The success or failure of any real estate investment depends on the property owner’s ability to consistently attract and retain great tenants.
A great tenant can be depended on to pay their rent on time, take care of your property and keep their rental unit clean. He or she has a high credit score, which tells you they are financially responsible. They are gainfully employed with a steady, verifiable income. They have a clean criminal background, a stable history as a long-term leaseholder in previous rentals, and a reputation among previous landlords for being a respectful and reliable tenant.
As a property owner, great tenants should be the audience you target for maximum return on your investment.
At the end of the day, regardless of how great the deal you got on a property or how robust the projected equity, cash flow, and return on investment the property’s equity, cash flow, and forecasted returns, unless your rental units are filled with top-notch tenants, your equity, cash flow, and returns vaporize.
So how do investors locate and retain great tenants for their investment property? The answer is as uncomplicated as it is commanding,
The quality of the property you buy establishes the caliber of tenant you are likely to attract. Therefore, if your goal is to attract high-quality tenants for your investment property, start by purchasing a property with the characteristics that attract the best tenants.
Start by getting to know what great tenants look for in a rental property. Below is an authoritative checklist for finding exceptional investment properties that attract high-quality tenants and maximize cash flow. The list contains the top 10 qualities that excellent tenants look for in a rental. It was established over a decade of surveying proven, high-quality tenants.
1. Quality of local schools
The quality of schools that serve residents in a property’s neighborhood was the number one deciding factor for more than 85 percent of great tenants interviewed. School quality is exceedingly important to parents with school-aged children, and those tenants consider school quality a definitive factor. For high-quality prospective tenants, if the schools aren’t good, your rental property is off the table. Moreover, school quality is the ultimate litmus test of a neighborhood’s quality—something all great tenants seek (including those without children). Hence, in order to make sure your investment succeeds, make sure to purchase properties exclusively zoned to high-performing, desirable schools.
2. Safe surroundings
Safety is a basic but powerful need and a dominant motivator for attracting excellent tenants. One of the main reasons prospective tenants choose to spend more to lease a home rather than an apartment is to ensure a safe environment for themselves and their family. When searching for investment properties, make sure to research crime statistics in communities with potential investment properties and limit your purchases to properties in safe neighborhoods.
3. Move-in ready condition
The property’s condition dictates the tenant’s ability to move right into a rental property, a very important factor among great tenants. You can find a tenant willing to move into a property that’s not entirely move-in ready—for instance, it needs painting, cleaning, flooring, etc.—but you can be certain that it won’t be an excellent tenant signing the lease. Your ideal tenant has high standards of cleanliness and upkeep and intends on taking care of the property throughout their tenancy. By offering a move-in ready home, you convey the message that you value their standards and share them.
4. Proximity to work
Great tenants do not want to commute long distances to their workplaces, so proximity to employment centers is very important to attracting them. You can have a stunning, move-in ready home in a great school district, but if your tenant has an hour-long drive to work and back each day, they’re going to look for a rental closer to work. As you search for potential investment properties, consider where your target tenants are most likely employed and how close a prospective property is to that employer.
Most inexperienced property investors think that the properties they purchase only need to be adequate to rent. Hence, they purchase starter homes or flips with cheap finishes and subpar environments and rent them to second-rate tenants who prove to be unreliable. This is not the path to take if you’re seeking excellent tenants. Spending more to purchase a property with high-demand upgrades that attract excellent tenants such as hardwood flooring, granite countertops, stainless appliances, high-end bathroom fixtures, etc. will draw great tenants who pay their rent on time and will take care of your property.
6. Appliances installed
When tenants first lease your property, they incur hefty expenses between the first and last month’s rent and security deposit, not to mention moving expenses. If you have an excellent tenant ready to sign a lease but unwilling or unable to purchase a refrigerator or washer/dryer in addition to their move-in costs, you may lose that excellent tenant to another rental that provides the appliances. Avoid placing yourself or the tenant in the position of losing out by installing all appliances on the front end. Often, high-quality tenants don’t mind paying a little more rent for a property that includes all appliances.
7. Neighborhood quality
The quality of a neighborhood reflects the lifestyle quality it offers. Things like neighborhood amenities play a major role in a tenant’s decision to live there. Great tenants are drawn to neighborhoods with running and bike trails, lakes, community pools, tennis courts, exercise facilities and the like. Quality tenants look for quality in the neighborhood they call home. A neighborhood doesn’t need to have all these amenities, but the more it does have, the better your chances of attracting great tenants. Look for investment properties in quality neighborhoods to attract the best tenants.
8. Access to public transportation, grocery stores, shopping, restaurants
Access to public transportation and basic necessities such as grocery stores, restaurants, and shopping is high on the list of great tenant expectations because it influences other important factors such as workplace commute and lifestyle quality. When you’re looking at investment properties, consider how easily residents can get to main highways, shopping centers, entertainment venues, and public transportation. Make sure basic services are available within easy reach of a potential investment property to attract excellent tenants.
9. Age of property
The age of a rental property is a determining factor for both investors and potential tenants. An older property may create hassles due to aging HVAC systems, plumbing, and electrical systems that may give out, inconveniencing both you and your tenant. Look for newer properties to purchase instead. A good rule of thumb for purchasing investment properties that will attract excellent tenants is no older than 15 years, less than 10 if possible.
10. Rental price
Your investment property ultimately boils down to a business decision for both you and your prospective tenant. Your tenant will be concerned with the rent price, and you will be concerned with the relationship between the rent price and the price you paid for the property. Do the research and analyze the market for comparable rental properties to make sure the rent price you establish isn’t so high that it narrows your potential tenant pool or so low that it conveys a message to tenants that there must be something wrong with the property.
Attract great tenants