Based in Los Angeles, The Money Smiths is a blog comprised of thoughts related to personal finances, real estate investing, and musings on early retirement.

How I Find New Tenants Out of State - Week 2

How I Find New Tenants Out of State - Week 2

As the title suggests, this is my second post on finding new tenants since receiving a 30-day notice from my current tenant that she will be leaving at the end of the month. For the first weeks activities- check out this post. This week has been relatively straight forward, but I want to share my thoughts on how and why I’ve been doing this the way that I have.

As a quick catch up, the steps I’ve taken so far are:

  1. Get that unit posted online!

  2. Call the contractor

  3. Start calling potential tenants

What did I do next?

Step 4: Get Pictures to Post of the Unit

This was a step that, in an ideal world, would take place as part of step 1. The reason that I wasn’t able to, was because I’m not physically near the property anymore. I actually have an answer for this problem that could be taken care of automatically, but that wasn’t the case here. I needed my friend Mike, who also takes care of small repairs at the property, to get to the unit and take pictures for me. Once I had those pictures, I was able to actually make my postings stand out much more.

Think about this for a second, how often does anyone in today’s standards buy something without a picture? I would wager that this is rarely the case anymore, so that made getting these pictures even more of a priority. These pictures are my first piece of contact that someone looking for a new home is going to look at, so they need to be taken in the best possible way.

There’s lots of tips when it comes to taking good pictures, but Mike and I only spoke about a few of them.

Open the shades, turn on the lights, and utilize a sunny day.

All of these have to do with maximizing the lighting of the unit. No one really wants to live in a dungeon- they want to live somewhere that’s inviting and easy on the eyes.

Maximize the angle.

This is very important with my current property, as there are many rooms, so there’s lots of corners. The best ways to do this are to use a wide angle lens on a camera, or use the a panorama style shot to see the whole space. I can’t speak for which one is better, but you definitely want to show as much of the room as possible.

Take multiple pictures from multiple angles.

The main takeaway with this idea is to make sure you don’t have to go back to the property just for more pictures. Nothing is more frustrating than getting home and realizing that the picture you took of the bathroom has grime all over the shower that you could have cleaned or avoided first. You also don’t tend to notice everything on the small screen of your phone/camera and will really see the details when the image is blown up on the screen of your PC.

Step 5: Show the Unit to Those Interested

This is where you make the real impression on someone, and your second chance to feel out whether or not someone would be a good fit for the unit. I had the help of my friends on this one, and this is honestly why the ability to stay so hands-off is accessible to me. By the time a potential tenant shows up to the property, I’ve already vetted them on the phone. during the first week I called six applicants, spoke to four, and deemed that two were appropriate to see the property. I’ve noticed that I’ll have around a 30 minute call with someone as an intro call- to see if I can find a reason not to rent to them.

If it turns out that someone makes $10,000 less income per year than my requirement, then I can let them know it’s not worth their time to pursue the unit further. This is absolutely necessary to not wasting anyone’s time. Let’s think about what an unqualified tenant represents in time lost:

  • Time spent speaking on the phone

  • Time spent answering questions the applicant has about the unit

  • Time spent scheduling with my current tenant to set up a viewing

  • Time spent physically driving to, and showing the unit

  • Time spent filling out an application

  • Time spent reviewing an application

  • Time spent not focusing these efforts on the right person.

I would estimate that a tenant going through the whole process, who isn’t qualified, wastes in total:

  • Two hours of time on the phone (between me, the tenant, and whoever is showing the unit)

  • one hour of time physically showing the unit (this is for current tenant, potential tenant, and whoever is showing the unit)

  • two hours of reviewing the application (this is split between time spent filling out the application and eventually getting it to me for my approval)

Wasting that much time isn’t necessary, and it’s just not a fair use of time for anyone involved. That’s why I screen so heavily on the front end.

When actually showing the property, I instructed my team to not try to up-sell anything about the property. In fact, I actually wanted them to point out issues they see with the property. I do this because I don’t want to get anyone living in the property under false expectations. The biggest expense to a landlord is vacancy, so if someone moves out a year later because they aren’t happy with the unit, that’s honestly a failed placement. I would be better off spending another month looking for a tenant that will stay for 3-5 years, than taking the first tenant who gets sold on something.

Step 6: Follow Up With the Everyone Involved

The way that I do this is super important, and further helps me to identify who actually wants to live in the apartment and will take the right initiative to see the process through to completion. I instruct the applicants on the phone that when they are done with the viewing that they should text or call me to let me know their thoughts. If they don’t get back to me, then they likely aren’t a match for the unit and they know that. I’m perfectly fine when people don’t call me after a viewing, as it means that they realized the unit doesn’t meet their needs for any number of reasons.

First I follow up with my trusty team, (Mike and Kristen in this case), to see what they thought. Did the applicant seem professional, were they creepy, did they dress in normal clothes, did they show up in pajamas? Each piece of information that I can get about them tells me how they present themselves, and also how they likely keep their homes.

Second I follow up with the current tenant, I want to make sure that throughout the entire process I can keep the current tenant happy and content with what’s going on. The apartment is still their home, so I want to make sure that they feel respected and they have a chance to speak their mind if expectations vs reality aren’t aligned.

Lastly, if the applicant calls me, I want to hear what they thought. Specifically I ask about what they thought of the unit, was there anything that they expected a different outcome for? Was there anything about the unit that they really liked? How could they see themselves if they lived there for a number of years? Just like with my initial phone call with the applicant, I’m looking for glaring issues that represent a reason to end the conversation and move on to the next interested party.

Step 7: Present the Potential Tenant with an Application

This is the culmination of what I’ve been working towards. I hope to have a good feeling for who is going to actually be a fit for the unit before getting to the application as I don’t like to waste anyone’s time. The application should really just verify the same information that’s already been spoken about on the phone, and during the walk-through.

I’m happy to say that of the three people who came to view the apartment this weekend, one of them seems to be a perfect fit. I’ve given her the application and she let me know to expect it by Monday. We will see how the application goes, and hopefully there are no surprises on that paper. For now though, it’s a waiting game.

Overall Thoughts on the Week

This week has shown me how this process can go really smooth. It has also shown me that my personal approach needs constant iteration and needs to be improved. I realized too late, that the paper application that I’ve been using represents the challenge of needing access to a printer and copy machine to get the data back and forth between me and the applicant. I decided, rather last minute, to give the application process through a chance, but won’t have thoughts on the outcome of that until next week.

I’ve also realized that I actually care about the personality of who I am renting to significantly. I really don’t like dealing with people who aren’t nice. So if I speak to someone and they don’t present themselves in a good light, then I am quick to dismiss them. I don’t think this is a bad thing, but I do think it’s something that I should be aware of while I’m talking to potential tenants. I make notes as to why I do or don’t think each person I talk to would be a good fit, and a large amount of my notes have to do with personality. I believe that in order to make this a lifelong interest of mine, I need to make sure that it' stays fun for me to do.

So What’s Next?

With this process going smoother than I originally anticipated, I want to take the time to really lay out what the process looks like. Not just through these blog posts, but I also want to write out the steps that are being taken in a more succinct and easy to observe format. The reason for that is to continue to optimize how I’m doing this and make sure that when the next apartment turnover happens, I have a guide to follow that will tell me exactly what to do.

The final steps are coming quickly for the unit, and the goal of having a tenant ready to move in by the end of the bathroom renovation feels attainable. Next week I plan to receive any applications, run a credit and background check, and get a deposit to hold the apartment. If I can get all of that completed over the next week I can focus on the bathroom renovation and making sure that it works out exactly how I want it to.

How I Find New Tenants Out of State - Weeks 3/4

How I Find New Tenants Out of State - Weeks 3/4

How I Find New Tenants Out Of State - Week 1

How I Find New Tenants Out Of State - Week 1