How do you balance tenant risk and reward?

1 Screening tenants

One of the most important steps to reduce tenant risk is to screen potential renters thoroughly and consistently. You should check their credit history, income, employment, references, and criminal background, as well as verify their identity and eligibility to rent. You should also have clear and fair criteria for accepting or rejecting applicants, and follow the fair housing laws and anti-discrimination policies in your area.

2 Setting rent and deposits

Another way to balance tenant risk and reward is to set your rent and deposits at appropriate levels. You want to charge a competitive rent that reflects the market value and condition of your property, as well as covers your expenses and generates a profit. You also want to collect a security deposit that protects you from potential damages or unpaid rent, but not so high that it discourages good tenants from applying. You should also consider offering incentives or discounts for early payments, long-term leases, or referrals.

3 Communicating with tenants

A key factor in maintaining a good relationship with your tenants is to communicate with them regularly and effectively. You should provide them with clear and written information about their rights and responsibilities, your policies and procedures, and any changes or updates that affect them. You should also respond to their requests, complaints, or feedback promptly and professionally, and keep them informed of any maintenance or repair issues. By communicating with your tenants, you can build trust, loyalty, and cooperation, and prevent or resolve conflicts.

4 Inspecting and maintaining properties

To ensure that your properties are in good condition and meet the health and safety standards, you should inspect and maintain them regularly. You should conduct move-in and move-out inspections, as well as periodic inspections during the tenancy, to document the state of the property and identify any damages or repairs needed. You should also perform routine maintenance tasks, such as cleaning, painting, landscaping, or replacing appliances, to keep your properties attractive and functional. By inspecting and maintaining your properties, you can protect your investment, avoid costly repairs, and increase your tenant satisfaction.

5 Handling tenant issues

Despite your best efforts, you may encounter some tenant issues that pose a risk to your property management business. These could include late or missed payments, lease violations, property damages, noise complaints, or legal disputes. To handle these issues effectively, you should have a clear and consistent policy for enforcing your lease terms, collecting fees or penalties, issuing notices or warnings, and initiating eviction procedures if necessary. You should also document every interaction and action you take, and seek legal advice or assistance if needed.

6 Evaluating tenant performance

Finally, to balance tenant risk and reward, you should evaluate your tenant performance regularly and adjust your strategies accordingly. You should track and analyze key metrics, such as occupancy rate, vacancy rate, turnover rate, rental income, expenses, profit margin, and tenant satisfaction. You should also solicit feedback from your tenants, such as surveys, reviews, or testimonials, to identify their needs, preferences, and expectations. By evaluating your tenant performance, you can measure your success, identify your strengths and weaknesses, and improve your property management practices.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?