30 day challenge

day 5

Question 5

My wife and I are buying our first rental. From the reading I've been doing on this site I don't hear anyone using realtors to find good tenants. This surprises me, why?

The last person a local realtor referred to me was slowly going crazy, had a husband in prison, had no respect for people who told her things she didn't want to hear, zero respect for contracts, and owed $11K in federal debt.

As the owner and landlord of property, I would rather have it vacant than accept an appicant who has issues. An issue is something that may prevent the tenants from being able to pay the rent. Example, small savings account, poor credit history, a prior eviction, limited work history

Realtors are into sell houses, not rentals. There is not much money for them. They cannot make a living on fiding tenants for residental rentals.

Robert J said it best.

No, they they are not worth it.

Heather - who cares if they screen. No tenant is screened until I say they're screened. In my situation, Realtors have done a great job finding tenants. However, being an agent myself, I do save half of the commission so it's easier to justify.

I like the fact that it's an extra hoop to jump through for the tenant. Maybe I'm wrong, but I think agents bring a better caliber of tenant, someone responsible enough to hire someone. Plus there's another advantage. Most tenants relocating from other cities use agents. Relocation due to job transfer = paying tenant. Anyone worth promoting has their act together.

If the agent thinks they are a waste of time they usually dump them before bothering me.

Heather - who cares if they screen. No tenant is screened until I say they're screened. In my situation, Realtors have done a great job finding tenants. However, being an agent myself, I do save half of the commission so it's easier to justify.

I like the fact that it's an extra hoop to jump through for the tenant. Maybe I'm wrong, but I think agents bring a better caliber of tenant, someone responsible enough to hire someone. Plus there's another advantage. Most tenants relocating from other cities use agents. Relocation due to job transfer = paying tenant. Anyone worth promoting has their act together.

If the agent thinks they are a waste of time they usually dump them before bothering me.

Let see there are two ways a realtor "finds" tenants. The first is when they are your property manager (they work for you). You hire them to "find" the tenant. This is a backwards relationship. The longer they work to find a good tenant the less they earn per hour of effort (see Robert J's comment above).

The second method is when the realtor "finds" a tenant by representing a tenant to locate a property (usually for a friend or a buyer that doesn't qualify to actually buy). Typically the tenant would pay for this but since tenant usually don't have money the realtor usually asks the LL to pay.

I tried it just once during a really dry spell. The Realtor brought me worse prospects than I was finding on my own.

I have never listed a property for rent through a realtor. Giving the listing is a contract that I do NOT want to enter into.

However, I have had several tenant prospects referred to me by realtors. I pay a small commission if it works out.

When I buy a house, it is usually in pretty bad shape. When the place is completely rehabilitated, I hold a small open house party, a house warming party. Every subcontractor and my workers, various vendors, neighbors, friends and the real estate agents (from both sides, if there were two) are invited. I like to show off my new masterpiece.

So all the realtors I've worked with know what my houses are like, and they are amazed at the transformations. When they have someone to refer, they call me. I don't pay the normal "first month's rent," but I'll pay one-half of that for an agent making a referral that works out. (I hvae no idea if this is reported to the broker and split with the broker. I pay cash.)

I do not rely on the realtors to do my screening for me. But I am happy to take their referrals. They are not my primary source, and I never list with them -- they just know that if they have someone, my houses are something they can show without worry, and they'll get some $$ if we make a deal.