Maximizing Your Rental Income (Part 4 - Prioritizing Rental Inquiries)
The Realtor.com annual housing market forecast, published December 22, 2021, predicts "national rent growth of 7.1% for 2022." Home buyers cannot find homes to purchase because of the historic supply deficit of homes available for sale. As home values and prices have risen, fewer would-be home buyers are financially able to purchase homes now. When a rental property goes on the market, tenants are flocking to see it. Investors are being inundated with inquiries and requests to see the property. It is critical to sift through and prioritize all the inquiries and only show your investment property to candidates who meet your prequalification requirements.
The Inquiry Response Email
Most investors and real estate brokers who are representing investors place their rental listings on all key websites such as zillow.com, rent.com and the like. Prospective tenants searching these sites for rental properties to live in are inquiring about the properties and requesting to see them. It is a good standard of practice to have an email written that you can copy and paste to each and every person who sends an inquiry about your rental property. This email should include your basic requirements for prospective tenants.
Rental Price
In your inquiry response email, be sure to include the rent amount. The email should state that the price is non-negotiable. In fact, you can tell prospective tenants that they may offer a higher rent amount to help increase their chances of getting chosen and approved as tenants. Prospective tenants are competing for these properties.
Credit and Income
In your email, state that you are looking for tenants with at least fair or good credit. According to the article on equifax.com, What is a Good Credit Score?, "generally credit scores from 580 to 669 are considered fair; 670 to 739 are considered good; 740 to 799 are considered very good; and 800 and up are considered excellent." You should also state that you are looking for tenants who have income of at least three times the monthly rent.
Lease Start Date and Lease Term
When you are prioritizing inquiries, be sure the prospects know your desired lease start date and the term of the lease you are offering. For example, if your property isn't available until May 1, and the person who inquires needs a place to live starting on April 1, this property will not work for them. It is a good practice to start with a one-year lease. This way, you have a chance to see if the new tenants pay rent on time and how well they take care of your property. Also, if rental prices keep increasing, you may be able to increase the rental price after a year.
Pet Policy
Be sure your pet policy is clear. If you do not allow pets, this clarification will weed out potential applicants who have pets. If you do allow pets, consider an extra pet deposit that is refundable upon no damage. You may also require an additional pet rent of $25 per month, for example. Also, remember that if a potential applicant has an assistance or emotional support animal, they are protected by fair housing laws. Get familiar with the laws in this article on hud.gov.
Smoking and Other Rules
You may also have other rules that you will want to state when prioritizing inquiries. For example, if you have a no smoking policy, state it. Inform the inquiries which utilities the tenants will be responsible for. If your tenants will be required to do the lawn care and snow removal, be sure they know up front.
The more information you clarify in your initial response email, the better. This will help to prioritize the inquiries as some will self-select out of the process as they don't meet your requirements. Those still interested in setting an appointment now know the minimum expectations for the rental. Thus reducing the overall work for you, allowing you to focus on true prospects.
Last of all, make sure you don't discriminate. Be sure to familiarize yourself with Housing Discrimination Under the Fair Housing Act. Also, finding tenants who will take care of your property and help keep your home value up. State your expectations about how you want them to care for the property as well.