Investing in property isn’t about buying a house and then having it sit there looking pretty. The whole point of it is to have it generating income and hopefully pay for itself.
The biggest part of this is getting suitable tenants into the house. But, how do you know when you’ve found tenants that you are sure won’t destroy the place or fail to pay rent? It can be a tricky process looking for tenants and you may never know who they are until several months down the road.
The first step to getting quality tenants is to be methodical in your search. While, you may want to get people in ASAP, try not to rush into anything. Chances are, you didn’t rush into buying the house, you took your time and did your research. Well, take this approach when looking for tenants.
Here are a few suggestions on how to approach your upcoming tenant search.
The first step is to have a comprehensive pre-tenancy application. This application will help you gather all the relevant information that you will need to make your decision.
A good application should provide general information about the applicant’s, current and previous living arrangements and residential references.
On top of the general information, it is also common to ask for work and salary information, vehicle details and whether or not the applicants have been apart of disputes with previous landlords.
If you have interest from groups of people, be it, students or young professionals, it is a good idea to get an application from each member of the group. The information you gather from these applications will allow you to gain a good picture of whether or not they would be suitable for your property.
While having a casual chat with prospective tenants at open homes or over the phone is a good place to start, don’t hesitate to organise formal interviews; particularly as you establish a short list. The questions you ask during these interviews will provide greater insight into their suitability that the application can’t. Common questions to ask include:
- What aspects of the property suits them?
- Why are they interested in the property?
- Their circumstances and ability to pay rent
- Their responsibilities should they be successful, including maintenance and responsibility should damage occur.
During an interview, you’ll also have the opportunity to outline specifics regarding the tenancy agreement and discuss any issues they may have with those specifics.
If you walk away comfortable with their answers and who they are, that’s a good sign. However, if you leave with more questions than answers it may be a warning sign.
This is a normal part of any tenancy application and generally prospective tenants are comfortable providing references for you to contact. It is a good idea to ask for at least two references to contact.
Ideally, these references should be a previous or current landlord or someone with a professional relationship with the applicant. Try to avoid family members or friends, as they may not provide a complete picture.
Contacting references is less about getting to know the individual and more about understanding what they are like as tenants. Ask the referee if they have had any issues with the applicant? Do they pay the rent on time? Are they clean and respectful? And, if they are easy to contact?
If you get the feeling the referee isn’t being completely truthful, consider asking the applicant for another reference. However, this is not a great sign!
As part of the tenancy application, applicant’s allow permission for you to do a credit and background search on them. Conducting one will provide you with insight into their financial position and history.
It will show you information about their current and previous work history, their credit history, including their involvement in defaults, bankruptcies and legal issues.
Ultimately, this will show you whether or not the applicants are in the financial position to afford to live in your house.
An investment property is a massive financial commitment. As a result, it is critical you are comfortable with the people you allow to lease your house. It is important you gather as much information as possible in order to have a clear picture of who the prospects are. Thus, allowing you to be comfortable with the tenants.
If you would like to discuss your obligations as a landlord or anything involving your investment properties, don’t hesitate to contact us today!
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