When selecting the perfect tenant, landlords must consider many factors to choose a high-quality renter who will properly take care of their property. We at Amhurst follow the “Longevity-Stability-Ability” formula to select the best tenants for the properties we manage, which we believe is the secret to succeeding in renting any type of property and earning consistent revenue from it. In this blog, we’re going to break down this formula and tell you why independent landlords should use it as a guideline to pick out good potential tenants from the not-so-good ones.
The Longevity-Stability-Ability Formula for Renting Properties, Explained
Longevity
Longevity describes tenants looking for properties they can stay for as long as possible due to their lifestyle. We have covered before why we recommend landlords rent their properties (unless their rental is located in a tourist area and their target audience is tourists) for the long term, and the main benefits of choosing long-term tenants are:
- Steady Income: Vacant properties only produce expenses that can pile up while you’re looking for your next tenant, a task that can also cost you money and time. Preferring long-term tenants saves you from the hassle of constantly looking for new tenants. You’ll be dependent less on fluctuations in demand for short-term accommodation in your area that can leave you with an unoccupied rental for an indeterminate time.
- Lower Turnover Costs: Changing tenants involves costs such as advertising, background and credit checks, cleaning, maintenance, and sometimes renovation to prepare the unit for new renters. With long-term tenants, you’ll reduce these expenses because they’ll be less frequent.
- Reduced Wear-and-Tear: Frequent tenant turnover is more likely to cause more damage to the property because renters have a “short-term” mentality and may be less careful while using the property’s amenities. On the other hand, long-term tenants tend to treat the property like a home, often maintaining it better.
- Predictable Relationships: Landlords can establish a reliable and predictable relationship with long-term tenants, minimizing conflicts and misunderstandings over time. Trust and mutual respect typically increase over the years.
Some tenants who fit the longevity criteria are families with children, people with pets, and professionals who work near the property. These types of renters tend to look for long-term rentals because moving may be especially difficult and disruptive, and they want to stay in the same neighbourhood for at least some years.
Stability
Stability stands for tenants who have a stable life. Stable tenants are crucial for landlords because they bring the consistency, reliability, and financial security that will save you from more than a headache and will make your landlord’s life easier. Stable renters often make regular, on-time payments, long-term rentals, and predictable property management. With stable tenants, landlords experience less surprises, emergencies, and after-hours calls. Long-term tenants are also more familiar with the property’s rules, reducing disputes and maintenance mishaps.
Ability
The tenant’s ability to pay rent without scraping together money every month is one of the most essential factors for landlords because rent payments will (obviously) directly impact the financial viability of your rental business. Consistent cash flow via regular rental payments will help you cover recurring expenses such as repairs, maintenance, property management fees and utilities (if you agreed to cover them in your lease.)
Rent payments are also the source of your revenue and the foundation of your return on investment (ROI), ensuring your venture is profitable and enabling future growth or reinvestment, such as buying another property to expand your business. Make sure, through credit and employment background checks, that your potential tenants have the means to pay rent in a timely manner without being a significant financial burden to them.
Longevity-Stability-Ability: The Best Way to Ensure Success as a Landlord
Following the Longevity-Stability-Ability formula whenever you screen tenants is the perfect guideline for finding trustworthy renters who will help you reach your investment goals. We have a blog with the questions you must ask your candidates and a step-by-step screening guide that complements the formula and will help you spot the best tenants for your property.
