March 2007  >>  return to MAI in the news

How to find a good tenant.
Before you rent it out Fancy being a landlord?
Here’s how to find (and keep) the right tenant

By Janet Huege

HIGLIGHTED AGENT:
INNA SOBEL
Licensed Real Estate Salesperson

…CHANCES are you’ve been a renter. And chances are you’ve fantasized about being a landlord, too. After all, who wouldn’t jump at the chance to let other people pay for your smart investment?

With apartment vacancy rates at the lowest point in five years, more and more New Yorkers are looking to tap into the rental market.

But being a landlord is more than just collecting a rent check each month.

It’s not as easy as most people think,” says Inna Sobel, sales agent at Manhattan Apartments Inc. and a landlord for eight years. "You have to do your homework beforehand, so you don’t get into a bad situation.”

The first bit of work to do is check with the city and the buildings department. Look at the Certificate of Occupancy and zoning to make sure you can legally have a tenant in your space.

Next, make sure you price your property correctly. Check ads and talk to brokers and other landlords. If you price too high, your property will sit unoccupied; if you price too low, you might get a less-than-stellar tenant.

So how do you find a good tenant? You can hire a real-estate broker to find one for you, or, if you’re a more DIY type, you can screen tenants yourself. Talk to your potential tenants over the phone first.

Then, when you show the apartment, have them fill out an application that includes rental history, proof of employment, permission to run a credit check, proof of identification and references. You can ask for pay stubs, tax returns and canceled rent checks.

"Make sure you check out everything,” says Scott Brueggeman, publisher of CompleteLandlord.com.

"Actually look at their history and call all their references. A landlord might give a good reference just to get rid of a bad tenant.”

You can run a credit check online, at a site like CompleteLandlord.com, or hire an attorney to do this. You might also want to run a criminal history check. Also run a check to see if they have been to housing court.

Once you find the right person to share your space, make certain it is protected. Take pictures of the unit before your tenant moves in.

"Take an inventory of the apartment as well,” advises Kym Sharp, who is looking for a new tenant in her two-family home in Rahway, N.J. "My last tenant stole my doorknobs.”

And don’t forget to obtain landlord insurance. You might suggest your tenants get renters’ insurance as well.

Download a detailed lease online or have an attorney draft one. Make sure it spells out everything, including the length of the lease, the amount and due date of rent, the form of payment and late fees and penalties.

House rules are sometimes included in the lease or as a separate document. Rules should address all official policies on pets, smoking, trash, visitors, illegal activity, keys, alterations to the space and noise. Also make sure your tenant knows you can come in and inspect the rental apartment at any time (though you’ll usually have to give 24 hours notice). You should occasionally inspect your property to check on your investment.

When your tenant signs the lease, it’s also time to get a security deposit and/or first and last month’s rent (plus a pet deposit if applicable).

Keep in mind that even after you’ve found the perfect tenant, not everything is smooth sailing. Things break, and you are the one responsible for it. Don’t be surprised if a tenant calls you at 3 a.m. complaining about no hot water.

So be sure to have a rolodex of service people to call. And remember that your best source of advice might be other landlords, so try to befriend one who’s willing to walk you through sticky situations.

"Talk to somebody who’s done it before,” Sobel says.

Good luck!