Even if you have managed to identify the perfect investment property offering excellent capital growth potential and a strong rental yield, you can still run into some serious problems if you don’t ensure you have the right tenant.
Having the perfect long-term tenant makes for a great experience for all parties and allows you to easily hold that investment property so you can realise its full potential. We’ve all heard the horror stories, but there are some simple things you can do to make sure you select the right tenant from the very beginning.
One of the key things to remember is that you are selling your property to potential renters. Despite the fact they are applying for the privilege to rent your property, the onus is on you to sell it.
To do this it is vital that owners present their property to a high standard both in the advertising material and at the home open, with everything in good working order. This gives a clear message that the property has been well cared for and would encourage the successful tenant to do the same.
Spending some time with the applicants at the viewing, discussing their circumstances and having a bit of chat will give you a good opportunity to get a feel for them. Is the applicant respectful and friendly? Are they well presented and clean? Is their vehicle clean and tidy? This is a great opportunity to ask some important questions. Why are they moving? When do they want to move in? Does this align with your needs? If the applicant is interested in the property let them know of any special conditions, and check whether this is an issue. If you like the garden to be well maintained, this is a great time to run this by the applicant and check on their response.
You can also get a good read on a potential tenant when you look at their application. Check that the application is filled in thoroughly and that all information has been provided in full. If tenants take a long time to get all the documentation to you it may indicate they are not serious about the property or possibly hiding something.
Always check employment references as well as asking for wage slips. Try to talk to a direct manager for a more personal employer reference as well as factual information from HR. Always confirm the salary they have given you is correct in view of checking that they can afford to live at the property. Confirm whether they are permanent/full time/part time etc. Check that they are out of their probation period. Find out how long they have been employed and if they are a loyal employee.
An obvious one is also checking previous rental references. Checking whether rent was paid on time and whether any breaches or terminations have been issued. Have any breaches been issued for non-payment of invoices? Check whether the previous routine inspections were good. Was the tenant easy to deal with? Was there a lot of maintenance reported? How did the tenants leave the property at the end of the tenancy? Do they have pets and would the current property be suitable? You can also check the National Tenancy Database to find this type of information.
You might also want to consider taking into account how many times the applicant has moved home. If you are looking for a long term tenant you may not want an applicant who likes to move homes every 6 months.
Always ensure that ID has been provided by each applicant and checked. Non-Australian passport holders need to provide visas and you need to make sure the visa has been granted.
These days you can also take your checks one step further and look at social media accounts. At times you can identify tenants who perhaps have pets that have not been disclosed on the application.
While all this might seem like a little bit of effort, you have to remember that this is your investment and your money on the line. A poor tenant can lead to any number of headaches for the homeowner. While a great tenant makes your life a breeze and can even add additional value by keeping your house in great shape.
