Usually, when you’re looking to buy a rental property, you need to look at different things such as rent, water damage, if the house is on anything, the type of neighborhood you’ll be in, anything that needs to be replaced, and the like, but there is actually a bigger question that you should ask yourself: how long has the tenant been there, how do they handle rent, and what kind of maintenance they do request.
Why does this matter? Well, landlords will tell you that tenant screening is one of the most important things to do, since it’ll tell you their credit score, history of criminal activity, and other information, and it can predict how reliable someone is with paying rent, and how responsible someone will be with the property that you have. I would say, that if you want longevity, responsibility, and reliability, you should definitely make sure that you observe and verify the current resident. You should definitely watch for this, and while you can’t visit every single tenant beforehand, you can actually find out good information on previous activity.
There is one chance you can actually visit the tenant in the home, and that’s when they buy the house that they live in. quality tenants are very important, and if you see that the house is kept, the lawn is cared for, and they do minor things themselves and don’t bring up broken items when you’re there, that’s a sign of a good tenant.
Quality tenants are worth it, and they are definitely really good, and a good tenant can affect the investment in different ways.
When a tenant does turn over, it can cost money. It can be as minimal as 500 dollars, or as much as thousands in a sense. Lots of times, you’re not really getting much from a tenant if they only have about 500 in repairs that they cover, and maybe a month of rent. If you’re a property manager that does charge a re-leasing fee, it can get to just under 2 percent on what you get in the cap rate.
Tenants who do pay on time are actually great because they save collection issues. If you have to evict someone in the area, it can be up to a thousand for each occurrence. If you assume that 20 percent of slow paying tenants have to be evicted, this adds to about 25 dollars a month, and it can bring the cape rate down a lot. You want to get tenants that are reliable.
Then there is the responsibility factor. It is harder to quantify what minor maintenance is worth, and if a quality tenant puts up their own ceiling fans, or they break the leaky bathroom faucet that they have and they fix it, it can save you a ton of money as an investor. You want someone that has longevity, reliability, and responsibility, but finding these is hard at best. While you can call the current landlord, you need to make sure that the references aren’t forged, or given fake numbers. You can always check the credit score, but will that tell you of the moving history. Existing tenants are very easy to evaluate.
Finding properties to purchase that already have great tenants can be worth almost 200 dollars a month for every investor. You can look for this, and this makes a huge difference between loss and profit, or a good investment versus a great one. You want to find those little gems in the rough, and since you can’t raise rents by almost 200 a month, by getting good tenants that don’t bother you or create drama, you can really benefit from this, and reap these benefits for years on end to come, and it’s a valuable set of tenant qualities.
If you’re worried about getting the wrong tenants, do consider all of these including San jose ca real Estate, since they make a huge difference in your future, and the types of people that you let onto your property, and in turn can help you get the most that you can out of this, and really make it so that you do benefit.