Does quality beat quantity when it comes to finding the best high-quality tenants possible? In this article, learn the top 5 traits of high-quality tenants, how tenants differ by generation, where to find them, how to attract them, and how to keep them happy so that you reduce turnover.
An investment property is an income-generating asset that can make or break your path to financial freedom. Property management goes beyond showings to prospective tenants, maintenance, and getting the lease signed. Whether you're a property manager or a landlord doing this alone, get ready to wear many hats. And by that, we don't mean "Jack-of-all-trades; master of none." You have to do it all and do it right.
While it sounds overwhelming (that's because it is!), there are plenty of helpful tools and ideas out there that can help you work smarter, so you can focus on the most important activity you'll ever have in property management: finding and retaining high-quality tenants.
Your property is unique, and so are your best quality A+ renters. You will need to go above and beyond the call of duty to impress them, make them happy, and keep them renewing their leases for longer. That starts from the moment they interact with you and your property, even as early as them scheduling a walkthrough. Essentially, you need to WOW them at every single stage of their journey with you.
While you're hunting for high quality tenants, rest assured they're doing the same — looking for quality landlords. It's a two-way street, and practicing empathy (putting yourself in their shoes) is key to winning their trust and their signed lease agreement.
The perfect tenant myth, debunked.
Before digging into checklists on attracting the high-quality tenants for your rental property, ask yourself what the perfect tenant means to you? Just like a company would think about their buyer's persona — what is your tenant's persona? There are numerous qualities that landlords look for in a tenant, but the biggest mistake they make is they copy/paste them from the internet and expect the right tenants to fall from the sky and into their property.
Typically, you might think the traits of high quality tenants only include:
- Paying rent on time
- No damages
Sounds perfect, right?
All of these things are their responsibility as lessees! This technically should be the bare minimum. They're supposed to pay rent, take care of their temporary home, and honor their rental contract, at least out of common sense if not for legal reasons.
There seems to be this dark hole that landlords fall into when they bend the rules because they don't want to lose their perfect tenant.
Top 5 traits of high-quality tenants
- Respectful of management and neighbors (i.e., no noise complaints, follow the rules)
- Kind, polite, fair, logical
- Pay on time and in full, preferably with auto-pay
- No damage to the unit after the lease expires
- Refer their friends
Most landlords and property managers face a big problem: they don't realize they were the perfect tenant until it was too late and they've moved on.
Quiet tenants and early payers who always say hello to the old lady next door do not necessarily make for high-quality tenants. It's after they leave that you realize how good they were.
Preventive maintenance and making a unit move-in ready for the next tenant is standard practice. But redoing a destroyed lawn, replacing ruined carpets, repainting, or removing cigarette smoke smells when the rental lease clearly prohibited smoking should not be on that list. If they are, we pray your tenant's deposit covers the costs*. Otherwise, you'll end up spending more on your property than what you're making with it.
So take a step back and rethink your ideal tenant's profile. Aside from your basic preferences - maybe non-smoking or with no furry friends - what are the guidelines you would use when choosing your next tenant?
Tenants by generations
Break down your screening criteria by age, income, job, and finally, your degree of involvement. Why is this the last one on the list, you ask? Because depending on your prospective tenant's generation, that's how much you'll need to get involved. Understanding generational differences is crucial as they reflect different needs:
- Baby boomers and Generation X - The most unlikely to rent as the majority have been raised into home-buying habits and usually own a place. However, if they do rent, they are often low-maintenance, high-quality tenants and typically reliable.
- Millennials - Major lifestyle explorers. They will sacrifice a large single-family home in the suburbs for a small apartment closer to what makes them "vibe" — city hotspots, tech hubs, culturally rich neighborhoods.
- Older Generation Z or college students - Require the most maintenance. Primarily located in college cities or towns, you might find yourself dealing with a higher turnover rate as this generation is not exactly known for its care for things, especially if they don't own them. Major ground rules are the secret to a college rental market.
The most important thing you must be careful about, though…
Make sure you stay neutral about your prospective tenant's race, gender, and disability. Out of human decency and legal purposes — housing discrimination is illegal.
See what is considered housing discrimination under the Rules of the Fair Housing Act of 1968 (equal housing opportunity).
Where to find great applicants?
Find out where the high-quality tenants hang out or how they search for new rentals. A great idea is to ask in your walkthrough or rental application, "Where did you find us?" and start keeping track of it. Once you've defined and found your perfect tenants, look back to see where they found you from. Then, double down on that channel!
- Google Search (for example, "apartment for rent in Miami, Florida")
- Online directories like Zillow, Trulia, Apartments.com, Realtor.com, etc.…
- A realtor (sometimes a friend or family member helping)
- Craigslist (yes, believe it or not)
- Social Media (i.e., Facebook marketplace or local Facebook groups)
Or maybe they even pass by the local bulletin board on their way to get their morning coffee. A "FOR RENT" sign at the property might also be helpful if it is located in an area with high pedestrian traffic.
There are plenty of strategies to attract high-quality tenants to your rental property. However, nothing will beat the traditional word of mouth method. And by that, we don't mean just to let people around know you have a vacancy. We suggest providing an exceptional experience for your tenants, so they recommend you to their friends, family, and co-workers.
Features that attract high-quality tenants
The quality of your tenant is directly proportional to what you offer. High-quality renters enjoy high-quality amenities, features, and services.
Tenants look for:
- Lease terms - Is it a short-term or long-term lease or customizable?
- Furnished - Is it partially or fully furnished, or is it an empty slate?
- Utilities - Are utilities included like water, electricity, internet, or TV? Internet and TV are usually a hassle to set up, especially for older generations, so this is an easy win.
- Appliances - For residential units, does it include a washer/dryer inside?
- Reviews - The younger generation will do as much homework on you and your property as you do on them. Make sure your reviews online are as good as they get.
- References - If you're doing a walkthrough and you bump into other tenants, are those tenants friendly with you? Does it show your prospective tenant that you maintain a good relationship with your active tenants?
Trust is the strongest currency in real estate. People don't do business with someone they don't trust. Transparency, honesty, and communication are key.
Tenants-to-be do a lot of research on the market before they make a decision. They visit numerous other options, they ask their friends, and they study the market. They're often required to submit so much paperwork and are waitlisted for so long that they don't want to get involved in a tedious process if they're not 100% sold on you and your property. You need to make sure that what they see is what they get.
3 ways to make your listing shine
Keep it clean
Whatever type of housing you offer, make sure it is always in tip-top shape. There are no excuses for delivering a neglected property to a tenant. Regardless of the price, for many people, their monthly rent is a burden they have to endure for the sake of having a roof over their head, especially now in the current real estate market so shaken by the COVID-19 pandemic. If you can, take advantage of the low season and invest back into your property if there's no active tenant at the moment.
Once you made sure your rental property is ready to receive its perfect tenant, show it off in the best light possible. High-quality tenants know exactly what they're looking for. Reading a compelling, descriptive, yet concise listing shows them this landlord knows what they're doing and that they're taking this seriously.
Professionally written listings
There should be NO typos or grammatical errors in your listing!
Suppose English isn't your native language or your best subject in school, at the very least, use Grammarly. If possible, get someone to review it for you. At best, hire a professional copywriter on a site like UpWork, iWriter, or TextBroker. It's very affordable to get content written, re-written, or simply reviewed for less than $0.05/word. Believe it or not, this can really make a difference.
Professional photography is not negotiable here. Take a few extra dollars and get your listing the photos it deserves. Don't shy away from hiring professionals - copywriters and photographers should be your best friends when it comes to marketing your rental properties. Trust us, it's an investment worth making. You can find local photographers on Thumbtack or GigSalad for under $75/hour. I've hired many, and they were all very good, especially compared to iPhone photos.
And if you're still not convinced, read how Airbnb exploded in growth simply by taking professional photographs of the rentals. The more photographers they hired, the more nights were booked. Airbnb even says hosts with professional photos get 24% more bookings, charge 26% more per night, and earn 40% more overall. Wow!
Image credit: snapper
In summary, spend the extra time and money on making the very best listing online for your vacancies, and it will pay dividends.
Then, it's up to you to pick the right tenant. "How do landlords choose between tenants?" is a question we love to hear as it implies there are multiple to choose from, and what a good problem to have!
Quality vs. quantity
There is an eternal dilemma between owners, landlords, investors, and property managers of:
I need to get this property rented as soon as possible VS I don't care how long my property remains vacant as long as I get a quality tenant. In an ideal world, these two would go hand in hand, and you'll get a dream tenant in a short time.
In reality, as a property manager, you need to come to peace with the fact that the rental market operates in seasons. Get acquainted with peak and low rental seasons, travel trends, and the local socio-economic implications of tourism and the real estate market in general. If you're avid for fast come income but are not willing to invest back into your property to increase its value and your tenants' comfort over time, then rental properties may not be your line of business.
It's perfectly fine to focus on either short or long-term rentals. However, choosing your tenants carefully can only serve you well. It increases your chances of renting it more often to them (hello returning clients!) or their referrals (assuming they had a stellar experience renting from you). It also significantly lowers your financial efforts put into your property's maintenance — the more careful the tenant, the fewer repairs you have to do.
If it's high season and there are a plethora of prospective tenants knocking at your door, trust your gut instinct on which one will most care for your property.
High-Quality Tenant checklist
Regardless of the rental season, make sure you create the tenant selection criteria that suits you most and have it at hand when a prospective tenant arises to make sure they check all the boxes.
We're not going to go into extreme detail about every possible thing to look for in a quality tenant as there are tons of resources online already.
Here are three things you may not have thought of, however:
- If you have a smart home or rental, you're looking for a tenant who's tech-savvy or doesn't shy away from asking for instructions when using a particular system to prevent damage.
- When you run a sustainable property, your ideal tenant would care for the environment and appreciate a home that allows them to enjoy life with minimal impact on the environment.
- If your property allows parties, your dream tenant is one to host them responsibly, in conformity with the law, and without trashing the place.
Before you even consider a prospective lessee, it is crucial to run an in-depth tenant screening process and background check. While paying rent on time is a basic expectation from a tenant, it's a responsibility they lack more often than not. A good credit history check and eviction check should hopefully uncover their payment and tenant history.
Take time to check their income and credit score - a reliable tenant will showcase a high income, low to none debts, and excellent credit score.
Getting a few personal and professional references can also help you determine the kind of individual character you're dealing with. Previous landlords are a great source of information on tenant behavior, rental payment habits, and general property consideration. Careful though — take everything with a grain of salt, people's relationships are unique, and what's frowned upon in a household can be completely accepted in another.
If all of these activities run smoothly, you're one step closer to finding your A+ tenant!
With high-quality tenants comes great responsibility
The happier the tenant, the longer you will retain them, keeping your revenue and profits flowing.
Tenant retention has to be every landlord or property manager's dream. It means not having to go out there and spend time and effort to stand out from the competition and run tenant screenings again and again. Googling "how to attract tenants for rental property" and "signs of a good tenant" booking after booking can be exhausting and oftentimes frustrating as all the results seem to provide the same instructions and no substance.
While there are proven methods to screen and identify potentially great tenants, they do not represent the perfect recipe - because there is none. Every landlord has a different property management style and is looking for other things in their ideal tenant.
Happy, long-term tenants mean a steady cash flow, less turnover, and inexpensive turnarounds — the opposite of landlord headaches!
After briefly basking in the glory of finding your A+ tenant, it's right back to work. Delivering a property in stellar condition definitely minimizes your time and effort in this part. However, that is not to say that you hand the keys and turn your cellphone off until the check-out date comes.
Communication is key and will define your relationship with your tenant.
While you want to be easily reachable in the event of an emergency or repair needed, you also want to proactively reach out to your tenant to see how they like their new home or if they need anything. Some people are such great tenants that they won't even bother their landlord with details (Amen for those)! Whatever you do, avoid reaching out to your tenant only to "remind" them to pay rent. It's a deal-breaker!
Sometimes tenants, for as trustworthy and reliable they might seem, break an annual lease two months in. There's plenty of reasons this can happen: a significant emergency, loss of a steady income source, a bad experience in the property, and more. You cannot do much about the first two, but you are definitely responsible for the latter. Invest in solid renters insurance that offers property protection and liability coverage and make sure you're an easy landlord to deal with.
Bringing small updates to your property adds value to your tenant experience.
By this, we mean changing the current TV with a larger one you found on sale over the weekend or adding a sound system, not storming in to repaint the living room or change the bathroom floors. However, it is recommended to keep an eye on the property and make sure it stays in shape.
Overall, you know you're renting to the right tenant when they allow you to periodically visit the property for preventive maintenance inspection without any hassle. By making themselves available, it shows they are transparent, honest, and careful tenants.
Throwing in some free items for your tenants, such as monthly lawn maintenance or hooking them up with a free car wash every once in a while, are definitely a nice touch, and they will appreciate it. Think about it - you can get someone to wash a car for as low as $25, it's almost a no-brainer.
The ROI on high-quality tenants
Tenants are far from being 100% perfect, but you have the power to decide how close to perfect you want them to be. Finding that quality tenant depends on many factors - from the location of your property to how promising they paint themselves to be - but the good news is that the more applications you have to choose from, the pickier you get to be.
One thing is certain, a high-quality tenant will:
- Pass the prescreening process with flying colors
- Afford the rental and pay on time
- Treat your property as if it's their own home
Remember when I said earlier to trust your gut?
The more complicated a tenant becomes during the booking process (refuses to give you past references or gets annoyed by any pre-requisite you might have), the less you'd want to approve their application. Follow your instinct and stay away from energy-draining, bad attitudes. The stress isn't usually worth it in the long term! Mental health is more important than financial health, although the two seem to be intertwined sometimes.
Finding the perfect tenant is arguably the definition of property management done right.
Setting clear expectations and boundaries from the start saves both parties time, money, and headaches. Unforeseen scenarios will pop up, sure, whether you're a seasoned landlord or a rookie property manager. Having a clear understanding of tenant psychology will help identify the right way to address them and keep them at bay.
For owners and investors, don't let the fear of ending up with the wrong tenants keep you from listing your property up for rent. While they require time and dedication, investment properties are still among the best ways to receive passive income. If self-management is overwhelming for you, hire a third-party property manager and turn your side hustle into an exciting business venture.
For property managers, as long as you and the owners agree to the same expectations and checklists of what you're looking for, you shouldn't have to worry. Set the right expectations for your owners to help ease the process.
For everyone, if you're feeling overwhelmed with the amount of work you have and are looking for an easier way to automate many processes so you can keep growing, consider using a property management software like DoorLoop.
And remember, knowledge comes with studying and experience, so keep an open mind and allow yourself to make mistakes - as long as you learn from them!
Once you find tenants, now you have to maintain them, below are some resources that will help you in terms of tenant retention:
- How to Create an Amazing Resident Experience: Critical Components
- How to Welcome Tenants and Establish Clear Expectations
- Additional Tips for Going Above and Beyond With Your Tenants
- How to Improve Tenant Communication
- Tips for Maximizing Tenant Retention