4

I own a four family building which I am actively renting.

Every time I go to rent it I raise the rent slightly and I check the comparables in the area to make sure I am still not pricing myself out of the market.

I ALWAYS get a ton of people that are willing to rent the unit and I end up having to pick one.

Is there a graceful way of doing this?

I tend to just pick the one I think is going to be best but honestly they're usually all fine.

Can I just start a bidding war? Is this a bad practice? How do you get people into a bidding war?

DotNetRussell
  • 2,964
  • 21
  • 35

3 Answers3

12

I don't know how many people "a ton" is, but if you are getting more than, say, 6 people who are qualified to rent, you've priced it too low. Better to ask for $1200, and have a potential tenant haggle or ask you to reduce the price than to have 6 people want it for $900. It's worth it to run a credit report, and let that help you choose. I agree with Victor, a bidding war is appropriate for a house sale, not rental apartments.

You didn't mention your country, but I'd be sure to find out the local laws regarding tenant choice. You may not (depending where you are) discriminate based on gender, sexual orientation, marital status, race, or religion.

JoeTaxpayer
  • 172,694
  • 34
  • 299
  • 561
8

I wouldn't start a bidding war if I were you. Sometimes you may get potentially bad tenants who cannot find a property anywhere else offering more money just to get in a place. If you know nothing else about these people how can you guarantee they will keep paying the rent once they get in.

The things you should be doing is checking the prospective tenant's employment and income status, making sure they are able to easily pay the rent. You should check their credit report to see if they have a history of bad debts. And you should be checking with their previous landlords or real estate agents to see if they caused any damages to their previous properties.

You should create a form that prospective tenants can fill out providing you with all the essential information you are after. Get them so sign a statement that gives you authority to ask information about them with other people (their previous landlords/ real estate agents, and their employers).

Have a system set out on how you will assess all applicants and for the information the applicants need to provide you with. Treat it as a business.

Victor
  • 20,987
  • 6
  • 48
  • 85
1

I'm surprised by all these complicated answers. Yes @Victor, you can create a form that asks people to put down their financial information but you want to be careful and not put off potential tenants by asking for too many details. Depending on the OP's typical tenants, an extensive background and credit check may not be necessary. For example, if I have proof that someone is a graduate student at the local university, that's usually good enough for me because I am willing to bet that they will follow my contract.

Bidding war doesn't sound doable, you advertise a price correct? You can only be haggled down not up.

So my suggestion is to look at other rental advertisements in the area. Compare what you're offering (location, quality of house, cleanliness, amenities, etc) to the competition and price accordingly. If you're getting a flood of interest, then you're probably pricing below the average price in your area. Or you live in an area where demand is just much higher than supply, in which case you can also raise your rent.

grayQuant
  • 273
  • 3
  • 8