Finding and Renting to ‘Perfect’ Tenants : An owner’s guide to sprucing up rentals, advertising, showing units and setting rents.

Looking for an apartment to rent is a bit like playing a slot machine. You’re always hoping to hit the jackpot--that great place with huge closets, a breathtaking view and cheap rent.

The apartment owner with a vacant unit is also trying to hit the big one--tenants who are quiet, pay the rent on time and never throw bad things down the toilet.

As a fairly new landlady/owner of a four-plex in Long Beach, I have just successfully gone through, for the second time, the game of chance of renting an apartment to new tenants.

It had been a year since I had first rented a unit, and I used the time to learn about my property, to read books and magazines and to talk with other owners about how they manage their apartments. As a result, the process was much easier the second time around.

What follows are some common-sense suggestions, from one owner’s point of view, on how to handle the renting process so both landlord and tenant can win. I’ll concentrate on six major points:

--Deciding on the amount of rent and security deposit.

--Preparing the unit.

--Advertising.

--Taking applications and checking them out.

--Showing the apartment.

--The rental agreement.

It’s important when you buy income property to familiarize yourself with the local housing regulations. You must know if there is a form of rent control in your area or any specific rules on renting to families with children, providing access for physically handicapped people, etc. Buying a book such as Robert Dicker’s “Summary California Landlord Tenant Law” is also recommended.

The following discussion is general and must be adapted to fit the laws of your city.

--Deciding on the amount of rent and security deposit.

As the owner, you should find out the history of the renters in your apartments. Do they stay a long time, or do people come and go? Since rent is a big factor in tenant turnover, this information will help you determine how well your rents are in sync with the market.

My underlying assumption is that we all want happy tenants who stay in their apartments forever and keep their places up. It’s an ordeal to keep re-renting a unit, and a losing proposition to boot.

That’s why it’s important to know the market rents for similar apartments in your area and whether your rents reflect that value.

Suppose you rarely have vacancies, but now that a unit has become vacant, you would like to get you money’s worth for it. Look for “Apartment for Rent” signs on your street and on surrounding blocks, noticing what the buildings offer the renter in terms of exterior appearance, location, view, privacy, yard and other amenities.

Often you will have to call to find out the rent. Don’t hesitate to ask for details such as whether the unit is freshly painted, how many bathrooms, availability of garage or parking, storage, whether pets are allowed. These details can be your ace in the hole when you are marketing your unit.

Likewise, check the local paper and investigate how much people are getting for similar apartments. Keep rechecking the paper and the street to get an idea of how fast the apartments are being rented.

When you have finished your preliminary investigation, take a hard look at the unit you are offering as if you were thinking of renting it yourself. What do you think you would be willing to pay to live here? It might pay to paint the unit or add a ceiling fan to make the place look inviting.

Once you have set the rent, the consensus is that you should set the deposit for the same amount. That will be the move-in fee. If you require first and last month’s rent and a deposit, it can narrow the number of tenants who can come up with that much cash.

If you charge first and last, a tenant may give you notice and use last month’s rent in lieu of payment, leaving you without a deposit against damages. Charging a month’s rent and the deposit is a good compromise.

--Preparing the apartment for rent.

Do not return your outgoing tenant’s deposit immediately. Legally you have 14 days after he or she leaves to return it. Although on first glance, it may look like the apartment is reasonably clean, check everything out thoroughly.

For example, I had a tenant move out of an apartment in which attractive gray carpets had been newly installed just a year before. When the tenant left, the carpets looked clean, but when I vacuumed, I realized there were vast yellow splotches in two of the three rooms. I rented a heavy-duty shampoo machine and couldn’t remove the discoloration.

I called a professional carpet cleaner for an estimate, and he told me that the yellow was actually bleached out coloring, possibly from water bed chemicals, and that he couldn’t do anything about it.

I was forced to recarpet the two rooms and took the money out of the deposit, forwarding all the documentation to the former tenant with the balance of the deposit. That’s why I don’t allow tenants to have water beds anymore, unless they carry their own insurance.

There may be other damage. Be sure to pull out drawers on built-in dressers and open closet doors and windows. Nothing is more embarrassing than showing a tenant a lovely special feature of your unit and having the knob fall off in your hand.

After you’ve dealt with damage, burned-out light bulbs and leaking faucets, it’s time to attend to cleaning. Unless your previous tenants were quite unusual, it will be necessary for you to hire someone or devote yourself to thoroughly cleaning the apartment.

Clean windows, mildew-free shower, gleaming sinks and toilets impress a prospective tenant.

Finally, look over the outside of your building. You should be following some kind of plan to enhance the exterior, if you didn’t buy the building in mint condition. Even the addition of a few bright flowering plants can bring out the “I want to live there” urge in the most cynical of tenants.

--Advertising.

It’s good to start advertising a soon-to-be-vacant unit as early as possible, but it seems that people are more interested in committing themselves as tenants when the unit is actually ready. There’s something psychologically deterring about an apartment that doesn’t have the toilet re-installed yet, or is still full of your old tenant’s boxed-up treasures.

However, it doesn’t hurt to try to attract interest, especially with free advertising. In many neighborhoods, you can place a sign in front of your building. You can also affix a sign on the street corner telephone pole with the apartment address and your telephone number.

I don’t like to mention the rent in my advertising. At first I included it, thinking it would weed out people who weren’t really interested. But I found out that it tied me to quoting a figure that I might want to change, depending on the market. It seemed awkward to be advertising a unit for $500 for two weeks and then $450 the next, if I decided I was asking too much.

Also, I found that I could be more descriptive on my signs or any free advertising spots (corner laundry, community center, local college), than in the local paper, where a few extra adjectives made a big difference in price. It seemed that just as many people called me when I mentioned how lovely and huge the living room was and that the unit had been completely remodeled, than when I pared it down to “3br/1 ba/ocean vu” and my phone number.

My theory--remembering when I was a renter--is that people look for how many bedrooms a place has and call all the places advertised and compare them after they’ve talked to the landlord. That’s when all the juicy details matter.

--Applications and credit check.

Rental application forms are available free to members of the local apartment owners’ associations. You can also get forms from books in the library or at the store. You can look at a variety of these forms and see what you like about them and make up your own.

The most important items to me are present employment information, present living situation and credit card debts. It’s nice to have a history of where the person has lived and worked for the last five years to see how often they’ve moved around, but it’s hard to judge a person by that, and sometimes people lie.

For a small fee you can get a TRW credit check on them and see if they pay their bills, and some places charge prospective tenants that fee just to put in their application. Members of apartment owners associations can get credit checks for $9.50, or a report can be obtained by contacting an agency listed in the phone book. For example, a company called Credit Check, (213) 969-8060, will do the service over the phone for $12.

It’s important to check a prospective tenant’s employer and former landlord to see what they say about them. Nevertheless, sometimes people cover their tracks or get friends to vouch for them.

To check the veracity of the information listed on the application, you might ask the former landlord how much rent was charged and see if the figures match, or ask how long the person lived there. In other words, ask more than just yes-or-no questions to get the landlord telling you the information, rather than feeding him or her the numbers off the application.

A good book on the subject of sizing up prospective tenants is “Landlording” by Leigh Robinson. This book is designed for do-it-yourself type of landlords and addresses myriad important issues for the small investor.

When I ask people how they size up prospective tenants, they admit how hard it is to judge people. Sometimes the nicest, most conservative-looking couple turn out to be destructive or always late on their rent, and the slob with the filthy car is the model tenant. You have to check them out, and then sit down and try to get to know them.

It is illegal and ignorant to discriminate on the basis of sex, race, creed, age, physical handicap and sexual preference. You might also be losing an excellent tenant.

But you can have criteria that tenants must meet before you rent to them. You can decide how many people may live there, determine whether they have ample income for the rent, whether or not they may be smokers, if they can keep pets, etc.

I like to tell my prospective tenants some of the disadvantages of living here and see their reaction. I don’t make things up--I just want to see if they can handle real life as it occurs in this building.

For example, I live upstairs and have noisy dogs. I tell the people to stand in the bedroom downstairs as my dogs rip through the house playing tag like they do on occasion. If the people don’t like it before they move in, they’ll hate it when they live there.

--Showing the apartment.

A realtor friend of mine gave me a good tip on attracting attention to your vacant apartment. Put an “open house” sign outside when you can spend some time showing the place, leave the door open and be available to anyone interested in a guided tour of the place.

It’s amazing how many people will look at an empty apartment. Some rave about it and you never see them again. Some come back a second and third time and can’t seem to make up their minds. Some swear they want it, but when you look at their income there’s no way they can afford the rent without a roommate they plan to get but can’t think of anyone just yet.

If someone is interested, encourage them to make out the application then and there. I have handed out oodles of applications that I’ve never had returned and then had to hurry out and make more copies so I’d have some when I needed them.

If people are seriously interested in renting the apartment, they’ll take the time to sit down and fill out the application on the spot, or they’ll come back when they do have time.

Of course, a very busy person may seem sincerely interested and you might want to give him or her an application to take home, but this should be done rarely.

When showing your apartment, it really helps to be patient and understanding.

People can talk your ear off on the phone with their special situations and whether it will, say, work out if their five children come and stay with them just for the summer? You might tell them how much it costs to move in, ask them to come and take a look and fill out an application. Chances are they’ll never show up.

It’s easy to start disliking people because you are seeing them at their worst. When they say one thing and do another, you suspect everyone of being that way. Try not to fall into an irritable, snippety mood because people won’t want to do business with you. Be pleasant and give people the benefit of the doubt, but don’t assume that you’ve got a tenant just based on talk. Remember, you don’t have a tenant until the deposit check clears and the rental agreement is signed.

--The rental agreement.

The rental agreement is very important. Like the application, you can obtain forms from local apartment owners’ associations or from books (“Landlording” has a form for everything.) Look the agreement over very carefully and make sure it covers all important issues, like where on the property they can park their cars, whether they can have pets, how many people can live there, warnings about loud parties.

You may want to personalize your contract to fit special circumstances.

These suggestions are only that, suggestions, based on my personal experience; they are not cast in stone. You’ll need to modify them for your situation.

But the important thing is for landlord and tenant alike to put themselves in each other’s shoes and try to understand each other. You don’t want to gamble on superficial impressions.