As an investment property owner, finding great tenants and filling vacancies is one of your top priorities. A vacant property will cause a huge dent in your investment while an unqualified or unsuitable tenant can cause damage, headache, and financial loss far into the future.
This stuff can truly make or break your investment, and that’s why you need to take it seriously. We’ve seen what can happen when property owners take the laissez-faire approach—they trust their gut, assume everything will work out, and go with the first person they feel comfortable with.
In this day and age, that just doesn’t cut it. That’s why we take our tenant vetting process extremely seriously and we work hard to ensure there are zero vacancies in the properties we manage.
At Mergo, we use a four-step process to ensure that all of our properties are consistently filled with great tenants. There are a lot of intricacies involved in this process, but here’s the high-level.
Step 1: Marketing
The first step in finding tenants for any property is getting the word out. There are many ways to do this—but in order to cast the widest net and get the highest number of qualified applicants, you need to be focusing primarily on online sources.
That’s why we list our properties on all major real estate and rental sites. That includes MLS (“Multiple Listing Service”—a network for real estate brokers), Zillow, Craigslist, Hotpads, and many more.
One common mistake we see new property owners make is listing on one site only. They assume that there are enough people on one site to fill their vacancy—and while that might be true, the problem is that you’re not actually seeing the full breadth of applicants that are available to you. That means you could potentially be missing out on the perfect tenant, and in some cases, the property may go vacant for longer than expected as you try to find more applicants on that particular website.
By focusing on multiple sites, we’re able to quickly gather huge numbers of interested parties to ensure we not only find a tenant quickly, but find the perfect tenant quickly. We aggregate all of the applicants across all of the websites so we can quickly sort through them and move on to the next step.
Step 2: Showing
We employ a full-time rental agent, Gretchen Devine, who has years of experience doing rentals and has facilitated over 300 apartment rentals in the Boston area. It is important to use a rental property agent who knows the property and works closely with owners and property managers because they are the first point of contact for a prospective tenant.
Gretchen schedules showings, open houses, and finds applicants who are ready to move on to the next step—vetting.
Step 3: Vetting
Once we find an interested tenant, we move them right into our vetting process. That means we have them fill out an application and submit income verification, a photo ID, and past landlord references. We then check their background and credit within our own system and contact their references with a specific set of questions to gauge their response.
Once that’s all done, we summarize our findings into one simple package and send it over to the property owner. We do all the legwork and send only the best applicants to our owners so they can choose who they’d like to accept.
Step 4: Renewal
In order to keep properties filled and turnovers smooth, it’s important to reach out to tenants well before their lease is up to determine if they will be moving or staying. You also need to make sure your turnovers are happening on the dates that people are looking.
We aim to start all of our lease cycles on June 1st or September 1st, as those are the two predominant rental cycles in the Greater Boston Metro Area. But in the case that we take over a new property with a different lease cycle, we always make sure to switch it to June or September within the first year. We do this when we reach out with our lease renewal notice.
We send our lease renewal notices in February, which ask tenants if they want to stay in their current home or leave. At this time, we also inform them of any rent increases that may occur if they do stay, and give them 30 days to respond to the letter so that we get all responses back quickly. It’s important to get apartments on the market as soon as possible—some neighborhoods rent as far as nine months in advance! Mission Hill, for example, rents most of its apartments in January for a move-in date of September that year.
If they don’t want to stay, we put it on the market immediately. Another common mistake we see people make is that they wait a few months to put it on the market because they don’t want to do it too far in advance. But then they end up having to scramble at the last minute or the property goes vacant because things took longer than expected and deals fell through.
We work to fill all of our properties one to six months before they actually turn over, because we don’t want to be scrambling at the last minute or, at the worst, dealing with a vacancy for any period of time.
This 4-step process ensures that all of our owners are generating consistent, stable revenue by avoiding vacancies and bad tenants. You’re more than welcome to implement this method on your own. Or, if you’d like to see how we can put it into practice for you, just get in touch for your free proposal.