In a part 2 series of ‘landlord life’, I’ll now talk about the next hard part of the job, which is finding tenants. If you’re new to the blog and more curious on the process to find a rental house, you can go back and read that post here. The next important part after finding the house is to find tenants! After all, having an investment property is like having a business and it’s tough to have a business without customers!

Getting the house ready

I wish it was as simple as putting the house on Zillow the same day we closed on the house, but there was some work and maintenance to be done first! Your inspection report will likely have flagged LOTS of things ‘wrong’ with the house and you’ll likely want to start addressing some of those items. I will say that it’s an important distinction of what actually needs to be fixed vs. what’s not really a big deal. Just like in your own house, there are likely things that are not perfect but they are functional and you live with them!

Mrs. Money and I had a good idea from the inspection report on what would need to be fixed (the hot water heater, a leaky pipe, enclosing the attic to kick out the squirrels and repairing the foundation) and then we also did a walk through once we closed on the house to figure out what else we wanted done. We made our list and got to work!

All in all it took about 1.5 months – between all the scheduling and doing the work itself. We vetted a few vendors but also had a few vendors we’ve worked with in the past and trusted. One of the bigger projects was painting the kitchen counters, which Mrs. Money took on. I’d say it was $150 in supplies well spent! We also did a thorough job of cleaning which thankfully the house was pretty clean to begin with so that job was made easier!

Having a good application process

The next step and arguably very important step is to have a good application process in place. This will first involve having an actual application for interested parties to apply. (PS here is where I found a pretty standard application document that I used.) This will give you the chance to ensure that your applicants meet your requirements for application (i.e. background of good rental history and no or limited criminal background, an appropriate credit score and or the appropriate income to rent ratio). It is important to think through your requirements to qualify to rent your house. We require 3x income to rent (so if the house is renting for $1,000 we ask that the tenant make at least $3,000/month), we ask for decent credit (more on that later) a clean background check and a clean rental history (i.e. no evictions). It’s important that all decisions must be made without regard to race, color, religion, national origin, sex, disability or familial status. That’s the law and in general a good way of doing business in my opinion. We personally don’t charge (although other landlords might be different) for an application but do have the tenant pay for a background check (we used this service which made it super easy).

Be prepared to get potentially several applications around the same time so be clear on your process and communicate. For us once we approved your application and you’ve seen the house and want to move forward (I guess not a requirement but I can’t imagine someone renting a house sight unseen but hey I guess it could happen), it’s the first person that returns to us a signed lease with the security deposit. I was very clear with prospective tenants on that process, letting them know where they were in the process and that it would be first come first serve for a signed lease!

Advertising the house

After we got our ducks in a row with the tenant application process, we started the process of advertising the house! We did hire a professional photographer to take pictures. It was well worth the $150, as online listings in my opinion really look more professional with professional photos.

In terms of actually getting the house listed online, all we used was Zillow, and we paid $0 to do it. In the past I’ve also listed on Craigslist but this time didn’t need to. To me Zillow is the gold standard for real estate and it’s so widely used that I didn’t feel the need to list outside of Zillow. Zillow also owns Hotpads and lists it there. Here’s a brief article on how to list on Zillow. We also put word out to our friends groups through Facebook pages with a link to the listing! The more word you can get out the better!

One new thing to Zillow is that they actually have an application process and background check that you as the landlord can use for free. I was a bit skeptical at first but after reading up on it gave it a shot. What Zillow does is gather all the same info that I would have asked a tenant for and also runs a background check on them. A tenant pays Zillow like $20 and it’s good for 30 days. I really liked that as it felt fairer to a tenant – so if they didn’t end up moving forward our rental they could still easily apply to another and have all their info ready.

It was a pretty brief and easy process and just like that the house was advertised online! There are additional add-ons that you can pay Zillow for to better advertise your house but thankfully we had enough interest to where we didn’t need to do so!

Showing the house

I think the first interested party came through within 24 hours or something really fast. Technically an interested party could simply request a tour without applying, but many ended up submitting their application along with their request for a tour. From there we scheduled a time to show it! Thankfully Mrs. Money was on summer break and had more availability! Shockingly some prospective tenants ghosted us and never got back to us for when they wanted to see the house! Some landlord pros that I learn from talk about actually letting tenants self tour the property on their own (to save the landlord time) but that feels a bit too next level for us so we opted to meet the prospective tenants there. Most tenants took about 15-30 mins to see the property.

Getting it rented

Once a tenant had seen the property and was interested in moving forward (via submitting us an application) we would review their application. If approved we would submit then a lease for them to sign. Basically the first one back with a signed lease with a security deposit (also somewhat factoring in desired move in date) would get the house for rent!

I will say that I was not as emotionally prepared for the applications as I should have been. It’s tough out there for many folks financially. It really reiterated the importance of personal finance and a good credit score to me. In hindsight I should have better specified what we thought of as a ‘decent credit score’ and what a ‘clean rental history’ meant. It was kind of emotional to read through some of these applications. I totally understand asking someone to take a chance and my heart went out to some of these prospective tenants! However I had to remind myself that this was a business not a charity and that if I take on too much risk by letting a tenant without the income or credit history to rent the house, then it could negatively affect my family, and me and ultimately negatively affect my tenant as well (I mean worse case but the bank kicks me and the tenant out of the house). I was empathetic but stuck to our requirements of a decent credit score (as opposed to a bad one) and a clean rental history (no evictions).

Other alternatives

Outside of actually owning a house and getting it rented yourself, there are other options. Firstly, REITs are publicly traded on the stock market and allow you to own part of a large portfolio of a variety of real estate. There’s also online platforms – like Fundrise or Ark7. I’ve linked reviews to both!

Summary

I’m continuing to learn that being a landlord isn’t as easy as it might sound like and it does take work. However this is work that Mrs. Money and I don’t hate doing and I really enjoy having a hard asset (as opposed to a stock that can be more volatile). You have to develop a good process with good guardrails and stick to them! Thankfully we were able to find a rental house, find quality tenants and although we’re not completely on easy street, are thankful that we have an income producing asset!