Atlanta Property Management Advice: The Right Tenant Is Worth the Wait
All property owners look at the return on investment (ROI) when buying or maintaining a rental property. The ideal is a positive cash flow, a tax deduction, and an increase in property value. As an Atlanta property management company, we know that an investor certainly wants to realize all three of these advantages. However, there are times when it becomes difficult and one of the three components is not working out. Quality of the tenant directly effects investors cash flow and the condition of the property and here, we'll discuss the "Right" tenant and why the right tenant is worth the wait.
Having a long vacancy can reduce a positive return or even produce a negative one. There are markets or other conditions that can simply create a long vacancy. When this happens, there are pitfalls to avoid and holding out for the right tenant can sometimes be the least costly alternative affecting the bottom line. Over the years, we have come across many different situations and what we have learned is that we'd rather wait a bit, then have to deal with a bad tenant. Don't misunderstand me, a bad tenant can be the nicest person on earth, but they either don't pay their rent on time or at all, want excessive maintenance, or worse yet...damage your investment property.
When your property is on the market and it's not renting as fast as you think it should there are a few factors that you as the owner need to look at; such as your price, condition of the property and how many similar rentals are on the market at the same time. Evaluate all the factors affecting your particular area and don't panic. Most properties can rent quickly for a higher rent if an owner looks the other way, ignoring sound screening practices. It is possible the tenant will turn out to be the “right” tenant to rent the property, but not likely. What intelligent, well-qualified individual is going to pay more rent when there are similar properties available at a lower price? When you property is overpriced, you'll be attracting two types of tenants: 1. Desperate, they just need to move and don't care about anything else at the moment; or 2. Deliberate, ones who don't intend to stay through the tenancy, don't intend to pay rent (on time or otherwise) and who know the rules of the game (eviction procedures, etc.). Neither one of these groups should or could be trusted as they will do what ever it takes to gain possession of your property. So, take a deep breath, be honest with yourself about the competitiveness of your rental price, make adjustments and the right tenant will be by shortly.
Be patient, consider what can happen if you ignore the warning signals. Ignoring bad credit, poor or non-existent landlord history, and inadequate income can lead to non-payment of rent, eviction proceedings, drug problems, and damage. That high rental price becomes insignificant if an owner has to pay legal fees, repaint, replace carpets, and do major repairs. It does not take long to have damages that exceed the security deposit, particularly if there is already lost rent and attorneys’ fees. Drug problems can have bigger liabilities and can cause serious fines in the thousands now that legislation is becoming tougher on property owners who “overlook” drug trafficking in their property. Make sure you do your due diligence with screening. Check with prior landlords in writing as well as speaking to them, job, references (we ask for 2 references that are not related to the tenants). Don't waiver from your selection criteria and the right tenant will come along soon enough.
What approach should an investor pursue?
- Look at the market as objectively and unemotionally as possible. It is an investment and, like the stock market, rental properties have their peaks and valleys.
- Ask for a reasonable rent that will compete with similar properties on the market.
- Make necessary repairs to entice the good tenants to want to rent your property.
- Rely on your property manager to find the right tenant and do the background screening. Do not panic and give into renting the property quickly at all costs.
- Be prepared to ride this vacancy out to obtain the right tenancy and protect your investment. It is better to adjust the rent, offer incentives to reduce the vacancy, or even accept loss of rent rather than suffer through unpaid rent, attorney fees, and damages, not to mention the emotional distress of a bad tenancy.
Our Atlanta property management company wants the right tenant to live in your property, for your peace of mind as well as ours. If concerned, call us to discuss reasonable alternatives for renting the property without compromising your tenancy and investment. Remember, the property will rent – it is just a matter of time and the right tenant really is “worth the wait.”
Marina Shlomov, a managing partner at ALH|Podland Rental Homes Property Management is the author of many articles on Landlording, Property Management, and Real Estate Investing. A residential builder in the state of Georgia since 1999, Marina is an investor herself. Her Atlanta property management company is intended “For Investors” and “By Investors” for a simple reason – she knows what investors’ goals are and she works hard to reach their goals. In her spare time, Marina likes to spend time with her family, friends, garden, read and travel. Check her out atwww.alhpodland.com. You can find Marina’s articles and comments at @rentalhomesatl on Twitter, on Facebook, Google+, Blogger. and YouTube, Bigger Pockets and REI CLub and LinkedIn.