The Top 10 Rental Features That Attract Cream of the Crop Tenants

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Let me share with you the cornerstone principle of long term real estate investing:

The success or failure of your real estate investments depends on your ability to consistently attract and retain great tenants.

In the end, it doesn’t matter how great of a deal you got on the property or how strong your projected cash flow and return on investment are. Without great tenants that pay rent on time and take care of your property, the equity, cash flow and returns all evaporate into thin air.

So the question that naturally follows is:

How do you find great tenants for your investment property?

The answer is so simple, yet so powerful.

The quality of the asset you buy determines the quality of the tenant you are likely to get.

Therefore, if you want to find excellent tenants for your investment property, you should first purchase an investment property with the qualities that attract excellent tenants.

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So a better question to ponder would be:

What do excellent tenants look for in an rental property?

To answer that question, I would like to provide you with the ultimate checklist for finding great investment properties, a lens you can use to filter properties, attract excellent tenants and make more money with your real estate investments. Fortunately, over the last decade, we have worked with hundreds of tenants on behalf of our clients. Many were “just ok” tenants, some were trouble — and some were excellent. Instead of guessing, we surveyed them and asked about what matters to them most.

The checklist you are receiving today contains the top 10 factors that excellent tenants look for in a great rental property in order of importance.

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The Top 10 Rental Features That Attract Cream of the Crop Tenants

School Quality

The quality of schools zoned to the property was the primary deciding factor for over 85% of great tenants we interviewed. Schools are extremely important to families and single parents with school-aged children, and those tenants use this factor as an acid test. To these prospective tenants, if schools aren’t good, it’s as if your rental property didn’t exist. Furthermore, school quality is the best predictor of neighborhood quality — something ALL great tenants seek (even those without children). Therefore, to ensure your success, only purchase properties zoned to high-performing, desirable schools.

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Safety

Safety is our most basic human need and a powerful motivator for excellent tenants. One of the main reasons why your prospective tenant decided to spend more to lease a home (as opposed to an apartment) is to provide a safe environment for themselves and their family. Therefore, research crime statistics and only purchase properties in safe neighborhoods.

Related: 6 Things Every Landlord Should Do to Win Over the Hearts of Tenants (A Renter’s Perspective!)

Move-In Ready Condition

The condition of the property — and more specifically the ability to move right in — is very important to excellent tenants. You can rent out a property that’s not quite move-in ready (requires paint, flooring, cleaning, etc.), but I assure you it won’t be to an excellent tenant. Your target tenant plans to take care of your property and has high standards of cleanliness and maintenance. If you provide a move-in ready home, you are communicating that you share those same standards.

Proximity to Employment

Let’s face it, no one likes to commute! So proximity to employment centers is very important to great tenants. You can have a great, move-in ready home zoned to great schools, but it won’t matter if your tenant has to drive an hour to work each day. As you look at potential properties, think about where your target tenants are likely to work and how close the property is to that area.

Upgrades

Most inexperienced investors subscribe to the myth that their investment properties just need to be “good enough for a rental.” Therefore, they purchase starter homes with cheap finishes and rent them to mediocre tenants for mediocre results. Don’t do that; instead, purchase homes that have strategic upgrades that move the needle with excellent tenants: hardwood flooring, granite counters, stainless appliances, covered patios, etc.

Appliances Included

At the very beginning, your tenant incurs a large expense when leasing your property. They have to pay a month’s rent for the security deposit plus the first month’s rent. If your property does not include a refrigerator and a washer/dryer, the tenant would then have to purchase those items, increasing their upfront cost. So remove the friction to make their decision easier by providing those appliances on the front end. Often your tenants won’t mind paying a little more for a property that includes all appliances.

Neighborhood Quality

Neighborhood quality determines lifestyle quality. Think about the community you live in — didn’t the neighborhood amenities play a major part in your decision to live there? Wouldn’t your lifestyle be different in a neighborhood with running and bike trails, lakes, community pools, tennis courts, a gym, etc.? Quality tenants care about neighborhood quality. A community doesn’t have to have ALL those amenities, but the more the better.

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Access to Transport & Basics

Access to modes of transportation and basic necessities like grocery stores, restaurants and shopping is very important because it affects other important factors such as commute to work and lifestyle quality. When you’re looking at investment properties think about: How easy is it to get to the main highway/park and ride/public transportation? Are there basic services within easy reach?

Related: 5 Tips to Protect Your Vacation Property Against Renter Wear & Tear

Age

Here’s one thing investors and their tenants have in common: They both don’t like hassle. The main factor that determines how much hassle either will experience is the age of the property. If you purchase older properties, they will have older systems (plumbing, electrical, HVAC) that break often, inconveniencing both you and your tenant. Purchase newer properties instead. A good rule of thumb is no older than 15 years, less than 10 if you can.

Rent and Price

Last but not least, your investment is ultimately a business decision for you as well as your prospective tenant. Your tenant will be concerned with the rent, and you will be concerned with the relationship between the rent and the price you pay for the property. Make sure the projected rent isn’t so high that it limits your tenant pool and so low that it lowers the quality.

Landlords: Which features do you make sure all your rentals include? Renters: Do you agree with the above list? What would you add?

Leave a comment below!

About Author

Erion Shehaj

Erion Shehaj is the founder of Investing Architect. I help successful professionals design and execute a custom Blueprint Real Estate Investing™ strategy so they can achieve financial independence, retire early and gain the freedom to live the life they always wanted. Side effects might include: Early retirement, wealth and piece of mind. Follow on Twitter if that's your thing.

21 Comments

  1. Douglas Skipworth

    Nice article, Erion. I think you’re right to emphasize the location. It reminds me of what BiggerPockets’ member Alex Craig always says in the BP Forums…you can change the tenant, you can change the management, and you can change the property (i.e., fix it up), but you can’t change the location!

  2. Alex Craig

    Thanks Douglas for the shout out. I agree that all of these are important, but more important in some cities. Proximity to jobs, transportation and building age is not all that important here in Memphis. Some of my best properties are pushing 100 years old and because the only people who use mass transportation are those with DUI’s and the very poor, those 2 features don’t come into play. Memphis is laid out well and even if you work downtown and live in the burbs, you can still get there in 30 minutes. Basically people live where they want to live. The rest of the items you mentioned are spot on. I am a firm believer in making the property retail ready for the area instead of trying to rent out a home that looks like grandma died and their heirs are now renting out b/c they cant agree on how to sell it. Great article.

    • brendon woirhaye

      I agree on the age bit! The area where I run rentals is a town with a lot of historical buildings, and very little modern construction. There was a building boom ~30 years ago, and that is the worst part of town (its overly dense). We do have to upgrade old systems, but the wisdom about age (and public transit) does vary by market.

      • Erion Shehaj

        Gentlemen

        I agree with you 100% – age is a criterion whose importance varies from location to location. In certain areas – Boston comes to mind – there hasn’t been any new construction that’s not in the multiple millions for decades. So obviously the investors’ decision would be very different there.

        But provided the market gives you a choice, CapEx are always substantially higher in older properties so that comes back to bite long term investors with older units.

  3. Rick Grubbs

    Try hard to make your tenants happy during the move-in process. I had a lady 10 years ago that was my first tenant in a single wide. She had a few things she wanted fixed. I grumbled a bit but spent the extra money to make her happy. She is still there 10 years later and never paid late or caused a problem. Her rent has probably paid for the trailer 2 or 3 times over by now. Biggest problem is she likes our family so well she always wants to stay and chat when dropping off the rent.

    • Erion Shehaj

      Rick

      That’s an excellent point Sir. In my experience, I’ve found that for every purposeful minute spent with the Tenant on the front end – helping them get settled, setting the right expectations, making sure they understand the lease – you save hours of aggravation and possibly thousands of dollars later.

  4. Chad Carson

    Like the post, Erion. I think I agree with all of them, but on age it’s not always the case. I have a lot of tenants who’d prefer to live in an older property with character as long as the systems you spoke of (particularly HVAC, electrical, plumbing) aren’t an issue. If those are modernized, an older property could actually be more attractive – because it’s likely infill vs sprawl, it’s closer to the transportation infrastructure, it has large trees and landscaping, and other desirable features.

    I like the main point behind article though — buy and fix properties to add value to your tenant.

    • Erion Shehaj

      Hey Chad

      Happy New Year! Agreed – if the main systems are new or updated then all you’re left with is the charm. I personally love older homes and often prefer them to newer ones. But for my investments, I stick to newer properties as in my experience, those main systems (HVAC, plumbing, electrical) are almost never fully modernized.

      But in the end, the list of criteria is meant to provide a long term investor with some “fence posts” to look for when evaluating property. Some of those posts are non-negotiable (quality of location and safety) others vary depending on location.

      Always appreciate your comments

  5. Jeff M.

    Hello Erion and Everyone:

    I agree with your article overall, especially location, schools, safety, etc, but I am not so sure about wood floors and granite counters. I don’t even have granite counters in my own house. Vinyl Plank flooring gets a lot of rave on BP and wood floors can be damaged more easily can’t they? Also, Laminate Counters have always been fine for me. That said, I am open to being educated here. In fact, I am renovating a place now and making decisions on cabinets, floors and counters. Opinions welcomed. And thanks again, Erion, for starting the dialogue.

    • John G.

      I have had a lot of luck with the granite counters. I put them in a 1908 duplex and tenants have been there for 5 years with decent rent too. They even stated they had never seen a rental with granite tops in town. I just bought pre-fabbed granite tops from Menards on sale for $180 for 96″ piece with backsplash and cut them to fit myself. Ended up being cheaper than laminate and got ALOT of attention when I advertised property.
      The last rental I rehabbed I did the same thing and got the same comments. Definitely got a lot higher quality renter. They feel like they have a little luxury which makes it hard for them to move and find a comparable property for the price. That’s just my experience I guess. I will continue on this path as I buy them.
      Also, if you ever decided to sell your rental you will have a leg up over the other listings too.

      • Erion Shehaj

        Jeff

        I’m glad to see you found it useful and even happier that it sparked a constructive dialogue.

        To answer your question regarding your current reno, I would say it depends on several factors. First, there’s nothing wrong with laminate counters and carpeting. But if you’re after the best tenants it’s important to understand that they typically have options. Because they’re so well qualified, any landlord would be happy to have them. So think of all these added investments as your competitive advantage in the market place for great tenants. There’s a difference between what you “might be able to get away with” and “the most effective way” to achieve your goal. You may be able to get away with less expensive finishes but that means you have to go down a notch or two in tenant quality.

        In addition, it also depends on your returns. If your returns are healthy enough to absorb the extra investment and not be impacted as much then the decision to upgrade is much easier, isn’t it?

        Last but not least, like John explained, there are ways to get those upgrades done on a budget so you get the benefit but don’t have to incur as high a cost.

        • Pamela H. Kinzey

          Here are some tips for renting low end from little old landlady who still tries to do some of the work ;

          If you can’t afford to replace your countertops, Lowe’s carries a countertop paint that does a great transformation of those scratches and minor burn marks. Put it on between tenants with doors open and run, though. Mighty smelly & toxic to breathe. Then provide trivets, which tenants MIGHT t use if you’re lucky, rather than putting down hot pots on your counter, and using it for a cutting board. I bought big cheap ceramic tiles on sale and glued on some bumper feet.

          My inherited properties are low end-they are what they are, and I’m retiring soon. No more expensive carpet installation for me. It’s vinyl with area rugs that I can roll up and easily replace between tenants. Tenants that use bright nail polish, bubble gum, neon candy, and iron on the floor, can ruin carpet in a day. The trend is away from carpet, anyway, and my tenants like easy to clean floors.

          Get as much rent and deposit as you can. I used to charge less, and I got sorrier tenants. I also learned to have tenants do a background check, and bring it to me. This weeds out a lot. I have come to realize the old rule of -your rent should not be more than 1/3 of your income, doesn’t apply to low rent housing. They need to make a lot more than that, especially the ones that live off of fast food, Figure ave. monthly price of living for your area and add at least that to rent cost to see if their pay stubs reflect sufficient income.

          I agree that more people will rent a place with all appliances, and if I were renting in a better neighborhood, I would supply them. But I don’t supply washer/dryer (but have hook-ups) , dishwashers, or microwaves. More to have to replace when they tear them up or steal. If they can’t afford to get some from Goodwill, then they are too poor for me. I do check their washer connections, to prevent leaks.

          Require tenants to have renter’s insurance with some liability coverage. I require this in my month to month contracts in case of burglary. But I recently had a tenant to catch the kitchen on fire. She filed a claim and her insurance covered all the renovation costs without me even filing a claim on my insurance. I was surprised. I also will be getting rechargeable fire extinguishers, and getting them checked yearly. I learned earlier that the ones form the hardware stores don’t always work.Three tenants have burned up stoves in 10 years, but only one got into the cabinets. I also will be replacing vent hood filters yearly.

          I

        • In a post about the sort of quality tenants expect and should receive, your comment circles back around to “yeah, but give them low quality anyway.” FYI Goodwill does not usually have appliances, and since Goodwill no longer repairs things, whether you can afford Goodwill is a moot point, especially since Goodwill has doubled the price in many localities. These days Goodwill prices are often comparable to new dollar store or even Walmart prices.

  6. Wendy Hoechstetter

    Great article, and I agree with the others about the desirability (or lack thereof) of older housing. A lot really depends on what predominates in a given area. Some cities just plain have a predominance of older housing stock, so buying newer isn’t even a possibility in such areas.

    In addition, older neighborhoods that are being revitalized become popular because housing is cheap (at least initially) and usually has a lot of character, they are well-located for various needs, and eventually prices skyrocket because they stay popular precisely because they *are* now both popular and trendy.

    As a current renter (and former homeowner), I quite agree with the rest. Great maintenance of the common areas, exterior of the building, and the grounds is important too, not just inside the unit itself.

    Top quality renters also expect things like year-round individually-controlled *central* air and heating (not the version where the landlord controls when the systems are turned on and off and you only get slight control of the range in your unit, but fully separate and independent), and laundry in the unit itself, even if it’s an apartment. And secure, covered parking, preferably an integral garage, without additional cost, especially in regions that have extremes of weather. These are obviously not all physically possible in all buildings, but the more of them you can offer, the more desirable it will be.

    One great feature my building has that I love and have never seen elsewhere is that despite the fact that we don’t have laundry right in our units (although there is plenty of room to install it) we are each able to have our *own* machines in the central basement laundry room – and it’s open 24/7. Young people don’t seem to like this, but you can bet that older, better-established folks, particularly homeowners, will love it. It was the *only* reason I was ultimately willing to not have it right in my unit.

  7. Katie Rogers

    Finally, a post that says think about what quality tenants want. A few nitpics from when I was a tenant. Move-in ready means more than barely legally habitable. The unit should be CLEAN. It is always irksome to have to clean a supposedly clean place. Upgrades do not need to be trendy, just good quality and durable. There should be at least a laundry room in the building, if not in the unit. There should be off-street parking for at least one vehicle. If parking is covered,make sure there is enough clearance for one of those vans with little bit higher roofs, at least 8’5″ or 9 feet for peace of mind. If the unit is shaded by neighboring structures, put in a skylight for adequate light.

  8. I agree that a rental home should be move in ready. I generally re-clean between tenants, seal tile, polish everything up, touch up paint, etc. The cleaner you give it to the new tenant, the cleaner they are likely to leave it.

    We rent houses in nice middle class neighborhoods of an older city, so the houses are older. We buy distressed houses so basically need to get rid of stuff, clean, deodorize, paint, repair woodwork, fix/replace doors, put in new floors, upgrade kitchens & bathrooms, put in new mechanicals (furnace, hot water heater, and central air), weatherize, put on roofs, siding, & new windows, and landscape. So even though it is a old house by the time we get done it ‘s nice with an older house’s character. We try to buy houses with at least one bedroom that fits a king size bed and the living room needs to be big enough for a wide screen TV. Also we like a garage or enough space to put one. We haven’t put in granite counter tops but our houses rent fast, the tenants use them lightly and tend to stay quite a while.

    I guess it would be a good idea to rent appliances but I hate having to clean them after tenants. I never feel like I get them clean enough and they always get so worn looking. Also a good many of our tenants have appliances. Not having appliances doesn’t seem to be a stumbling block for us. The last house we rehabbed the prospective tenant went and looked at other rentals that had appliances then came back to us because our house was nicer. Then he bought some second hand appliances.

    • Nevertheless, a rental with appliances is a big plus for tenants. Tenants do not really want to deal with the hassle of selling their appliances before they because the place (and most places) come with appliances. It is difficult to time the sale. Tenants may lose the sale if they do not agree do with without a frig and or a stove for some days or even weeks before they actually leave.

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