The 8 Steps You Need To Follow In Order To Rent Your Apartment
If you are a D-I-Y (Do It Yourself) Landlord you will eventually have to place one of your units available for rent. What will do below is go over the steps you should follow in order to make the process as smooth and profitable as possible. Here we go!
Step 1 – Don’t do anything until the unit is vacant!
That’s right wait until it’s empty. You are probably thinking to yourself why would I want to do that? I’m guaranteeing losing money by operating this way! Well, yes, for sure you will have a vacancy period. This is an unfortunate peril of this business, but it’s needed for a few reasons. When you unit becomes vacant you now have a product available to sell. When it’s occupied you don’t have possession, so how can you post it as “available”? We had a situation in our early days where we did advertise an occupied house, and the new tenants showed up and the old tenants refused to leave. Now what? We had to pay for a hotel for 40 days until the old tenants moved out; terrible! Also, when it’s occupied you don’t know what damages exist, and on top of that during your showings you have no leverage as the current tenant’s living conditions + timing is unpredictable.
Step 2 – Get it ready for a new tenant
This is where most D-I-Y landlords cut corners. They skip as much as possible so they can get it to market as soon as possible. Vacancies should be looked at as an opportunity to IMPROVE the unit by painting, changing flooring, replacing appliances, fixture updates, and more. Look at it this way, these investments are long lasting + will get you a higher rent amount. On top of that they are all tax deductible. It’s a no brainer, don’t be cheap!
Step 3 – Take photos and a video
When you post your unit for rent you should have about 15-20 photos of THE FINISHED PRODUCT, and a virtual tour walk through showing the condition. This will appeal to more potential renters and show your professionalism. Using old photos, or no photos is sloppy and will attract candidates of that caliber. Be neat + clean, it will make you the most successful!
Step 4 – Pre-screen interested candidates
One of the biggest mistakes we see D-I-Y landlords make is not pre-screening candidates. So, an interested tenant asks for a showing and it’s immediately granted. This is very inefficient as you have no idea about the candidate. We suggest inquiring about their income, criminal history, preferences, pets, parking requests, storage requests, etc. The more you know about the person(s) the better idea you have if your unit will work for them. If you have a $1000 apartment and the candidate makes $1500 a month, they can’t afford it. Why would you waste time showing it to them?
Step 5 – Process applications and run background checks
We suggest that you utilize an online application source that can also run a background check for you. Paper applications are inefficient and leave plenty of room for error. Here is a sample of a tenant screening resource: https://www.tenantbackgroundsearch.com/
Step 6 – Draft a lease
Once you have settled on a candidate you will want to draft a lease for them. Nexus is proud to offer a FREE Lease Generator™ for your use.
Step 7 – Sign lease and secure deposit
We highly recommend sending the lease for digital signature so there is a time stamp, and not a waste of either party’s time. Websites like DocuSign are perfect for this, and often offer free trials for your first month. Nexus uses DocuSign too! In addition, for securing the deposit you can utilize many different online sources. We suggest PayPal as it is often free to use and keeps a log of the transaction forever!
Step 8 – Secure first month’s rent and exchange keys
What’s important here is that you want to ensure that you are paid in full before releasing the keys to your new tenant(s)! Don’t make the mistake of working out a payment plan for the deposit or accepting the full payment at a later date. If the tenant doesn’t have the money now that is a bright red flag. Demand full payment or else look for a new tenant! Each state’s laws are different pertaining to the amounts you can require from the tenant upon move in. For example, in Rhode Island you can accept 1st month’s rent and security deposit. The security deposit can be no more than the amount of the month’s rent. In Massachusetts you can accept first month’s rent, last month’s rent, and a security deposit, but the security deposit must be placed into an interest-bearing account. Rhode Island doesn’t have that requirement for security deposits.
We would love to hear your feedback on this topic! Post a comment below so we can start a discussion!
Gregory Rice is the Vice President of franchise sales for Nexus Property Management®.
Nexus Property Management® is a National Property Management Franchise that manages all types of rental property from single family homes or condos to large apartment buildings and complexes.
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