There are two things to consider when choosing your ideal tenant. First and foremost, know what the legalities are for your rental property. This is so important as it could end up costing you a lot of money. Second, before advertising or showing your property, figure out who your most likely tenant might be. This will cut back on time, energy, and aggravation.
Breaking the Law is Expensive
When it comes to rental properties there might be city or county occupancy rules that you will want to research and find out exactly who and how the city or county allows tenants to live together. For instance, in one of the cities in which I own rental properties, there is an occupancy ordinance that reads in part:
“Family means one of the following, when living together in a dwelling unit or using it as a common place of abode for 30 days or more in any three-month period:
- A natural family of one or more persona who are all related to each other by law, blood, marriage, or adoption.
- Six or fewer persons living together in a facility which is licensed by the Department of Children and Family Services in accordance with 419.001(2), Florida Statues, or a substantially equivalent statute.
- A maximum of two unrelated persons, together with their natural family who are related to each other by law, blood, marriage, or adoption.”
Did you notice number three? What does that mean? Under this particular ordinance, three people are not allowed to live together inside city limits unless they are related to each other. In other words, it is illegal for three friends to room together.
Why do they have that ordinance? In this case, it’s a college town and the ordinance is put in place to maintain peaceful neighborhoods. We find this ordinance a lot throughout my home state of Florida as we have a lot of college towns.
So, don’t get to excited if you are purchasing a rental in a collage town and you find a 4-bedroom near campus, thinking you can rent it for top dollar to university students. It may not be permitted by the city or county ordinances in that area. This is where a knowledgeable Realtor could provide some insight.
Say you do buy this property and unknowingly rent it to a group of college students. A couple of months later you are notified by the city that the cops have been called to the property multiple times, which is when they discovered that you are not in compliance with the city’s occupancy ordinance. You are then given notice to correct the situation. This is where it gets expensive.
To comply you have to ask some of the tenants to move out. This boils down to the possibility that you might have to pay for tenants to move (think moving truck, gas, movers, utility switchover fees, and possible legal fees) and then compensate them for their increase in rent through the end of their lease term. There go all possible profits from your investment! Know what the legalities are before you start marketing to your target tenants. This can save you thousands of dollars.
Targeting Your “Ideal” Tenant
Before you can rent your property, you must first identify the most likely tenant for that property. Here’s an exercise to help:
Say you purchase a 2-bedroom, 1 bathroom starter size home and rents in the area show that the property should be priced below the median rental value. Which of the following is your more likely tenant?
- An elderly single person on social security income
- A family of five
- A recent college graduate just starting a new career
If you selected either 1 or 3 (or both), you’re off to a great start.
Disclaimer: Just because you have a 2-bedroom, 1 bathroom starter home doesn’t mean you won’t get a family of five who want to rent it. But what’ the challenge with renting to that many people? One important thing to consider is plumbing – yep that’s right, plumbing. If you have a septic tank at this property, it may not be the proper size to sustain the use of that many people.
Now that you know the legalities about renting your property and you know who you want to attract to your rental property, you can be better able to find that perfect paying tenant.