They just aren’t cutting the mustard
I learned a great tactic from one of my landlord teachers named David Tilney when I took his course called “Hassle Free Property Management.” In the course, David said that all his leases end in either June or July of the year. The reason for this is multifaceted.
You see, June and July is when kids are out of school. This makes it easier to move, especially if you are having kids change school districts because, instead of changing mid-year when everyone has already made friends and been picked for the team, they can start a new school with a new class at the same time as everyone else.
Because of this fact, people that are planning to move tend to pick these months to do so. This makes for a larger applicant pool to choose from. In addition to having more applicants, we have found that people who are planning to move tend to have stronger applications and perform better as tenants to those applicants who find themselves in situations where they have to move.
Another reason David chooses this time frame is that summer is peak period for housing. Not only do houses sell for more during the summer, but you get premium rents then, too.
So, having an abundance of good applications as well as premium rents makes David’s process make a lot of sense. We adopted his policy and it has worked out great for us.
I sure wish it was summer right now.
You see, we have had three houses on market for rent. One has been on the market since before Thanksgiving, and the other two came online during December. And our applicant pool has not been great.
You see, we have a lot of people that need to move. And because of that fact, we’re getting lots of applications that are ranking poorly on our grading scale.
We are looking for applicants who can do the four jobs of a tenant. And just to remind you, the four jobs are: 1. Take care of the house. 2. Pay on time. 3. Be comfortable to work with by staying in good communication and being respectful. 4. Be a good neighbor.
We have applicants that have found themselves living in hotel extended stays, in a friend’s basement and then people who had to move in with family. It’s really hard to tell if someone can take care of our house if they aren’t living in a place that they are responsible for taking care of.
Another thing that’s happening is that people don’t have the financials needed. Not only are we getting applicants who don’t have enough money to move in (which is always fun because they try to negotiate with us about it), but we are having trouble verifying income on people.
That’s not normally an issue. We just get applicants to send us checks stubs or bank statement. But we have had people sending us bank statements where they have multiple NSFs in multiple months, which is interesting because they are sending us proof that that they can’t do job No.2, which is pay on time.
Remember that I said we have one rental sitting since Thanksgiving. Well, we haven’t received a rent payment on it since we had to evict in October. So that means that house has had no income for three, going on four, months.
Now, it would be easy to look at that scenario and start rationalizing in your head how you could take a lesser applicant in order to get money coming back in, but please don’t do that. Every single time — without fail and including the house I’m mentioning — we have bent our criteria because we wanted to get a house filled, we have regretted it. And most of the time, not only did the people not stay for a long time, but they ending in eviction, and they left owing us money.
My mentor Bill Cook said it the best when he said, “I would rather take another month of vacancy to find the right person for the house than put the wrong person in and have to do it all over again.” So, if you are filling a house this time of year and the applications are just not cutting the mustard, be patient and wait on a good one. You will be glad you did.
Joe and Ashley English buy houses and mobile homes in Northwest Georgia. For more information or to ask a question, go to www.cashflowwithjoe.com or call Joe at 678-986-6813.