Handing over the keys to your retirement. For most people, that’s what investing in property is about. It’s a large investment, but in order to make a return you have to trust that someone will take care of it properly. How do you decide which are the tenants who will keep your property clean, dry, and as damage free as possible, and the ones who are late with rent, lie, and don’t stick to the terms of your rental agreement?
How much is the rent?
What you charge in rent can be a major factor in determining the type of people your property attracts. Charge too much and you may price yourself out of the market. Go too low and your rental property won’t be a viable investment. When factoring in how much rent to charge, make sure the rent you set covers your operating expenses, gives you a reasonable return and is still competitive within the local market.
Application forms
When there’s high demand in a particular area, you can afford to be more choosy about who can live in your rental property. A standard application form can ask potential tenants:
- Where else they have lived (and for how long).
- For details of prior landlords.
- Their employment history.
- For detials of sources of income.
- For a statement authorising you to contact referees and verify the information provided.
Sorting through application forms can be time consuming, but it’s better to be thorough before you hand over the keys, instead of wishing you had done more background on them afterwards.
Interviews
These are an opportunity to ask follow-up questions and gather additional information. It’s a good chance to visibly assess the people you might trust your retirement plan to.
Ask them why they’re moving, find out whether they gave proper notice, how they kept their previous property and treated neighbours. If the applicant is a first-time renter or student they may not have a rental history, which case you might be able to ask for a parent or guardian to co-sign the lease.
Keep in mind you can’t ask questions that might violate fair housing laws, or aren’t part of normal standards for qualifying applicants. You can not reject an applicant based on race, colour, gender, nationality, family status, disability or religion. Any decision you make must be based on sound business practices, otherwise it might be construed as discriminatory.
Reference checks
It’s a two edged sword asking tenants to provide references. On the one hand, you want to check with someone else whether the potential tenants are as good as they say they are. On the other hand, people are highly unlikely to to provide a contact they weren’t pretty sure would say good things. It’s still better to check references than not. Is the referee an employer or previous landlord? They might be able to give an insight into the character of the people who want rent your property.
Background checks
These can be more telling about a person’s character than a referee. Check to see if their names have been lodged with the Tenancy Tribunal. All cases are public record, and will let you know if they have been late paying landlords, caused excessive damage, or generally been a nuisance in other properties they’ve rented.
When it comes to how to find good tenants, credit checks will give you an indication about how they handle money, whether they’ve been declared bankrupt or might have any difficulties paying rent or expenses once they’ve moved into your property.
Property managers
Of course, any property manager worth their fee will run all of these checks for you. Some agencies will be more thorough than others, and some will have access to background check databases you don’t. They will have experience finding the right tenant for the right property, and will also have your best interests at heart. If finding a tenant seems a bit daunting, trust a specialist property manager to run these checks for you.
Worried about letting your home to untrustworthy tenants? Our free guide can help:
