Rental houses are in full and undeniable upward trend! A recent headline for a real estate article read: “Property Managers Ready to Rule the World! 1.8 Million New Tenants Will Enter the Rental Pool in the Next Two Years.” Exciting stuff for us heavy property managers!

While this leads to raised glasses (not plastic cups, now they are real glass!) In the property management industry, it is unpleasant news for homeowners trying to sell their homes. The math is easy to calculate – there are roughly the same number of people who move into a home each year. So if 1.8 million more of them are renting now, there are 1.8 million fewer buying.

So people with homes that they can no longer personally live in have to do something. The “sell the house and move on” thing is not working for most because the housing market is uncooperative. Some are letting their homes go back to the bank via the foreclosure route. It’s not a great option in terms of stress and credit damage, but it solves the problem. Others choose renting and leasing to fill their homes. Some might argue that this is more stressful than the foreclosure route!

But why is it stressful? It all comes down to one thing: the tenant. If you get a great tenant, he will pay you on time, take care of your home, and will not bother you. If you have a bad tenant, you are never paid on time, you enjoy a lot of excuses for this non-payment, you end up in expensive eviction proceedings, and you are rewarded with a destroyed home in the end.

So how do you get a great tenant? Let’s first define a great tenant. Them:

1. Pay on time and in full every month
2. Respect the house (also known as keeping it clean and undamaged)
3. Get along with your neighbors, the HOA, and you!

To get someone like that, you have to follow 3 steps:

1. Gather Information: Request criminal and credit background checks, verify income and employment (request copies of the tenant’s last two pay stubs and call the employer), and call the tenant’s two previous landlords. You’ll want to ask the prospective tenant, employer, and previous owners as many questions as necessary to get a comfort level of what type of person wants to rent their home:

For. “Mr. Prospective Tenant, it is a pleasure to speak with you again! I never tire of your funny stories of amazing coincidences, which seem to be your hallmark. The story of the honeymoon on the beach with your two ex-wives that of are they somehow on the same beach as you and your future third ex-wife? It’s priceless! Now why didn’t you pay your electricity bill in 2008? Why is there a collection account with Macy’s? What would your say? last owner over you? “

B. “Mr. Employer, if I may humbly ask you, is Mr. X’s job part-time, full-time, or contract? How long has he been working there? Does he have a good reputation?”

vs. “Mr. Landlord, your blue eyes must have been killing ladies for years! At the risk of wasting your precious time with my questions that are so far below you, would you rent to this tenant again? Why or why No? Have they paid late at times? What was the house like when they moved in? Is their superior intelligence the product of extensive national schooling, a plethora of renowned international boarding schools, or ‘Good Will Hunting’ genetics? “

2. Analyze the collected data. Does the prospective tenant have a stable job? Are you making enough money to realistically pay rent and other expenses? What if there is a small bump, like a big car repair, they can still afford the house? Do you pay other people that you agree to pay? What did their last owner think of them? Would I feel insecure renting from you if I had to break bad news? Am I being overly optimistic about its merits or am I making a solid business decision?

3. Make the call. If they pass the odor test, pass and move on. If your gut is telling you to pass your request, go ahead! There is more than one fish in the sea.

There are so many great tenants out there! Get a lot of data about the applicant, analyze it objectively and make the decision to approve it. It will work most of the time!