Winter and the holiday season, for many regions of the country, are slow rental traffic periods. In the apartment world, property managers will tell you that anyone who moves around this time is of year is almost by definition highly suspect.
So how can you best manage slow rental traffic and still find quality renters?
Find Quality Renters even in Slow Rental Traffic Periods
Remember, your goal, in a sense is to identify and mitigate the 3 kinds of risk:
- Identity Risk – Is your candidate who he/she says?
- Behavior Risk – Will they behave well, for your asset, your neighbors etc
- Financial Risk – Simply, will they pay your rent in full, on time?
In ‘peak season’, you can evaluate many applicants and select the ones that best meet your criteria. In off-peak season, you may have very few applicants to evaluate.
If you can wait for the perfect one, no problem. But if you can’t, it’s pretty stressful.
You can reasonably still manage the situation by acknowledging that each candidate brings some level of the 3 risks above, and working to mitigate that risk.
Avoid The Pitfalls of Slow Rental Traffic
Re-focus on the risk and mitigation.
One of the most common mistakes we see in periods of slow traffic is landlords shortcutting their own rental screening process — particularly failing to create or use their own rental acceptance standards.
ShortCutting Your Own Rental Screening Process
Many landlords in off-peak season know there will be little traffic and because there is little traffic, there is little to compare – right?
Wrong. You are still comparing candidates to your rental acceptance criteria – you still must have the criteria to run a compliant process, and critically to have a proper baseline.
Without knowing your acceptance standards, it’s harder to identify the type of risk your traffic is bringing and how to mitigate it.
- Is there behavior risk or financial risk?
- Is the financial risk low, moderate or high?
- Am I willing to even consider a candidate with high financial risk, and if so, how can I best reduce the risk and protect myself?
Great renters are typically the result of successful evaluation of:
- The type of risk
- The level or risk (low, moderate, high)
- Subsequent options to reduce the risk if possible.
It’s even a good idea to share this with your candidate in the proper tone and style, and see if an agreement can be made.
2 Success Stories of Finding Quality Renters in Slow Rental Traffic
1. “No Pets for New Rehab” – Successful Risk Identification
A client renovated the house, and had a no-pets policy, but after weeks of not finding the right candidate and slow traffic – they were getting worried. Then a seemingly good family applied – that had a pet – and a big dog at that.
What type of risk is this?
- Well, if the landlords are worried about the dog hurting the neighbor’s children or barking all night, that is behavior risk.
- But if they are worried about the dog chewing up the newly renovated house, that’s financial risk.
The landlord mitigated the behavior risk by meeting the dog. It was an old and tired dog that seemed to sleep a lot.
Conclusion: Low behavior risk that the dog presents.
The owner then mitigate financial risk with a higher security deposit and monthly pet fee, which was readily agreed to.
Conclusion: Low financial risk presented by the pet.
A win/win agreement with low risk for both parties was then struck. Lease was signed and renters moved in.
This is a great success story and example. The owners originally didn’t want pets – but were able to think through:
- Is my risk with the candidates or the pet?
- Why does the pet worry us, what are we trying to avoid?
- The pet brings low behavior risk and some financial risk to our new rehab
- How can we mitigate the financial risk?
- Would I rather wait for additional candidates or have I mitigated risk well?
2. “Low Financial Risk given Candidate High Cash Position” – Successful Risk Identification
Just like real estate investors offer all cash or high earnest money to increase their odds of securing a property, renters may offer higher cash or prepayments to increase their odds of securing a rental house.
Unless the rental supply and demand is way off – like maybe in San Fran – we see more of this from riskier candidates who are trying to better position themselves.
It can seem like a great no-brainer, a wonderful applicant who brings barely any financial risk.
Maybe, maybe not.
A client was renting a nice “B” type property and attracting some traffic, but fairly low-quality traffic for a few straight weekends. Then a nice couple with high-cash applied and it seemed as though finally the right candidates had come their way.
The bank statements panned out, the pay stubs looked good, the application looked solid. The candidates were going to bring the certified check and sign the lease – but kept avoiding the background check.
Seemingly, this presented very low financial risk.
“Oh yeah, we’ll get to that, but we’re all ready with our check in hand, see you tonight and we’ll sign the lease.”
The landlord had encouraged the couple many times to complete the step, but it seemed trivial to the candidates – and finally the landlord had to say – don’t bring the check until the background is done.
Never heard back. In periods of low traffic, it is tempting to believe the best in candidates and rush the process, lest the owner risk losing the seemingly good applicant.
This is a great success story. Sticking to the process revealed the risk types and levels:
- Behavior risk: High
- Financial risk: Moderate at a minimum, and more likely, high
Two weekends later, a couple applied who was going through a corporate job re-location. The process was swiftly followed by all parties and this was truly a low-risk situation.
By waiting 2 more weekends, a much better outcome was achieved.
You can still find great renters with slow traffic. It may take more time, but you can still be successful by:
- Adhering to your process, including importantly, having your rental acceptance standards in place
- Knowing there are 3 kinds of risk each applicant will bring
- Your job is to successfully evaluate the kind of risk and the level of risk
- Then determine if there are ways you can successfully mitigate that risk
To your success!