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How to manage prospective tenants efficiently, effectively and without killing them

One of the many things that amazed me about the management side of real estate investing was the "No Show."  The No Show is the prospective tenant who calls to say they drove by the house, love it, and would like to sign a lease right away.  You make arrangements to show them the house, confirm the appointment 1 hour before the allotted time, and then they don’t show up or even call.  This happens over and over and over again.  It’s still a mystery to me why that don’t exercise the common courtesy to call us to cancel the appointment.  So we’ve come up with a way to address this issue, at least in part.  I’ll explain what we do in a minute, but first, here are some other types of prospective tenants we’ve encountered over the years.

The Negotiator:  "I see you’ve listed the rent at $1,295 a month.  Would you accept $800?"

The Credit Risk:  "I recently filed for bankruptcy protection.  I’ve also been evicted from my last 7 rental units.  Will that be a problem?"

The Out-of-Towner:  "I am moving to your area and will be in town Saturday to look at homes.  Can you show me the property that afternoon at precisely 2 pm?"

The Anxious:  "I’m very interested in the property and must move by the end of the week.  Can I see the property today?"  These prospective tenants almost without exception become No Shows.

The Planner:  "I see the property is available April 1.  I need a place beginning in July.  Do you think your property will still be available?"  God, I hope not.

The Cash Cow:  "Can I pay $15,000 up front to lower my monthly rent?"  While always exciting, these folks never work out.  And if a tenant is paying you in bricks of cash, you may wish they had become a No Show.

The Scam Artist:  Contact is always made via email:  "I’m from the UK and will be moving to [insert any mid-sized town in Podunk, U.S.A.] at the end of the month.  I’m very interested in the property you’ve advertised.  I can pay with a money order, and would like to write it for 5 times the actual rent.  Please send me the balance in cash as I’ll need it for moving expenses."

The Murderer:  One of our prospective tenants was a convicted murderer.  I let Mike call him to reject his application.

The Story Teller:  "So any way, my husband lost his job two years ago, and we’ve been running an eBay store to get by.  If you’re ever looking for handmade booties for your cat, you’ve come to the right place."

The Dreamer:  "We won’t rent for ever.  Our plan is to build a 10,000 square foot home next year once we get our credit cards paid off."

Well, you get the idea.  So back to the No Show.  What Mike and I did this past week was to hold an open house for our property, The Problem Child.  As prospective tenants called or emailed us about the property, we told them about the open house.  Some wanted to see the property at a different time, but we declined.  Part of that was due to the fact that the property is still occupied.  But regardless, we gave them a 2-hour window on a Saturday afternoon to see the property.  If one or two didn’t show, so be it.

In terms of traffic, the open house was a success.  We had several couples come by to see the property.  And it sure beats driving out to the property for one prospective tenant who fails to show.

{ 12 comments… add one }

  • Patrick March 7, 2008, 8:16 am

    Great way to handle those people who think the world should bend over to meet their needs!

    Oh, and I love how you hold the suspense until the end. Great writing. ;)

  • WealthBoy March 7, 2008, 9:37 am

    Seems that so often the simplest solution is the most effective as well. Very nice article.

  • Living Off Dividends & Passive Income March 7, 2008, 12:20 pm

    how did you advertise for the open-house?

  • Rob March 7, 2008, 12:27 pm

    All our marketing is done online and with yard signs. We advertise in Craigslist and on rentals.com. We use to advertise in local newspapers, but it’s very expensive and not as effective.

  • Ernesto@InsuranceYak.com March 7, 2008, 3:19 pm

    You missed a few:

    The “who’s got the job?” family: six adults want to move in and no one has a job. Plenty of disability, child support and food stamps, just no jobs.

    The right-wing urban activist: Goes on about lack of affordable housing and how landlords in the area are conspiring to keep rent high and the workin man down. The city should be lookin into this! Funny how this one changed her tune when I showed her the built in dishwasher, kitchen island and central air.

    The Litigation specialist: Weary of toxic mold, safety issues and lead paint. Not convinced that toxic mold is only prevelent in the South East and not Ohio. Can’t understand why the landlord won’t give them a application to fill out.

    I’ve gotten away from yard signs..too much riff-raff. I’m Craigslist only at this point.

  • Ben March 11, 2008, 11:42 pm

    This is interesting…I never thought about what it was like on the other end. Now I know how not to be.

  • Mr. Cheap March 14, 2008, 12:15 pm

    Great post! I’ve seen most of these potential tenants too (thankfully no murderers, that I know of, yet).

    I usually try to schedule a bunch of people in a row, often in 15 or 30 minute blocks. Then if there’s a no-show, I just read or get a coffee until the next one shows up.

  • Mortgage Banker X April 9, 2008, 10:58 pm

    Unique, interesting, and valuable article.

  • Sell My House April 14, 2008, 5:32 pm

    Great idea, I will try this out with the lease option I am marketing next week….we will see how it works.

  • Sue July 13, 2008, 4:55 pm

    Wow.. this article really cooled me down! and what an apt title..
    With two no-shows on two consecutive days, i was feeling terrible. You trust people and think that this prospective caller is going to be the ONE.. so you bend backwards and compromise on your rules.

    But the only problem with open house is that we wont be able to screen the tenants before hand , for eg: no big pets, etc etc .

    Isnt that a disadvantage? Any thoughts?

  • luke January 10, 2009, 5:29 pm

    very good article. I absolutely hate the no shows but your right, it’s part of the business. The open house rental idea is very good.

    cheers.

    great site btw.

  • Marie September 14, 2010, 10:25 am

    I have a five bedroom house and I decided to rent out to room mates. The last room available I offered for a reduced price. A girl came in, saw the house, and her prospective room and loved everything about it. She told me, she wants it. I told her I have other people scheduled to see the and if she’s really interested, I have to asked her to give me half of her deposit ($100 out of $200) so I can hold the room for her and I can the other people and let them know it’s been taken. She gave me a $100 to hold the room which will become part of her security deposit when she moves in. I called her Monday, left a message on her phone and advised her to email me her email address so I can send her the paperworks in advance. She emailed and told me that her plans changed and wants her $100 back!…What’s the point of me taking a deposit from her to hold the room if I will give it back to her? Any advise on what to do.

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