The Most Important Hidden Quality of a Tenant

It will make managing your own property almost too easy

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.

best quality of a rental tenant

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.

For Conversation:

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?

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33 thoughts on “The Most Important Hidden Quality of a Tenant

  1. That’s a really good tip. Finding new tenant is a huge pain. We’ve been lucky so far with our tenants and they are pretty stable. One couple is getting married so they’ll probably move out soon. I’m not looking forward to finding new tenants at all.

    • We live next to a rental that has had 5 tenants in the last 5 years. Each time there is a ton of showings and a few weeks gap between people. So much work, expense and lost income. At some point we might do more short term rentals but not this year. =)

  2. Thanks for this quick tip! Haven’t heard this take on how to keep renters. I know that preventing turnover is key, but I love the gift card idea and the Christmas bonus. Job history, etc. I’m looking to buy my first investment property this year. Thanks again for sharing, and I look forward to stopping by again.

    • The gift card makes it really easy for the tenant to take care of small things or plant some flowers, mulch or what not. Then I just have them mail me the receipt so I can add it to my tax file. =) Plus I can see what they spent it on. 😉

  3. I look for 4 times the rent amount in monthly income. My experience is the tenant is more likely to pay their rent on time if they aren’t making a choice between paying rent or keeping the lights on and food on the table

    • 4x is a safe number. That is about what we use. But I also look at what they paid for their past rentals and if they paid on time. I figure if they could pay a similar amount for x years, they have it figured out. I also don’t like if they make too much. I figure they will end up buying sooner rather than later. =)

  4. This is really helpful – to see what you look for and how you work with your tenants is useful information for those of us just starting out. I love the idea of the Christmas bonus and Lowe’s gift card too! Great ideas. Long term tenants seem like the way to go to me, even if it meant a little less rent month-to-month.

    • That Christmas bonus has been a HUGE hit. It buys us a lot of goodwill. For me, every year we don’t have to turn over the unit, it’s worth the bonus. Our units run about $1000 a month each, so even two weeks empty costs us $500. Plus the hassle of changing over all the utilities, repairs, ect.

  5. I have friends who have made that trade off, but coming from a slightly different vantage point. They purchased a 3 bed house in a stable, family-oriented neighbourhood where most people own their own homes. The city they purchased in (not where they live), has reasonably priced real estate. This means that their tenants tend to be younger, professional couples or families who are saving up to buy their own places. The trade off that they have made is they expect to have to find new tenants every 2-3 years, but attract people who are interested in home ownership and respect their places.
    The tenants they currently have are a carpenter (win!) and a nurse (gvt job, yay!). They once got a phone call “can we install a dishwasher? we’ll pay for it.” My friends have seen the quality of the carpenter’s work and said “ABSOLUTELY! We’ll pay for the dishwasher, too, if you do the labour.”
    So… a trade off, for sure, but so far it has worked out well for them.

    • I think it’s great to think through the kinds of tenants that the home type/location will attract and the pros and cons of those. If a place has good cash flow and decent tenants, it’s hard not to love the rental biz. =)

  6. Nice point. I have no experience as a landlord, but your point certainly makes a lot of sense. Thats great that you have such a low vacancy rate. It sounds like you treat your tenants very well. If we decide to rent in our early retirement, we may have to move up to Montana and rent from you!

  7. Really interesting philosophy, and I can see how it really pays off. We have one tenant like that, and she takes good care of the house (most of the time). It’s definitely something to look at as we try to find a tenant for our new rental.

    Our other rental, though, is near NC State and goes to students, who are naturally going to go through changes. What we’ve done to keep the tenant quality high is to rent to engineering students. They tend to be detail-oriented, do better upkeep, and tend to be more focused on their studies than on partying. Our big carrot to get them/keep them has been to discount the rent in the summer, and to be pretty flexible if the rent doesn’t quite make it to us by the first.

    • I think the student market can be a good option, but there is more turnover. Sometimes a small incentive can greatly motivate students to find their replacement. =) That makes the process easier. =)

  8. What a great way of seeing things! I kind of looked for the same thing when renting out my house without realizing it. The couple I rented to owns a business in the town. They had a foreclosure on their record which didn’t bother me too much because the house is in Southern California and home prices were so ridiculously inflated and then crashed. They want to stay put but have no interest in buying again. They’ve asked if they could paint or make cosmetic changes and I let them. I had them send me the receipts and deduct it from the rent check. I want them to feel like they’re at home so they never leave. I live 2,000 miles away, and if I had to find new tenants every year I’d have to hire a property manager.

    • I totally let people customize the home so they feel like it is their home. It’s a big reason I allow pets. It’s really hard to find rentals that allow pets, so already they are less likely to move. Plus, it feels more like home if there aren’t tons of crazy rules. And people in Montana hate crazy rules. =)

  9. Hi, just a general comment, I’m so enjoying your blog! Now when I start typing “mo” instead of motherearth news, it’s coming up with your site. I especially like the giving side of it, the other bloggers I’ve read seem to be especially tight with their money (I think 1 guy I read retired In his early 30’s has over a million and gave $67 last year) you are proving to be a good influence on me, especially the idea of having $ allocated so I can listen out for someone who needs it rather than just avoid. Thanks for putting your ideas out there for all.

    Tammy, NZ

    • Tammy, thanks so much for the comment! My favorite general comment of the day. =) I think talking about giving money away is even more taboo than talking about money is general! But it’s hard to learn, practice and get new perspectives if we never talk about it, giving or money. I’m glad you are liking the blog! =) I’m liking it too. 😉 Monday is my 1 year blogiversary!!!! I have a post coming on that. It’s been a crazy year being in this online space. =) Thanks for the comment!

    • I had a friend who own 12 low income rentals. Profitable but a total hassle. She would only rent them month to month. That way if a tenant didn’t pay rent, she just gave them 30 days notice. It really simplified the process. That isn’t my jam AT ALL. I would do a vacation rental first.

  10. You are so wise. I’m not a new agey kind of person but you really have an old soul. The thoughts you come up with are so refreshing. So common sense. Yet brilliant. You should think about teaching a course called the Psychology of Real Estate.

    We were awful when we had rentals. We lived in NY and had them here in NC and relied on a realtor/property manger couple. It started off great but then they had problems with their own business and things went downhill. If I were ever to invest in real estate again, it would be in land, or trailer parks. But, that’s just because of where we are in our lifestage right now. Passive/no effort is our motto.

    • It is SO important to consider life stage! There are times when it’s totally worth it to pour in tons of time and effort to set yourself up for future success. But then there are other seasons. =) At this point, we really like the renovation, but not so much the unexpected hassle of people moving. Or the daily/weekly work of vacation rentals. I could see us doing weekly or monthly rentals when the kids are older and we can’t travel as much anyways because of school activities. But if we want to travel more full time, it will need to be hands off.

      I’m not sure I could teach Psychology of Real Estate, but that sounds like I class I would like to take! =)

  11. We still own 2 rental properties in a state we moved away from 6 years ago. We have a “never move” tenant in one of them. Oh that I could clone these folks. He has had the same job for many years. They ALWAYS pay their rent before it’s due. They do minor repairs/upkeep without even telling us. They love the house and said “this is the house we want to die in!” He would like to buy the house, but will not get a bank mortgage. We do own the property free and clear, so we could be the bank. I’m just not clear on how that will affect taxes/capital gains, etc.

    Finding/having one of these types of tenants is a real blessing, especially when we live 500 miles away. Thanks for the post on this.

    • Those “never move” tenants can make landlord life so simple. =) I like doing the Lowes gift card because I think it helps people build the habit of noticing and caring for the home. Plus they don’t have to worry about paying out of pocket. And I think it gives them some freedom to just handle things themselves instead of always asking permission. The renters who take care of the minor upkeep are a god send!

      I have a friend who has owner financed every home he has sold. When the rates are stronger, like 6-8%, it can be a great deal. You will have to pay taxes on that interest every year. I’m not sure how the capitol gains work, but they are in there somewhere. =)

      Thanks for the comment Cork!

  12. I love this! I’m the antithesis to this and you would never rent to me. 🙂

    As a landlord as well though, I tend to look for rental properties that are multi-unit that feel like single family. No shared walls, not behind the other ect. I feel it still attracts the same group while upping returns.

    I’m going to implement some of this. I like the spring gift card idea! I think I’m going to do an incentive rent reduction for an auto-bank deposit payment. I love my tenants who do it, soooo easy, I want more of that.

    I have found my tenants who stay there for a long time end up significantly under market value. Do you ever raise rents to help keep the gap from widening? I don’t enjoy raising rents.

    • Ha! I would never rent to myself either! =) I do raise the rents, but slowly. $25 here or $50 there seems easier. Plus I make sure the price is still cheaper than what they could find else where. In general they are just really happy we are renewing the lease and get to stay. Plus it means another year, another, even bigger, Christmas bonus. =) Last year they were $300 and $500 in Costco cash. The lady at Costco nearly fell over when she found out it was gifts for our renters!

  13. I hadn’t thought of it specifically this way but this is exactly what I look for in a tenant as well and hope to cultivate that staying-put-is-good feeling with the current tenants. Our first tenants were pretty bad but they paid the mortgage for a year. These tenants had a few hiccups but we’ve borne with it and it’s been really good.

    Love your idea of giving them the Lowe’s gift card in the spring, that’s such a nice way to bring in that spirit of cooperation!

  14. I hadn’t thought about this before, but it makes perfect sense! It’s also brilliant to give gift cards to home improvement stores so the tenants feel empowered (and they don’t bug you for every little thing). Plus, if they stay longer, it’s in their best interest to keep the house in better shape.

    • It definitely helps them be more invested and start thinking more like a steward of the home instead of a consumer. Most of our renters have never owned a home, so all this home stuff is new to them. I give them more direction at first, and they slowly learn what it means to care for a home. (change furnace filters, spray for weeds, spray for spiders) small things like that. We only rent single family, unattached homes. And I let them know when they move in, “this is a real house, not an apartment.” AKA I won’t shove your driveway….you need to buy a snow shovel. =)