Many property owners underestimate the value of good tenants, until they get bad ones! There are a number of important things to consider when choosing the perfect tenant and a bad choice can end up being a disaster. Check out our 5 tips for choosing the right tenant and find the perfect match to help take care of your investment.
Make a wish list
When rental properties are in demand, you can be inundated with good applications, making the selection process overwhelming. Before your listing is published, outline some features you think would appeal to your ideal tenant.
It can be useful to consider the demographic in the area when deciding how to describe your property but it’s important not to be discriminatory. If your property is near a university, then ruling out students might limit your options for example. Many tenants will be renting with pets too and this may not always be a bad thing. Those with animals to care for tend to stay on longer as tenants, either to avoid unsettling their pets, or because it can be difficult to find a property that is pet friendly.
Looks can also NOT be deceiving
It’s important to be objective where judgement is concerned but you can tell a lot about a person at first sight. Property managers are experienced with using those instincts so trust yours to do this. If you are interviewing them yourself, pay attention to things like whether they arrived to the appointment on time, whether they have the things they were asked to bring (or pre-registered online as many property websites now request).
Also consider the efforts they have made with their appearance. Someone who turns up late, dishevelled and hungover is certainly doing themselves no favours, compared to the freshly showered person, coffee in hand who is waiting eagerly to meet you. Small things can also be warning signs too – if their car is a mobile rubbish tip there’s a chance your property will become that too. If they seem unorganised and unreliable this will inevitably play out when they become your tenant.
Be sure they can pay the rent
A tenant that can pay the rent on time every month is crucial. Make sure you check the financial information they provide thoroughly. Ideally you can get a sense of their income and their current expenses and determine from this whether they will be a secure option for you. Asking general questions around things such as direct debits or monthly leases they currently have – for cars or gym memberships for example – can indicate their capacity to budget and make regular payments.
Self-employed people are well worth considering too as tenants. Because they can’t provide pay slips specifically, they will often give more comprehensive information such as balance sheets and bank statements to prove their capacity. Don’t rule out people who have been living overseas or travelling either. Asking for things like Airbnb summaries can give an indication of their monthly accommodation spend, which can often work out at more than the rent you’ll be needing them to pay.
Do a detailed background check
On paper the basic facts can make it hard to get a sense of the real character of a person. In these days of social media, it is easy to search for someone online and get a sense of their lifestyle, though try not to lean too far into stalker territory. If they have provided referees, be sure there is at least one unbiased person and ideally a previous landlord you can call. If they provide none, then ask for them and if they decline to provide details, move on. Without some kind of verification of their character, you are really just asking for trouble.
If you have the chance to speak to a previous landlord, ask specific questions such as how long they lived there for, how much interaction the landlord had with the tenant and whether they were consistent at reporting relevant issues with the property, or were particularly fussy about things. Speaking to their employer or one of their major freelance clients can also be useful, especially where their capacity to pay rent is concerned.
Trust your instincts
You can often tell during the application process if someone will be easy or difficult to deal with. Good communicators are gold when it comes to your investment – they are your eyes and ears in the property after all. Use and trust your own instincts. Some people are very relaxed about things like dripping taps or loose door handles – this is what you DON’T want. Alternatively, you don’t want someone calling you about every squeak in the floorboards.
Even if you are using a property manager, things can go wrong due to simple personality clashes. Tenants have the right to ask questions about the property, however, some questions can be unrealistic and over the top. If they ask a lot of questions that you find to be not relevant, this may be a sign of things to come. Conversely, an applicant who provides all the information required, responds practically to questions and delivers further information as needed will more often than not be a pleasure to deal with in the longer term.