Where to find the right tenant
Now that you’re ready to rent your investment property out, the search for the right tenant begins in earnest. There are three primary ways you can find the right tenant, but each of them carry different potential pitfalls. Here’s what to keep in mind:
Word of mouth
Asking your friends and colleagues if they know anyone who might be perfect for you is a great way to find someone you’d expect to be relatively reliable, but it can jeopardise that relationship if things go sour. We recommend you conduct candidate screening on their recommended tenants anyway, just to be sure you don’t end up with a dud tenant, and end up losing a friend in the process.
Using online classifieds services to find the right tenant can also be a little tumultuous. Make sure you have enough time and resources on hand to manage your advertisements, sift through applications, and whittle down your list to your top tenant choices. Don’t forget to make your life easier when managing your online advertisements, and delete the listings when you have found the right tenant.
Hiring a letting agent could solve all your problems, but finding the right person may take you a few tries. Make sure your selected letting agent applies rigorous screening methods and that they are meticulous about adhering to your requirements. Keep in mind too, that they will require a commission from you, so include that in your calculations when setting a rental price for your property.
Screening potential tenants
No matter how you find your top potential tenants, you must screen each one. Consider it akin to a job application process, and be rigorous in your screening methods. Depending on your requirements, you should ask your potential tenant to submit the following when applying to rent your property:
- A certified copy of their Identity Document
- Three month’s bank statements
- Written references from previous landlords
- Confirmation of employment or a payslip
- Agreement to undergo a credit check
- Full details on who they intend to have living with them
If you approach your tenant selection process in the same way as a job application process, then you’ll know that setting up an interview is essential. If possible, try and set up an interview that doesn’t take place in your rental property, and is therefore a neutral location. If, at any time, you feel the interview process isn’t working out, it’s much easier to leave, rather than being stuck having an awkward conversation while in your rental property. A thorough interview with your potential tenants will give you good insight into their lives, and let you know if you share matching or similar values with your potential tenant. Ensuring that your potential tenant shares similar values to you - especially in terms of lifestyle and taking care of your property - enables you to start building a relationship of trust. You’ll need that relationship of trust in place when you hand over the keys to their new home.
Verify, then trust
It’s not enough to just have copies of your tenant’s important documentation on file: you must verify the information too. Falsifying documentation is all too easy nowadays, so be sure to: - Conduct a credit check for your tenant - Verify their employment, directly with their employer (Don’t feel bad: Human Resources Departments are very comfortable with this process, and regularly receive verification requests) - Verify their references. Wherever possible, get in direct contact with their previous landlord, so they can substantiate their written reference. (Again, don’t feel bad: as a landlord, they know all too well the potential fears surrounding renting out their properties!)
Lifestyle and habits
You’ve found who you think is the perfect tenant, and they’ve passed every test. Their credit score seems perfect, and they’ve received glowing references from past landlords. But, there’s just something that doesn’t sit right with you, and you can’t think why. Don’t be shy to look your potential tenant up on social media platforms, to see if they really do live the “quiet life” they claim to. Consider this part of your screening process, just as employers now conduct online profile searches when researching potential candidates for a job.
Trust your gut
You’ve shown your potential tenant around the property, they’ve passed every test, and they’re ready to pay their deposit, but something just doesn’t feel right? In all things, trust your gut. Rather avoid the hassle and heartache of having to deal with a potentially troublesome tenant, than be stuck with a dud.