E07: Tenant Screening Tips and Navigating the Impact of Rising Interest Rates

Discover the secrets to decode local real estate trends, master data-driven tenant screening, and build a rock-solid portfolio for an everlasting triumph. In this episode, Peter, Ron and Wade discuss the impact of rising interest rates on the housing market and offer their predictions for where rates are headed in 2023 and beyond. They also share tips for effectively screening tenants, including checking car cleanliness, and discuss the benefits of using property management software to document communications. 

Here are some power takeaways from today’s conversation:

• Examining interest rate trends and predictions for 2024
• The shifting real estate landscape from multifamily to single family
• Establishing boundaries and expectations for property management
• Essential checks for evaluating potential rental tenants
• Maintenance requests and communication with tenants

 

Episode Highlights:

[02:45] Examining Interest Rate Trends and Predictions for 2024

There is a misconception among some Americans that 3.5% to 5% interest rates are normal, when in fact historically, they are exceptionally low. As rates continue to potentially decrease, there may be individuals who choose to wait on the sidelines, anticipating further drops. It will be intriguing to observe how the data supports these potential reductions, and to unravel the underlying factors influencing this shift. With various elements at play, it is difficult to pinpoint a precise trajectory, but it is predicted that by the end of 2024, interest rates could reach approximately 6.75%.

[14:43] The Shifting Real Estate Landscape From Multifamily to Single Family

In recent years, the multifamily sector has experienced a surge in popularity, with many investors flocking to this market. However, various factors such as interest rates, new developments across the country, and repeated trading of properties have shaped this space. As a result, there is now a growing trend towards single-family properties as investors seek good deals and value. Observing the demand in the real estate market, some experts predict a shift towards single-family homes. Additionally, industrial properties, outdoor storage, and flex spaces have seen increased demand in recent years, particularly due to the effects of COVID-19. For investors who prioritize supply and demand dynamics, the allure of single-family properties may eventually lead them to this segment of the market.

[28:41] Essential Checks for Evaluating Potential Rental Tenants

• When evaluating potential tenants, it's crucial to conduct credit and background checks. Checking their credit scores, performing NTN reports for credit history, and looking for red flags like evictions or bankruptcies are important steps. Verifying income, liquid assets, and rental references also help ensure the reliability of applicants. These standard checks allow landlords to screen out risky tenants and select responsible individuals who will pay rent on time and maintain the property.

[35:37] Establishing Boundaries and Expectations for Property Management

Implementing software as a communication filter provides a crucial boundary when it comes to property management. By setting clear expectations from the beginning, including maintenance standards outlined in the lease agreement, and informing tenants about quarterly property inspections, boundaries are established and maintained. This proactive approach ensures that all parties involved understand their responsibilities and helps foster a successful landlord-tenant relationship.

Resources Mentioned:

www.gsprei.com