There are a number of things that people look for when trying to find tenants for their properties. High credit score, great referrals, enough income. All of those are important for sure. But that isn’t the most important for us. We have always managed our own properties. We have looked at one hidden quality that has saved us tons of time, money and effort.
People who don’t like change.
That’s what I look for. We have opted to invest in single family homes. We like homes large enough that it would be a pain to move out of. Homes big enough to accommodate a few kids or pets. We charge a little below market value.
And then we find the perfect tenant.
The tenant who doesn’t like change.
They stay at the same job, sometimes for 17+ years. They rarely move homes let alone cities, states or countries. From living spaces and job history I look for people who avoid change.
You may see an application form that has lots of slots for employment, and previous housing. Because some people love change. They are constantly switching jobs. 1 year here, 2 years there. They have lived in a few states, a few different towns, plus a stint in South America to learn Spanish. They have jumped around from place to place, job to job, and most likely will continue to do so. They are probably interesting, awesome people. I just don’t want to rent to them.
Our rentals are comfortable. They’re slightly below market value. We offer a generous Christmas bonus ($100 for every year they have lived there.) We give them a Lowe’s gift card each spring to take care of any little things they might need for the house (weed spray, caulking, furnace filters, ect). We handle repairs quickly. If something is a hassle, we discount their rent.
You add all these things up combine it with a person who avoids change, and they don’t move.
Less Vacancy = Less Hassle, Fewer Repairs, More Profit
It works out great for us in this season of life. Tenants moving out is a hassle. There are extra repairs, paint or new flooring, advertising, lost income from vacancy, and just the stress of it. Turning over a rental takes time. Time for showings. Time reviewing applications. I don’t want to do that every 12 months. All of those things cut into a landlords ROI.
I also find that tenants that tend to stay put in their lives, often are the most reasonable. When things go wrong, or we need to make repairs they tend to be very understanding. I think that is a quality that comes from being planted in places. They have seen the ups and downs that come from working or living in one place a long time. But they chose to stick it out and saw that things generally get better. Same applies to their home. The roof might leak, or they might get water in the basement with an early Spring melt. Instead of flipping out and moving, they tend to shrug their shoulders and go, “That’s life.” We fix the problem and life moves on.
As a result, we have never had a vacancy (4 years in one rental/3 years in another) We probably could earn a bit more money by investing in different types of rentals, or charging above market rates. But we enjoy providing decent, affordable housing to people in our community. And it free us up to do more of the work we want to do on the rentals, instead of managing a rotating door of tenants.
Cash flow has to be priority number one. But when considering desired landlord lifestyle, give careful thought to the types of rentals you buy and how much turn over you really want to deal with.
Are there any things you look for in tenants?
Would you prefer high turnover if it meant a bit more cash flow each month?
Would you be less stressed about investing in rentals if you knew your first tenant would stay for 10 years?