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You’ve just bought your first investment property, and you can’t wait to rent it out. You plan on being a responsible, accountable landlord to your potential tenants. But have you thought about the quality of tenants you hope to attract?
According to BiggerPockets’ writer Erion Shehaj, the success or failure of your real estate investments depends on your ability to consistently attract and retain great tenants, and THAT depends on what you were willing to do to get them in the first place. “In the end, it doesn’t matter how great of a deal you got on the property or how strong your projected cash flow and return on investment are. Without great tenants that pay rent on time and take care of your property, the equity, cash flow and returns all evaporate into thin air,” says Shehaj.
So first one must determine what traits in a property attract the highest quality tenant. Just what do they look for in a rental property? Shehaj offers a checklist, which includes things like judging location, neighborhood quality, ease of transportation, school quality, safety (a BIG one), having the property move-in ready, proximity to employment, how updated the property is, and a number of other traits.
Here is the first litmus test: would YOU live there? “Most inexperienced investors subscribe to the myth that their investment properties just need to be ‘good enough for a rental,’” says Shehaj. “Therefore, they purchase starter homes with cheap finishes and rent them to mediocre tenants for mediocre results. Don’t do that; instead, purchase homes that have strategic upgrades that move the needle with excellent tenants: hardwood flooring, granite counters, stainless appliances, covered patios, etc.”
Is the age of the property a factor? Keep in mind that a good tenant does not want to deal with hassles like plumbing, bad AC or electrical issues. So if you are buying a property that was built more than 15 years ago, make sure you’ve thoroughly gone through it with a few experts so you can offer a maintenance-free experience to your potential tenants.
While tenants won’t really care about how much you paid for the place, they will be concerned with the amount of rent you charge. It’s a fine line all landlords walk. So make sure your projected rent isn’t so high that it limits your tenant pool or so low that it lowers the quality of the tenants you want to attract.
Source: BiggerPockets.com, TBWS