CASE STUDY -- Lateral thinking

Property managers need experience – and a healthy dose of lateral thinking – to weed out dodgy tenants, says award-winning property manager Ros Munt

With 25 years under her belt as a property manager and a 1,000-plus property rent roll at Smallcombe Real Estate in South Australia, Ros Munt has been caught out by a tenant on only a very few occasions.

Ms Munt, winner of the Real Estate Institute of South Australia (REISA) property manager of the year award, is the first to admit there are no fool-proof methods when it comes to finding the right tenant.

“No one has a magical solution; I do use a lot of instinct and life experience to determine whether the tenant is suited to a landlord and then I support that decision with thorough background checks,” she says.

On one occasion, however, the Smallcombe Mitcham office where Ms Munt works was caught out in a staggering act of tenant fraud that affected more than five real estate agencies in Adelaide and cost thousands of dollars.

“One of my managers met the potential tenant,” she says. “Unfortunately, the chap who chose this person was a young lad and he probably thought he looked like a good tenant. We did check the references that were valid at the time; however, what we found when the police went to the property was shocking.

“He had a filing cabinet in his home that had folders for each of his identities, and each of the [financial] companies he was dealing with,” she says.

“There was even a phone and a little story about what he had told that person in each file. He was very organised and clever about his deception.”

One way to minimise the chances of this kind of situation affecting your business is to employ mature staff and to follow your intuition, Ms Munt says.

“I employ mature staff because, for me, life experience adds to helping pick a tenant,” she says. “I can look at a person and immediately pick if their application will be good or not, and nine times out of 10 my gut instinct is correct.”

According to Ms Munt, illegal activity carried out in rental homes is on the rise and should be the number one priority for property managers when assessing tenants.

“It is a massive issue and is only going to get worse,” she says. “It is a bigger [concern] than someone simply not being who they say they are.”

“It is impossible to be 100 per cent accurate in screening a tenant, but you’ve got to obviously ensure you do as much as you can,” she says.

“This means not just checking one thing on their application. Some agents only check the rental reference because they think that it might be really good so they’ll just go with that. You actually really need to work through it and confirm their employment, confirm character references and then back that up with all the documentation they should produce to prove who they are, including a bank statement and photo identification.

“After that, it is very important to cross check that information with a database like the National Tenancy Database.”

Ms Munt says too few managers scrutinise potential tenants properly.

“It is looking outside the square – this is, once again, where experienced managers come into play.

“It is all well and good to look at someone’s application, but ask yourself how many people were parked in the car outside. Is it the family that is actually going to move in? They may have told you there will be two people living at the residence on the application, but if you glance out the window then you’ll find the rest.

“Also, have the tenants declared what pets they will have in the home? Did you ask them any questions when you handed out the application to get a background on them?”

The application process can be more effective if a property manager knows how to ask the right questions, Ms Munt adds.

“If I have a very busy open [inspection], I will ask people to write a bit of a cover letter on top of the application. It’s amazing what sort of story that can build up about the tenant,” she says.

“Applications can be quite generic, so getting your questions right is very important. We are constantly updating questions we ask possible tenants in order to get the clearest picture of them.

“It is about thinking a bit outside the square whenever you can in order to get the best results. None of us wants to spend time in a tribunal because we’ve made the wrong choice.”

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