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How to Get and Keep Good Tenants

Managing your tenants is sometimes a tougher job than managing your investment property, whether it is an office building, a shopping center, or just a condominium. No matter how diligent you think you are, it is inevitable that every once in a while you may get a bad tenant. But there are ways that you can protect yourself, besides just having a well-drafted lease. The key to minimizing the number of bad tenants you may attract is to focus on luring good tenants to your property. They will always be attracted to a well-maintained property with a reputation for sound management and fair business practices.

Here are some suggestions for attracting good tenants:

1. MAKE A GOOD FIRST IMPRESSION. First impressions are everything when it comes to trying to attract a better class of tenants. The very first thing a good prospect sees will ultimately determine the level of interest. The prospective tenant will consider:

Curb Appeal. Keep the property maintained in excellent condition. This level of care communicates "pride of ownership,” which also indicates that someone is taking responsibility for the property and most likely will be professional in all business dealings.
Professional Management. The leasing agent must also make a good first impression by being dressed professionally and treating the prospect in a professional manner.
Presentation of the Property. The leasing agent should present the prospect with an organized and thorough presentation packet. The agent should anticipate questions and be fully prepared to provide all the essential information about the property and describe what life will be like for a prospective tenant.

2. BE MARKET SAVVY. A smart leasing agent knows where prospective tenants go to get their information about different properties. It could be the local newspaper, local periodicals, websites, trade publications, or brokers. An astute owner will put his advertising dollars where they will do the most good. If the internet is the main source, then the owner must decide whether to invest in a professional, eye-catching website or to list the property on public websites such as craigslist.

3. NURTURE THE NETWORK. The best source of securing good tenants is from referrals from existing and former high-quality tenants who have been satisfied with the property and its management. There is no harm in asking your tenants for leads and to offer incentives for prospects that result in leases.

4. SCREEN PROSPECTS TO AVOID BAD TENANTS. Each prospect should be screened in the following way:

Go with Your First Impression. Your first impression is probably your best one. Just as you want to make a good impression in showcasing your property, a serious, prospective tenant should be equally motivated. Poor hygiene, questionable business practices, or inappropriate questions should be a tip-off that you may not want to enter into an agreement with this person.
Scrutinize the Application Carefully. Missing details, inconsistencies in chronology, or financial information that seems inconsistent should raise a red flag.
Invest in a Criminal Background and Credit Check. What you don't know can hurt you.
Check Personal and Business References. A former landlord, banker, or insurance broker may be able to provide valuable insight into whether you are going to achieve your goal of leasing to only high-quality tenants.

5. PROVIDE LEASE DOCUMENTATION. Have a lease prepared by an attorney experienced in commercial real estate matters. A well-drafted lease will anticipate many types of contingencies and set forth the rights of both landlord and tenant to avoid misunderstandings as to who does what. This is particularly true when it comes to claims for repairs or maintenance or what happens in the event of a casualty loss. If the lease spells this out, there will be fewer disputes.

How is your property maintained, leased out, and managed? Can you share some past experiences that may have turned out better had you followed some of these suggestions?