No matter how good a deal you think you’re getting on a rental property and how good your expected cash flow and return on investment are, none of that matters without good tenants. You want dependable tenants who respect and care for your property—and pay rent on time. Otherwise, your equity, cash flow, and profits will all vanish.
But how do you attract quality tenants?
When deciding on investing in a rental property, consider the following features if you want to attract quality tenants who will treat your property as well as you would.
Let’s face it. One of the first things a potential tenant looks at is the cost. If the rent is not within their budget, the potential tenant may move on without looking at what else your rental property has to offer.
But you still want to bring in a profit on your investment. The 2% rule of thumb is one general principle to follow regarding ROI. You are more likely to produce positive cash flow if your rent is 2% of the purchase price. However, the market also determines rental rates, so you’ll need to find out what you can rent for in the area. Renting below market value has the danger of destroying your monthly earnings, but vacancies will do the same.
Excellent tenants place a high value on the property’s condition and, more especially, their ability to move in immediately. While you could rent out a house that needs some work (painting, new flooring, cleaning, etc.), you likely won’t get the best tenants.
Your desired tenant has high expectations for upkeep and cleanliness and plans to take good care of your property. By offering a house ready to move into, you are signaling that you adhere to the same standards.
When renting your property, your tenant may be dealing with some moving costs. In addition to paying the first month/last month’s rent, they must also pay the security deposit. If your rental doesn’t have a refrigerator, washer/dryer, and possibly a dishwasher, the tenant will have to pay for those goods in advance, raising their cost.
By giving them those appliances up front, you can reduce their resistance to their decision and make it simpler. Frequently, your tenants won’t mind shelling out a little extra for a home with all appliances.
Lifestyle quality is influenced by the sort of neighborhood one lives in. Consider where you currently reside. Did local amenities play a significant role in your decision to settle there?
It is crucial to have access to transportation and basic amenities like grocery stores, restaurants, and shops since they impact other critical aspects like the commute to work and the quality of one’s lifestyle. Consider the accessibility of the main highway, park and rides, and public transportation when evaluating investment sites.
Issues like crime, safety, and street appearance can also be factors. Quality neighborhoods are essential to good tenants. The more attractive aspects of your area, the better.
Most rental property investors believe their investment properties need just be “good enough for a rental.” As a result, they buy starter homes with subpar finishes and rent them to tenants who produce subpar outcomes.
Avoid doing that and instead invest in houses with thoughtful additions that attract outstanding tenants, such as hardwood floors, granite countertops, stainless steel appliances, covered patios, etc.
Safety is also a strong motivator for good tenants. To give themselves and their family a safe atmosphere, your prospective tenant may end up choosing to spend more money renting a home instead an apartment. With that in mind, look up crime rates and only buy rental houses in areas with low crime rates, Neighborhood Watch programs, and good lighting.
A surprising number of tenants report that the quality of the schools zoned to the property can be a significant deciding factor. Families and single parents with school-aged children place a high value on their local schools, and quality renters use this issue as a litmus test.
If the schools are poor, it will be as though your rental property doesn’t exist in the eyes of these potential tenants. Additionally, the biggest predictor of neighborhood quality is school quality. Only invest in properties zoned with high-performing schools to maximize your chances of success.
Everyone hates a long commute. It’s a waste of time, waste of fuel, and it leads to unnecessary wear and tear on one’s vehicles. Therefore, the most desirable renters place a high value on their location near job centers. Even if your home is prime property and is close to excellent schools, it won’t matter if your tenant has to drive an hour each way to work.
Consider where your ideal tenants are likely to work and how close the property is to that location as you look at suitable homes.
Old plumbing, electrical, and HVAC systems found in many older homes are more likely to break down frequently. This leads to inconvenience for both you and your tenant. To avoid this, look at investing in newer properties with newer systems and in areas with recent upgrades to essential infrastructure such as sewers, water, electricity, and Internet/cable access.
Investing in residential rental property can be a great way to generate monthly income. While the entire process necessitates careful planning and accountability, the rewards can be significant and frequently serve as the impetus for additional real estate purchases.
If you have any questions, be sure to consult a qualified and experienced rental investment advisory company for more information. Click here to get started!