As a seasoned investor of residential real estate, I’ve learned some hard lessons. Near the top of my schooling is the importance of setting and keeping quality business relationships with renters. Here’s my approach:
Pre-lease: contract with a reputable company to find excellent tenants.
While the cost for tenant search, typically about one month’s rent, may seem steep, it’s important to keep in mind that a quality renter with a solid financial and legal background presents a much lower risk for causing unplanned costs after move-in, like: late rent payment, property damage, or disruption to the neighborhood.
Good property management/ tenant search companies have the best tools and time to find quality tenants. The investment is worth it.
Tenant move in: set the proper tone of the lease agreement and business relationship.
This should occur during the walk-through of the property and the final review/ sign-off of the lease agreement. Both parties should come away with a clear grasp of the lease agreement, understand that it is a CONTRACT, and that abiding by it will help ensure a harmonious relationship. The owner should also be clear that because it’s a contract, any non-compliance will be dealt with quickly and minimal regard to extenuating circumstances. For example, I learned early that allowing any late payment of rent due to a client’s “tight cash month” rarely ends with that one occurrence. Don’t let this happen -s tick to the contract.
While the contractual aspect of this meeting may seem a bit cold and rigid, it’s important to balance the message with gratitude and respect to the tenant. She should feel comfortable and “at home.”
A clear and balanced message of obligations, expectations, and human dignity puts the business relationship on a high road as the lease period starts.
During lease period: check in – sparingly. But always be available and responsive to tenant.
Regarding routine communication, don’t go overboard. Unless there are specific concerns with the safety or function of the home, avoid the temptation to frequently “check in” with the tenant. Typically, I’ll contact the tenant about every 2-3 months, mainly just to keep the channels open and positive. Any more often starts to look and feel like patronizing; and therefore is risky.
Conversely, when a client flags a problem with the operation of the home (broken appliance, etc.) you need to jump on it – quickly. Besides being your obligation as the owner, it reinforces the message that you’re honoring the contract, and that you expect the same from the tenant.
Lease closeout: complete the contract quickly
Keep the same professional tone and efficiency. Reconcile any adjustments to the damage deposit quickly at the final walk-through. Although not essential, I like to immediately return the security deposit amount owed (rather than mailing the following month). Also, I’ll request the client to provide a positive reference for my Landlord Referral log. A positive referral is often useful in attracting new high quality tenants to my properties.
This method has served me well and improved both the profitability and enjoyment of my real estate investment business.