestion…I require the deposit to be paid at the time of signing the contract. At that point it is a “holding fee” that is converted to the deposit when the pay their 1st month’s rent. You might consider doing that to avoid scenarios as noted above! That would really infuriate me.

    I’m all about getting the right renter and I’ve given up over a month in rent because I had a very qualified person want to rent from me but their lease wasn’t up yet. I was willing to give up the lost rent to get a good renter…but they paid me the deposit at contract signing!!

    • Katie Rogers

      My problem with the holding fee is some landlords do not actually hold the apartment. This happened to me once. I had already given notice, packed and hired movers when I learned the landlord had rented to someone else. Sure they returned my money, but now my family was homeless.

  12. JT Spangler

    It sucks when it’s time to buy, but one amazing benefit of owning in high demand areas is I can basically name my price for rents, and pre-screen via the neighborhood facebook page. So before I even have to share any property details, I know a good deal about who wants to know.

  13. sol bergren

    Loved this article Brandon, I feel like I was doing this to a certain degree but I really love the idea of clearly spelling it out, this will save me so much time, thx!

    p.s. I am not usually able to find tenants who make 3X rent or greater(I’ve reduced my requirements on that alot), I think I’ve maybe gotten a handful of applications that would meet that requirement. Maybe it’s a location specific U.S.A – Canada difference, or maybe I’m missing something, dunno!

  14. Boyd Haugrose

    I have to say that over the years that I rented out 1 house in a small town in MT, I probably would have eliminated a couple of bad tenants had I used these methods. However I was very fortunate having a prospective tenant contact me asking if I would consider a 5 year lease. I asked why they wanted that length of lease. The answer convinced me to allow them such & they became vey good tenants. At the end of the lease, they requested another 5 year lease, but due to circumstances at the time, I could not grant it. So in a couple of months they moved out & I sold the house.
    I will be using these ideas in the future. Thank you so much!

    • Christopher Moran

      Roberto, I love your video idea! Then I will embed the link to the video of the unit into my Craigslist ads. Thanks a lot for sharing this idea!

      And Brandon, I loved your ideas, too, but already use them.

      My favorite idea lately, is putting a Cozy.co link right in my Craigslist ads. If they drive by and are still interested, I have them fill out the application on Cozy first, to see if they are qualified, before ever having someone meet with them in person.

  15. Jiri Vetyska

    I also uses to deal with no-shows, but since the rental market has turned hot, I only do one or two hour open house. Very few phone calls or emails, and the best thing, people feel the competition and I get several serious applications resulting in a great tenant.

  16. Ellease mayo

    I screen tenants for my daughters. The first time I made individual appoints. That was crazy with the no shows. Being a real estate agent I decided to do open houses. Many potential tenant had not heard of that for renting. But Open house worked wonderfully. Now I have to get the pre screening down packed. Thanks I have the suggestions in my notebook.

  17. Lee Carrell

    I used to run hither-and-yon for tenant scheduling too! Now, I schedule showings on the days and time that I will already be at the property. That way it is never a wasted trip or gas, because I was going to be there anyway!

    I have a written checklist that I keep by the phone for pre-screening each caller. I always direct them to look at the pictures online and specifically identify the location, so if they have reservations about the location, it will come out then.

    I listen to sob stories too, sometimes people want to just get it off their chest, but I always go right back to the stated requirements for renting!

  18. Dan Mouton

    Most of my screening is done through email. Only my email address is published for the online ads, and from the inquiries I have time to get a look at their facebook, twitter, etc. Then I reply with the following questions:

    In the interest of saving time, please respond to the following questions in order to schedule a showing.
    Thank you for your understanding and cooperation.
    Where do you live now?
    Are you currently renting?
    Why are you moving?
    How many people will be living with you?
    What kind of reference will your current landlord give you?
    What kind of reference will your previous landlords give you?
    What kind of work do you do?
    What types of pets do you have?*
    How many people who will be living in this unit are smokers?*
    We run credit and criminal background checks on every lease applicant over the age of 18. Will there be any issues there?
    We require a lease application and a fee to cover the background and credit check for each tenant over 18. Is there any problem with that?
    When do you want to move in?
    Will you have the first month’s rent and security deposit ready if we sign a lease?
    Do you have any questions about the process or the rental unit?
    Do you have a problem with any of these requirements?

    The serious one will reply with the answers.

  19. Jean G.

    In addition to listing really strict requirements on Craigslist (I will even write exactly how much cash is required to move in, in case a tenant doesn’t know how to add first month of rent, last month of rent, and security deposit – I’ve seen it!), I will also ask each person that I agree to show the property to, for a cellphone number. Then I’ll call them before I head out to the property at the time of the appointment. If I can’t get a hold of them, I don’t go. This has virtually eliminated no shows.

  20. Katie Rogers

    Okay, what if you have an applicant with a great resume who just moved to town with a family. They just spent the last six years in a foreign country, and they need to find a home and look for a job. Maybe they actually came to take a job, but of course, have not yet received their first paycheck. They were aware of their challenges and have several months rent at the ready. Will you automatically dismiss them as unqualified? There are no references, no credit report, and no job. If they have to go to a hotel, they will quickly use up the money they have set aside for rent and deposit, and end up in really dire straits even though there is zero indication they would be anything but a great tenant. Landlords routinely put potentially great tenants into just this conundrum.

    • Jean G.

      I don’t know about people who spent 6 months overseas and are just coming back, but I’ve had great luck with immigrants who are arriving from overseas for the first time, with their family. If they have started a job (but no paycheck) and I can verify this with the employer, they’ll actually get plus points in my book over someone who already lives here, because one, I can help someone who may not otherwise be able to get a decent place, and two, I’ve always had great experiences with these types of tenants.

      • Katie Rogers

        My point is that so many comments on BP characterize the real life situations of good people (and BTW potentially great tenants) as “sob stories” thereby revealing a serious lack of respect and empathy for the people that enrich them. Of course, there are also many comments that come against such attitudes. From the tenant’s point of view, it is just as hard to find a good landlord, as landlords think it is to find a good tenant.

  21. Luka Milicevic

    This sounds all too familiar. I started with the rookie route and I made all of the above mistakes. On my first rental I was extremely excited when I scheduled 10 showings in one day! I thought I was on top of the world, only to be disappointed when 2 people actually showed up to the appointment.

    Now I do exactly like you said; I pre-screen.

    I have a form that I created online where prospective tenants have to answer a few questions before scheduling a showing. It’s not the official application but it helps to weed out the tire kickers.

    I still do the “for rent” sign in front of the property, but I request tenants text me their email addresses and I direct them to my online question form.

    Pre-screening saves so much time and effort. When I look back, I can’t believe I was naive to schedule showings for every phone call I received.

  22. Cameron Berens

    I always require that I send them a copy of our rental criteria along with an application for them to look over when scheduling an appointment. I’d say about 50% of them don’t end up going forward with a showing after that which saves me a lot of time showing to people who wouldn’t qualify anyways.
    Also, always confirm showings an hour or so before hand. After you spend enough evenings standing around waiting for no shows you figure this one out.
    After implementing these two steps as part of my process my vacancy rate stayed about the same (1%) but my man hours spent filing the vacancies dropped a lot.

  23. Troy Zsofka

    Couldn’t agree more with Brandon on this.
    While I space the showings 20 minutes apart so I can get a good read on each applicant, I schedule each showing (after a solid prequal over the phone of course) subject to a confirmation call or text. In other words, I say “okay, Tuesday at 6 sounds good. Let’s tentatively schedule that time, subject to you confirming our appointment on Tuesday afternoon”. I make it clear that I have upwards of an hour commute, so if they don’t call, text or email to confirm, I don’t make the trip.
    Before making this my policy, I had no-shows all the time (even on prequalified applicants). After I started doing this, I’ve only had one actual no-show (she confirmed via text an hour prior to the appointment, which had been scheduled 3 days earlier, and then still failed to show up or answer her phone. Figure that one out… I hope she’s okay)

  24. Katie Rogers

    When I was a tenant, I cannot speak for other tenants, but I was never “just looking.” If I looked at a place and did not fill out an application, it was because I rejected either the place or the landlord (or property manager showing the place).

  25. Tim Sabo

    Good advice! Here’s some more:

    We have recently employed Google Forms to do this work for us. Using Google Forms, I created a form I then send to prospects when they call in reference to our ads. Our form, what we call the Rental Questionnaire, asks a prospect everything we need to know BEFORE we set up an appointment (those who don’t qualify via the form don’t get appointments).

    These forms are easy to create and modify. They capture all the data in one place, so you don’t have to remember the questions, find a tablet, a pen, etc. while you’re in the middle of playing X Box with your son. And since Google Forms does all the work capturing, I can look at the answers anytime, from anywhere. (We also use Google Drive, which stores our data.)

    It seemed that prospects were always calling right around dinner time, or right in the middle of painting, or some inconvenient time, and then we couldn’t remember the questions, or something. Using our digital Rental Questionnaire, all I need to ask is the prospect’s email address, and I zip off the form.

    Using technology to create efficiency is nothing new; it may just be new to landlords. I am trying to use technology to assist me in doing the job with less effort and fewer mistakes.

    One more piece of advice: never post the address of your unit (or an outside picture of the property) on your website if you have any inkling of predators. There are some who wait to find an empty building: we’ve had this happen once. Never again.

    Use technology wisely, to your advantage.

  26. Tim Sabo

    When we do set an appointment with a prospect, we always require that they call us 30 minutes prior to confirm: if they can’t remember to do that, they won’t remember when to pay the rent.

    Fianlly, we also use a Google Phone number in our Craigslist ads: sometimes you get cranks, so we can weed those folks out. We have to push ‘1’ to accept or the call goes directly to Gmail.

  27. Meghan Macur

    Thanks for another great post, Brandon! We started out the year with our first multifamily purchase, and while tenants and their leases carried over from the previous owner, I’m nervous for the day I have to first screen and place tenants. Haha, I read everything you had on financing a property and bringing it to closing, and then I’m like, “Oh, landlording. I should probably read up more on landlording.” I ended up researching and putting together my own introductory packet from me to the tenants, but would still appreciate an article on how others make the transition smoothly when buying a new property and adopting the current tenants.

  28. Jim Costa

    “The rookie landlording mistakes” … when it comes to getting good tenants and renting your unit quickly, is more appropriate for the title. Brandon has some great ideas and their are more great suggestions in the comments. Here are a few more ideas that beginners should know. Look in your state for joining your landlord association. This is usually very inexpensive (ours is $50 a year!) and will provide you with many forms that are made for your state. They will provide you application forms that cover many of the questions that are above. Many provide discounted screening services.

    The number one must is, know your market! Spend time researching on craigslist and zillow. Both have map features that allow you to narrow down to your neighborhood. If you are asking top dollar can you justify. Do you have a garage, granite counters, newer appliances, flooring, larger units fenced back yards, location, updated windows, new cabinets. Now you certainly don’t need these to rent but if you are wanting top dollar it will keep your turnover lower. Now you can also get top dollar rent if you don’t have these things by being flexible on your criteria. It is a give and take. Maybe someone doesn’t have good credit because of medical or job layoff. I am more concerned about ability to pay rent moving forward. I certainly look at credit but that is only part of the story. Everyone has a story and it won’t take you long to differentiate between a story and an explanation. Don’t get caught up in the story but be open to an explanation.

    The biggest mistake newbies make is becoming desperate. When your place doesn’t rent after 2-3 weeks you start becoming desperate and begin to throw out your criteria all the way. Don’t fall into this trap. That’s why number one, know your market, is so important. I also like the open houses but the videos have worked better and a lot less time commitment.

    When you list on Zillow (which is free) they have a video walk through feature that is uploaded via their free app. I used this on my last vacancy and had my unit rented before the tenant even moved out. Most owners starting out choose to self mange. I still self manage with 10 properties and 18 units. I have had bad luck with property managers and can seem to get my properties rented much quicker. The 5-10% savings justifies my time. Yes you give up a few hours but I find that the hands on approach limits the future hours you need to spend at/on the unit.

    Another time saving feature I wish I would have implemented years ago is to set up an account for your rental. Pick a bank that is conveniently located for your rental (and you). Open an account and give the account number to the tenant to deposit directly. This has eliminated many delays, lost checks, excuses. This also opens you up to not have to be home the first week of the month to deposit your checks. I can log in and immediately see who has deposited checks. This takes a little training of your bank to record deposits correctly, specially when you have same rent amounts. You can set up multiple banks if need be. Also check with your bank to be sure they can accept a cash deposit from a nonlisted owner on the account. This eliminated a bank I wanted to use but is more convenient for the tenants that pay with cashiers checks and saves them money.

    Another thing I would recommend and will separate you from the novice and certainly make you feel more legit, is to build a website. This is a great learning experience and will only take about 2 hours to complete with the many templates that are now available. You are limited to what you can post on zillow, craigslist and other sites. If you build your own website your possibilities are endless. With companies like WIX and godaddy, this can be done for under $5 a month and you can expand as you need. List the features of your unit, talk about the neighborhood, list properties you are selling or interested in buying. Get creative!

    Just a side note. Top dollar is nice but with top dollar you will always be competing and tend to have higher turnover. The person willing to pay top dollar for a nicer place with excellent credit will eventually buy their own place move up and out of their job. One theory is to rent a little lower than market rents, this will give you more applicants and allow you to cherry pick the best. Tenants will tend to stay longer and ask for less things because they know they are getting a good deal on rent and don’t want their rent to go up. One month vacant and $3-500 turnover cost for carpet cleaning, paint and lock smith may be worth $100 below market rent.

    Happy Investing and Buy Right!

    • Tim Sabo

      @JimC40 is right on. I think he has been reading my mind, cause these ARE the things to do to get your business rolling…great article Jim! I mean, Brandon and Jim!

      The fact is, Brandon made great points, and Jim adds to it. There are a lot of professionals out there, and as Jim mentioned, joining a landlord organization will help you them some: join, listen, learn, and grow smart. From wisdom comes the riches of life. Brandon and Jim have helped us all today; build on what they gave us.

  29. Mike Simon

    Are your application fees non refundable or do you refund the application fee to those who don’t get the apartment? Do you run a credit/background check on each person over the age of 18 and take application fees for everyone?

  30. Rhonda Royer

    This article has some great info in it! Canadian here, but find much use in the info written by Brandon & his followers. I learned on my last vacancy that the people you think are the best, might be great people but don’t always follow through. I have taken a few more tidbits about interviewing & pre-screening from this article, & appreciate everyone’s personal input. I did an open house but still only 1 person showed, and ultimately this is the person I gained as my tenant, but at a reduced rent because I panicked. Turns out she is a great tenant, pays rent on time & cares for my rental property as her own, so I guess I traded off on that one. Next time I will have more patience 🙂 .
    In Ontario, we have to be very careful not to pre-screen anyone out with questions that could be considered a prejudice, like “Do you have any pets? Do you smoke? Have small children? Receive social assistance? etc…” I have learned to work around these but it’s definitely something you want to keep in mind when speaking to your tenants if it is the same in your area. Learn creative conversation. In our city there are “career tenants” that routinely sue uneducated landlords because they believe they were screened out of a property on the basis of a prejudice.
    I also wanted to mention that often times the 2% rule isn’t always realistic, so don’t let that number scare you away from becoming a landlord. Remember if they pay your mortgage/taxes/utilities & you have a little slush fund left, 2% or no 2% they are still increasing your bottom line.
    Thanks again everyone, from a cold, blustery pocket in Canada tonight!

  31. Jim Costa

    @mike Simon
    application fees are just that…application fees. They are non refundable. You should run a credit and background check. Usually runs $15-$35 This is usually less than the application fee but then you need to spend time calling references and verifying employment. The balance is compensation for your time. Do not use the application fee as an income source.

    Many times I will have the applicant fill out the application for review before I collect a fee. This can all be done electronically. If they take the time to fill out I will take the 2 minutes to look over and let them know if it looks like they are qualified. If it is someone that isn’t a risk you want to take on, than don’t take the fee, and tell them they don’t meet the requirements. If the application looks good, tell them so, but tell them you can’t fully process their application until the application fee is paid.

    Usually something like:

    Hi John Smith. I received your application and it looks like you would be a good fit. We can not fully process your application until we receive the application fee. We have sent several applications out and plan on the unit renting quickly. Would you like to deposit the application fee directly or would you like to meet.

    You can explain your process a little further. If you have multi unit property, I usually emphasize the background check to protect the other families in the unit. Also gives them peace of mind to know everyone else went through the process.

    My daughter just rented an apartment from a large complex “commercial” operation. It reminded me of how laxed I had become. (I had no openings and she didn’t want to rent from Dad)

    She is a recent college graduate with a good income.

    They asked for a $50 application fee (non refundable)

    a $250 pet fee (she has a cat) non refundable
    a $250 pet deposit (refundable)
    $15/month addition pet add on
    a Move-in fee of $300 (non refundable)
    First months rent
    $500 deposit (refundable)

    Once she was accepted she had to sign a lease without having seen the actual unit. They said they would let her inspect the unit once available and let her back out if she didn’t like it.

    We are in a high demand area and units are renting quickly.

    Nice thing about buying/putting offers on multiple pieces of property is that you get to inspect a lot of leases. Start reading through and adopting what you like.

    Be confident in what you ask for. It comes across the other end of line. We charge a $50 dollar application fee per adult. With that we run a credit and background check as well as check references and job status. If they have checked with large apartment complexes they are charging the same. We charge a move-in fee (what seems to now be the standard). We change the locks for every new tenant because we don’t know who has a key and it gives them comfort to know no one else will have a key. We now spend the extra money and put the smart key system in our units as tenants move out. A little more money upfront but to change keys is a $5 rekey you can do yourself instead of hiring a locksmith or changing out the locks.

    Check your state laws but if you have someone that is a higher risk you might be able to combat that with a cosigner or larger deposit to protect yourself.

  32. Olatunbosun Idowu

    Hello Guys,
    Let me quickly say a big thank you to BiggerPockets and its members for giving numerous real estate rookies and professional investors the road map to real estate investing success through various insightful articles, suggestion and support. I am a new member of BiggerPockets from Nigeria and I must say i have read some of your life changing articles but my greatest concerns are real estate investment financing in my country is the easiest way to debt trap in contrast to what is obtainable in the United State. Real estate investors in the United State enjoy many benefits such as low mortgage interest rate due to the several mortgage financing options. The Home Path Investment mortgage, Federal Housing Administration mortgage, Veteran Affairs Loan, USDA Rural development loan, 203K FHA, Home Equity Loan and line of credit, Individual Retirement Plan Account are all available to any prospective investor. An investor can even take out loan against his/her whole life insurance policy and also there are millions or thousands of hard money lenders willing and able to finance real estate investment. Real estate mortgage financing in the United State only requires downpayment between 3.5% to 25% with annual interest of 6% to 8%.
    But the same can’t be said about where i come from because our mortgage system is not structured in a way to allow investors enjoy the benefits that come with investing in real estate as we have seen abroad especially in the United State. Investors find it difficult investing in real estate in my country because of several challenges facing the real estate sector and the bureaucracy involved in processing and perfecting required documents from financing to completion down to the final sale of the property.
    The current mortgage interest rate in my country is between 18% to 24% across the financial Institution. We have very few mortgage financing programs, one I can remember is the National Housing Fund that provides mortgage facility of #15m ($47, 619) at 6% interest rate per annum which i know for sure is not functioning besides there are so many protocols you must follow to qualify for this mortgage facility. Our real estate sector in my own opinion needs some new and fresh ideas, concepts and input to take it from where it is now to a whole new level as we have in the United State.
    Finally i intend promoting these new innovations and initiatives in real estate investing, resource and property management in my country through my website that will be launched soon because i don’t have a domain name for now.

    Thanks
    Olatunbosun Idowu

  33. Olatunbosun Idowu

    Thanks Brandon for the article on how to save time and effort filling a vacant apartment. This is very useful for people in a country where you can easily have access to prospective tenants details online in contrast to we have in my country because prospective tenant screening and selection are done by either physically verifying the details provided by the tenant or trusting and relying on the information given by the tenant in good faith. The reason for this is that we don’t have a good record or data management system that enables you to quickly run a background check, credit score and previous rental history on a tenant, all of these are done by meeting with the people with all these information so that you can verify the tenant’s details and of course many tenants most time don’t want to pay for this verification of tenant details services. I consider unavailability of good record or data management and non payment of details verification service a challenge to realtors from my region.
    Thanks
    Olatunbosun Idowu

  34. WOW, many great comments to a stellar article. Not sure if this was covered in the comments but just last night, I had the current tenant show the unit to a well qualified person. I pre-screened on the phone and via email, narrowed down to one perspective tenant then asked the current tenant show the property. He was happy to help. Today it’s rented. While this doesn’t always work, it may be an option.

    • Tim Sabo

      NEVER allow a tenant to show your property! OMG, the potential liability issues alone frighten me! This is a BIG, BIG No-No! Never ask a tenant do your job! You are fortunate this worked once, but my advice is DO YOUR JOB, and save yourself a lot of future issues!

  35. Jose Carcamo

    I post a detailed ad of the property with pictures and the following qualifications:
    1) Be employed, paid military, retired with retirement income, or some form of verifiable, steady income. No SSI, welfare, section 8, etc.
    2) No recent collections
    3) No felonies
    4) You must have the first month’s rent and security deposit ($xxx total) in hand at the time of signing the lease
    5) No evictions
    6) $100 per pet deposit

    I can show you the property on Sundays at 1 pm. Please text. No phone calls.

    When a text inquiry comes in, I provide a brief description of the property and repeat the qualifications above. This saves me a lot of time on the phone with unqualified prospects. I will be adding Brandon’s technique of asking them to drive by before scheduling a showing.

  36. Jack B.

    Hahaha, I learned this the hard way and started just avoiding phone calls and sending out copy paste emails to tenants with the requirements when they email me, despite them being listed at the very beginning AND end of the listing. I noticed many people were too dumb to read to the bottom so I put it at the top as well. While it has drastically cut down on the waste of time showings, and I almost always try to do a group showing, I still get a lot of people who email me that they make good money ($1,200 a month) when the rent is $2,500, or with evictions, credit issues galore or ask what the deposit and move in requirements are. While it has cut down on the morons, I still have one special kind of tenant who shows up and has a civil judgement from a landlord from just the last week, several unpaid utility bills in the last year, and the credit score of a homeless ghost.

    I even had one short little guy show up with his mistress and his one year old complaining about how his wife kicked him out and his house is being foreclosed, etc. Then he balks at me when I tell him he doesn’t qualify. Ummm…I said this clearly in the advertisement AND the email I sent you. Not my fault you have the IQ of a chimp.

  37. Kevin Conroy

    I did flip one house but would like to buy some rentals. I was going to fix the last one and rent it but the bad eggs out there and the scary nightmare stories made me decide to sell! These tips have been very helpful and informative! There is no substitute for experience. Thanks guys! Does anyone know the best area in Cincinnati for both single home rentals and multifamily? Thanks again!

  38. Tyler Watts

    I remember my first rental. Spent 8 hrs there and had all these appointments lined up. Had 15 appointments and 3 showed up. I remember sitting on the floor just waiting. lol

    But it’s part of the process to learn. Lessons cost money, good ones cost more.
    At the end of the day I did find my tenant and he’s been there 4 years so it wasn’t a total bust.

    Good read!

    • Kathryn Gingras

      I feel your pain…. my first venture I planned for an open house, ON A THURSDAY AFTERNOON, 4 hours of me sitting (I brought a lawn chair) in the empty house, waiting, and waiting, and…… NO ONE showed up, how could they? They were HOPEFULLY all at work!! Haha
      After that I set up appointments, and “Call me an hour before the appointment to confirm that I will be there” (posture). Rented the house out in a week to a lovely couple who might never leave! (One can only hope). Thanks for posting, makes me feel less silly.

      • Tim Sabo

        Ouch! We tell prospective tenants to call-to confirm they’re coming-thirty minutes to the appointment. No Exceptions. I tell them if they don’t call me with the confirmation, don’t expect to see me there. Some folks are lazy, and others are forgetful, busy, or just plain stupid. Whatever the case may be, I believe it is imperative to find responsible tenants: if they can’t REMEMBER to call and confirm an appointment, more than likely they won’t be responsible enough to call when the rent is going to be late, or for any other matter where a responsible person would call. To me, this is just one of a series of tests-character tests-you use to test prospective tenants during the process. While everyone can goof up, too many failures of these little tests is probably indicative of future behavior.

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