One of the most difficult parts of being a landlord in Indianapolis is finding qualified, committed rental applicants and converting them to tenants. Significant time is spent to determine if an application can be approved, and then actually getting a lease signed. The really great applicants are a challenge because the world is their oyster. There is a lot of competition for them as renters. Getting a great applicant committed is your goal. The poor applicants always seem ready to commit within minutes of making application.
Last night, an accepted great applicant as of two days ago, chose to not move forward signing a lease. I asked if there is anything we can do to change their mind? Unfortunately, there rarely is because the problem is not the lease terms. The decision to back out is based on finding housing the applicant likes better.
Three Policies To Find Committed Rental Applicants
Through the years we have discovered a few ways to reduce these back-outs. There is no perfect solution. To me they make sense but in your business, depending on the homes you offer, they may not.
1 – Don’t Make Your Application Fee and Screening Process Cheap and Easy
Raise your application fee to a not-outrageous level but one that causes applicants to be serious. Some managers and owners set their application fee to match the cost incurred for the screening. Your time to underwrite every application is worth something. Figure out the sweet spot where serious people will still make application, while not chasing them off due to the application fee. This change will limit your applications to the most committed rental applicants.
2 – Approved Applicants Need to be Ready to Pay a Deposit
Don’t stop showing the property until the commitment is in writing and funds have been committed. For example, we require a deposit at lease signing. Sometimes applicants will ask if they can pay the security deposit later or even at move in. Some people do not feel truly obligated until they have separated themselves from their money. Signing the lease is not enough. Get a lease signed and the security deposit paid. Committed rental applicants will have no problem with this policy and will be willing to proceed immediately.
3 – Sign The Lease and Submit the Security Deposit
We don’t take a deposit without the lease being signed. Some owners take a hold deposit. Be sure all parties to the hold deposit understand what happens to these funds if a lease is not signed. Applicants see this as a refundable amount that keeps anyone from jumping in line in front of them. If the landlord or manager accepts a hold deposit be sure it’s non-refundable, the applicant knows that, and if it’s enough money it will be painful. After all, the hold deposit forces the marketing to cease for the home so everything is now on hold.
We find a policy for a quick lease signing, with a deposit payment, is the best way to ensure that you have a committed rental applicant.
There may be other processes people use. Ultimately, if the applicant finds a house they like better there, is not a lot you can do but keep showing the home. The above processes though will eliminate some of the tire kicking that can cause wasted time and a delay in locating a great tenant.