Book Review
Nightmare or Dream Come True?
The Right Tenants Make the Difference

"Tenants are your most valuable asset, and choosing good ones is the most important decision landlords make."

There is absolutely no arguing with the opening sentence of Attorney Janet Portman's book, Every Landlord's Guide to Finding Great Tenants (Nolo, 2006, $19.99). From there, she goes on to deliver more than her title promises in a style that shows she understands the business of landlording and, for a bonus, has a sense of humor.

She begins with two basic assumptions: first, that you are a conscientious landlord who takes care of your property and second, that you're willing to do the work it takes to invest in real estate and manage it properly. In the first chapter, she sets out the ten things you need to do to develop a winning strategy for finding the best tenants, and then spends the rest of the book expanding on those points. Portman's advice:

1. Make a plan for getting your property rented. Establish the terms of your lease, the requirements for residents, and your advertising strategy. Be prepared for the phone calls and to show the unit before you actually begin the process of trying to rent your property. Put your rental policies in writing so that you can give them to prospective tenants. This lets them know right away if they don't qualify and tells them that you apply your rules consistently.

2. Deal with current tenants fairly and respectfully. If you already have tenants, either because you've been in the business for a while or you purchased an occupied property, you need to interact positively with them.

3. Comply with fair housing laws. Know what federal, state, and local fair housing laws apply and make sure everything you do is in compliance. Portman points out that it's not always obvious when a person is a member of a protected class; stay legal and you won't have to worry about figuring that out. And remember that anyone can file a complaint with HUD or file a lawsuit. Even if you win the case, the defense process is time-consuming and can be expensive. Operate in a manner that shows you know and follow the law, and your chances of a problem become minimal.

4. Be consistent. To avoid discrimination charges, apply your screening and selection criteria consistently.

5. Maintain some flexibility, especially with disabled tenants. Portman notes that the law tells you to be consistent in one sentence and flexible in the next. There are ways to do this without being discriminatory.

6. Thoroughly screen and rank your applicants. Always take the time to check out prospective tenants, even when the market is soft. Don't let the desire to get your unit rented override common sense and good business practices. Portman walks the reader through the process of what to ask, how to evaluate applications, and how to check references and conduct background checks.

7. Be careful what you say. Portman writes,"Ill-chosen words can precipitate a fair housing lawsuit, commit you to promises that you never intended, or sow confusion leading to problems."

8. Put everything in writing and keep good records.Create a paper trail that will keep you on track and provide hard evidence that you followed the law.

9. Screen all occupants and roommates. When there will be more than one tenant (husband and wife or a group of unrelated roommates), or when an existing tenant brings in a replacement roommate, do the same screening that you would do initially for all the adult occupants of the unit.

10. Get professional help or advice when you need it.Don't try to do it all yourself; know when and where to turn for help.

Portman includes sample scripts to help you learn what to say and not to say, in particular when handling objections, avoiding discriminatory statements, and dealing with questions about competing properties.

As part of your strategy to find good tenants, Portman recommends getting input from departing tenants. Use the same “exit interview” process businesses use with their departing employees by asking your tenants to complete an exit questionnaire when they move.

When you reject an applicant, make a note of the reason. If you start to see a pattern, figure out what you could do differently in the early stages of the process—perhaps in your marketing, policies, or screening—that would eliminate unsuitable candidates early on.

Certainly there is more to managing rental property than finding tenants, and good landlords will take the time to learn strong management strategies. Even so, Every Landlord's Guide to Finding Great Tenants is a must for any landlord or property manager who is committed to running profitable properties.