Would you let a stranger into your house? Accepting tenants without adequately screening applicants is akin to allowing a stranger into your house, and handing over the keys. No doubt, a costly decision in any property owner’s book.
While finding a tenant for your rental property is about marketing your property to the right demographic, securing the right tenant for your investment is about thorough tenant screening and reference checking.
In my 35 years’ experience in real estate and property management, on the face of it, one in five property managers process tenancy applications without carrying out adequate checks. This increases the risk of choosing the wrong tenant, which gives rise to unpaid rent, costly evictions, and damage to your property.
But with a little knowledge and a lot of patience and persistence, it is possible to secure the right tenant for your investment, without the risk.
4 tips to secure the right tenant:
1. First impressions.
Turns out our first impressions of strangers are often accurate. So, while it’s essential that all prospective tenants complete the application form and provide all necessary paperwork, there is much more involved in finding the right tenant, than the details of their application.
How the tenant presents themselves (both in dress and hygiene), behaves and communicates – particularly the questions they ask – will establish an overall impression, to help you decide. But it doesn’t stop there…
2. Get details, ask questions:
The tenants needn’t be the only ones to ask the critical questions. It’s important you also know:
- How many people will be residing in the premises? Does that fit within the guidelines?
- What is the age of the tenants? Are there any children or elderly? Is the property suitable for tenants of that age (safety and accessibility)?
- What is the prospective tenant’s desired length of the lease? Does it suit?
- Will the tenant accept the property in its current condition or will they be requiring changes? If so, what are they? Are they reasonable requests?
- Do they have pets? Is the property suitable for pets?
Asking these questions up front will help to vet and filter applications.
3. Check and check again
- Verify their financials: Can the tenant service the rent?
Ideally, the tenant’s income should be three times the monthly rent, but their amount of debt also needs to be considered. Checking financials is about checking that the tenant has an income/debt ratio that allows them to pay the rent at the same time every month. This requires contacting their employer to confirm the length and status of their employment and their income, and request copies of their pay slips.
- Confirm their rental history: Have they always been good tenants?
If possible, get feedback from current and previous landlords and leasing agents. This will provide a broader, more accurate picture of their rental history. Also check for previous evictions, civil judgments or bankruptcies.
The things you should ask:
- Were they ever late paying their rent?
- What was the reason for moving out?
- Did they provide the minimum amount of notice prior to moving?
- How did they maintain the property? Were they clean and tidy?
- Did they damage the property in any way?
- Were they respectful of their neighbours?
- Did they complain often?
If the prospective tenant is a first-time renter, they may not have a rental history. In this case, check three personal references from non-relatives.
- Consistency is key
Consistently having the rent paid on time, every month is one of the most important factors for landlords. So, if a prospective tenant shows that they have regularly moved addresses and changed jobs, it suggests a pattern of inconsistency, which is not ideal, long-term tenant material.
Securing the right tenant is important to a successful tenancy, for both the tenant and the landlord. Use these four tips to help you find and keep the right one.