Here are 10 tactics to get you the best tenants, every time.
Investment properties make up an important financial strategy for many Australian property owners. However, many of the headaches that come with these properties are due to troublesome tenants.
A crucial part of the return on investment to these properties is finding and keeping good tenants who will pay the highest possible rent, pay on time and take care of the property as if it were their own. In our current tight rental market in many major urban areas, it’s common to receive hundreds of applications for a property, which makes finding the right tenants a daunting task.
LocalAgentFinder, Australia’s largest free real estate agent comparison service, provides the following 10 tips for property owners to help avoid nightmare tenants and source the best possible tenants.
1. Find the right property manager
Matt McCann, CEO of LocalAgentFinder.com.au, says finding the right team to management your property is crucial and your chosen management team should fulfil strict criteria. They must have a dedicated property management division; your individual property manager should be experienced and have previous success with problematic tenants; the agency principal should be involved in the function of the property management division; your manager must attend inspections even on weekends or during extended hours to cater to tenants’ needs; and the agency has to have good programs and processes for vetting applications and monitoring rental arrears.
A streamlined method of sourcing an experience property management team is through free agent comparison services that compare commissions, experience and successes.
2. Update your property
By keeping your property in top condition, you’ll attract tenants who take care of their belongings and property, and it will also keep you ahead of the competition. Ensure property updates suit your target demographic. For example, if your agent advises that the best potential tenants in the area are executives, it may be desirable to offer a furnished property and advertise it as an executive rental.
3. Set the right rental price
It is best to keep your rental price in line with similar properties in the area or other landlords will gain a competitive edge in the search for good tenants. Ask your real estate agent about the current market and what similar properties in the area are being rented out for to decide on a realistic price.
4. Consider a short-term lease
If you’re on the fence about a candidate because they have very little established credit but do have steady employment (such as a recent graduate), you could ask your property manager about offering them a shorter lease as a trial period. The contract could then be extended or terminated according to both parties’ needs.
5. Check to ensure your agent has run a credit check
It’s a good idea to include a credit check in the screening process as it is usually safer to choose a tenant who has good established credit. Your property manager should look to see if any late payments by the potential tenant on their previous rental were a one-time deal or persistent, and how recently they occurred. Another part of the credit report that is open for scrutiny is the applicant’s past addresses. It’s important to verify that these correspond with addresses provided on the application form to find out if the applicant is trying to hide something.
6. Ensure reference checks are made with employers and previous landlords
It’s tempting to choose applications from potential tenants that show a willingness to pay more rent or pay a large sum up front, but keep in mind that this could mask a less than desirable rental history. Ensure your property manager makes reference checks with the applicant’s previous landlords, who can clarify whether the tenant paid their rent on time, allowed pets or anyone else to live on the premises without notification, and the condition they left the property in. A good screening question to ask is whether or not the landlord would rent to the applicant again.
In addition, reference checks with the applicant’s current employer can verify the stability of the applicant’s source of income. When verifying an employer reference, it may be better to look up the company’s number in the phone book to ensure the applicant’s true employer has been reached, rather than a friend. This approach may seem extreme, but a few applicants may know their way around the screening process.
7. Ensure the applicant has been vetted against a tenant database
Many professional property management agencies have access to a tenant database. These are run by private companies, and show whether or not a tenant has had any legal actions filed against them or if there are any other red flags that have been officially reported.
8. Photo-document the property’s condition
Take detailed photographs of your property before anyone moves in. A copy should be provided for the tenant, your property manager, and yourself. These photos can be used as a deterrent from making any false claims regarding damage later on.
9. Ensure the property is inspected regularly
Once your tenant has moved in, your property manager will need to inspect the property regularly. Although your tenants may be perfectly behaved, their pets or guests may not follow suit.
10. Consider landlord insurance
Landlord insurance is designed to protect your building against loss, theft or damage. There are also policies that specifically cover the cost of unpaid rent or legal costs for chasing up on this lost income. Because these policies will differ, it’s best to compare your options carefully to find the right fit.