An investment property can be an attractive financial proposition for clients, but finding the perfect tenant is a crucial part of the equation.
A good tenant will be profitable for the landlord, whereas a bad tenant can be costly for everyone.
An experienced property manager will have established policies and procedures in place to ensure that prospective tenants are screened thoroughly and effectively and that bad tenants are avoided at all costs.
Here are some insights from one of the leading property managers in Perth on how to find the perfect tenant:
- Verify their income
The perfect tenant will be financially responsible and will have sufficient means to pay their rental obligations in full and on time. A professional property manager will know from experience that a higher income does not necessarily equate to a greater ability to pay rent, as the tenant may have borrowings and debts that require monthly repayments, so it is essential to do an in-depth assessment of their income and financial obligations.
- Check their rental history
It’s vital to check rental history with at least two previous landlords or property managers to assess a tenant’s suitability. Some of the questions that should be asked include:
- Was the rent paid on time?
- How long did they rent the property for?
- Why did they move?
- How did they treat the property and was there any damage other than regular wear and tear?
- Did they have a good relationship with their neighbours?
- Were there any lease violations?
A perfect tenant will have an impeccable rental history that demonstrates that they paid their rent on time and in full, and that they treated the property with respect and care.
- Do a credit check
Property management companies should run a credit check through the National Tenancy Database. Clearly, a perfect tenant will have a blemish-free credit record.
- Contact references
One of the biggest mistakes that a property manager can make is inadequate screening of prospective tenants. It can be time-consuming to personally contact references, but as any experienced property manager will attest, it is a vital step in the screening process because it provides an opportunity to get answers to important questions. For example, you can get an idea of a person’s history and the status of their current position from an employer – all of which is crucial information in terms of finding the perfect long-term tenant.
- Establish motivation for renting the property
By asking applicants the right questions, it is possible to ascertain whether they are likely to stay in the property for the long term, which is first prize for property investors. Find out what links they have to the area and what the reasons are behind their choice of suburb. Someone with family living in the area, or whose workplace is within easy reach, or who has children who attend a neighbourhood school or nearby university is more likely to be a stable, long-term tenant.
Perfect tenants are akin to money in the bank for investors – and one of the keys to finding the perfect tenant is making sure that every application is thoroughly reviewed and that there is no room for ambiguity or misunderstanding. In short, the perfect tenant is one who:
- pays rent on time and in full;
- remains in the property for a long lease; and
- treats the property with respect and care.