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 1

How I Find New Tenants Out Of State - Week 1

If you remember from my last net worth update, posted here, I set a goal for myself for the month of October. That goal is

To document as much as I can about the process of finding new tenants while living out of state.

This goal came to be because I received notice from one of my tenants that she will be moving out of the unit in 30 days. The end date for her lease is going to be October 31, 2018. When I got this news, my thoughts went in a million different directions, but then I calmed down and started to think about this challenge as a good thing. This is the first time, since getting into real estate investing back in 2015, that I will need to fill a vacancy while not living in the property, and more interestingly - not living in the same state, or even same timezone.

The beauty of living in the property when looking to fill a vacancy is that it provided me a sense of security, knowing that I would be able to physically meet each interested party. I would be able to judge their character myself, and see first hand who and what they were. This is no longer the case, so I’ve already realized that I’m going to have to give up some of the control that I once had. This also means that this will be the first time that I’m looking for a tenant that I can’t keep an eye on while they live there. I’m jumping into entirely new territory with this move, but I accept the challenge and I’ll likely post about this crazy adventure for the next few weeks.

That being said, what was step one for me?

Step 1: Get That Unit Posted Online!

This seems to be a pretty obvious first step, the only way I’m going to get people interested in my unit is if they know it’s available. My go to resource for posting our units is Zillow Rental Manager. The reason I love this tool so much is because I can post availability for my unit on Zillow, Trulia, and HotPads with just a few button clicks. The really handy bit about this tool is that I can activate or deactivate a listing easily from my phone as they also have an app. In my listing I can put all of the appropriate information and have the posting ready to go without actually putting it out on the internet. This is a very neat feature to have because I honestly don’t remember the specifics about this unit, but because I had filled it in the past, I was able to just reactivate my posting from two years ago.

I’ve made the target move-in date for November 15th. Normally I would want to make the move-in date a day after the current tenant moves out, this is because I want that unit lived in and making money for as much of the year as possible. I can’t have the move-in date be November 1st, this time, because I plan to have the bathroom renovated before a new tenant moves in.

Step 2: Call the Contractor

This is the part of the business that always hurts a little. When I was living in the unit I could make most of the repairs myself, now that I’m on the other side of the country, I have to leave the major repairs to contractors and the smaller repairs to my good friend/handyman Mike. We always planned on renovating our bathroom, and I was secretly hoping that I would be able to pull that off with the tenant in the unit. Well, the tenant never made her unit available for me to do that, which isn’t all that surprising, and now I need to get the bathroom renovated before we put a new tenant in.

This isn’t a renovation just for the sake of renovating, this is a much needed face lift for the whole bathroom. We want to tile the floor, change out the shower surround and hardware, and put a new sink, toilet, and medicine cabinet in. This will likely cost us a pretty penny, but I’m hoping that with the increased rent we can charge, along with the increased durability of the pieces we’re installing, this will even out.

Being able to put “brand new tiled bathroom being installed before move-in” in the posting will certainly make prospective tenants interested.

Step 3: Start Calling Potential Tenants

My favorite part. I love connecting with people and there’s no easier way to do it than when they give you their phone number and you have something that they want! So far, in the first week of having a posting, even with no pictures, I’ve had six sets of tenants apply. Of those six, I’ve successfully spoken to four, and of those four there are two that I feel can pass my basic phone screen and will be granted access to view the unit.

I use a google sheet that keeps track of all of the information that I can record during our conversation. I keep the talking mostly to their side as I’m waiting to hear if they will disclose information that they might not normally. I keep the conversation very friendly as I want to establish a good rapport with the person, and also hopefully have them let their guard down.

The information that I keep track of is:

  • Pets?

  • Are they Smokers?

  • Vehicles

  • Reason for Moving

  • Credit?

  • Preferred Length of Lease

  • Personality

  • Name

  • Phone Number

  • Social Media

  • Preferred Occupancy Date

  • Source

  • Number of Occupants

  • Income

Each one of these data points can tell me a surprising amount about the person I’m talking to. For instance, I know for a fact that I don’t want people that smoke cigarettes to live in my units. This is a completely fair thing to say and wouldn’t get me in trouble. The reason I don’t want smokers in my apartments is because the cigarette smell gets stuck on everything and is almost impossible to get out. Also, lets be honest, it’s 2018 right now, if you’re still smoking cigarettes in today’s day and age, you’re probably a little behind the times.

When I’m speaking to interested parties, every question I ask is looking for an answer that will tell me why I shouldn’t rent to them. If someone is unnecessarily combative on the phone, I definitely don’t want them to be my tenant. If someone has a sob-story about how life is really beating them up and they really just need someone to take a chance on them, odds are that I won’t be the person to take that chance. It sounds a little harsh as I type this, but that’s the reality of being a landlord. The unit that I’m looking to rent out is my investment, and I have to do everything I can to protect that investment from trouble.

So What’s Next?

Well, that’s interesting because these steps are really what starts everything else in motion. My plan for the next week is to get pictures posted of the unit as I don’t currently have any currently up and to hopefully speak to many more potential tenants.

What’s nice about this so far is that I haven’t really had to change my approach, even though I’m 3 hours behind where my property is. I’ve been calling those who are interested in the morning to make sure I’m not calling people while they sleep, but other than that there’s been no change of approach.

What will be interesting will be when it comes time to actually show tenants the property. I can rely on my friend/handyman Mike to show the property and to give me a second opinion on applicants, so I am hopeful that we can find a good tenant by the November 15th deadline.

Overall, I would say that I’m optimistic about the future of finding a tenant, even while living out of state. I’ve realized that I set myself up correctly when leaving to make sure that my ability to manage the property was pegged for success and due to that, I’ll be OK.

Hopefully I have some good updates next week!

How I Find New Tenants Out of State - Week 2

How I Find New Tenants Out of State - Week 2

Net Worth Update #3: September 2018

Net Worth Update #3: September 2018