March 14th, 2017
How to retain great tenants
Would you let any old Thomas, Dick or Harriet into your home? Not without screening and vetting them first. You’d look through the flyscreen or peephole, you’d ask for more information if you didn’t recognise them, and then you’d decide whether or not you’ll allow them over the threshold.
Screening and vetting is just as important for the properties in which you don’t reside. One of the biggest property management mistakes is not thoroughly screening tenants. Without thorough and effective vetting procedures, you’re far more likely to run into issues further down the track, ranging from undeclared pets and payment issues through to property damage and clandestine drug labs.
Preventing these issues is relatively simple – you just need to ask the right questions. So let’s take a look at the top 10 questions to ask potential tenants – the ones that will allow you to quickly and confidently identify the very best of the bunch.
Unless they provide a good reason, you should be wary of tenants who are hoping to move in straight away. Most rental properties require a month’s notice from the tenant if they want to leave, so a candidate who is looking to move in immediately may have left things too late – a sign that they may be unreliable.
And why are they moving? While the reasons will usually be fair and genuine, you should be looking for red flags such as evictions and disagreements with neighbours.
There’s no better quality in a potential tenant than reliability, and none worse than flakiness. Whether the potential tenant spent 10 problem-free years in their last rental, or has lived in six apartments in the last 12 months, you can expect their past performance to be a reliable predictor of the future.
If the potential tenant enjoys stable employment in a well-paid position, you can be confident in their ability to pay rent in the long term. A good rule of thumb is if the tenant earns 2.5x the monthly rent, they should be able to afford it. Remember to combine the earnings if the application includes multiple tenants who work.
If they agree, you can get a good idea of the potential tenant’s level of responsibility, both socially and financially. If they don’t, that’s as good a sign as any that they’ve got something to hide. Remember that you’ll need written consent to run these checks – a verbal agreement is not legally binding.
Lying is easy, particularly for those who have a lot of practice. The best way to check the quality of a potential tenant, therefore, is not to get the information straight from the horse’s mouth, but rather to ask an (ideally independent) third party.
Ask for references from former landlords and employers. If the candidate is hesitant to hand them over, it should be a large and loudly flapping red flag. If they do offer some up, take the time to speak to the references directly, and ask probing questions regarding the tenant’s character and reliability.
An answer of yes shouldn’t automatically annul an application – if nothing else you can be confident that the candidate is honest! There may be extenuating circumstances that are worth listening to. It may have been through no fault of the tenant’s, or a long time ago and with no issues since. If the answer is yes, it’s not a great sign, but be sure to explore the answer further.
Always take receipt of the security deposit and first month’s rent before the tenant moves in – no ifs, no buts, no asterisks, no exceptions. If they can’t get the funds together in time, they’re not the tenant for you.
A single tenant, a couple, a family, a group of friends? As the manager of the property you have every right to know who will be inside it. Each type of tenant will bring their own set of pros and cons – young families are stable, but toddlers see every surface as a potential canvas. Share house arrangements can be profitable, but individual tenants will constantly come and go.
Decide from the outset whether your property is pet friendly or not. If you institute a ‘no pets’ policy, you can happily strike any potential tenant with a pet off your list. If you choose to accept applicants with pets you’ll have access to a greater pool of candidates, but also expose yourself to greater risk – claws, teeth and bodily functions (of pets and tenants alike) can cause real and lasting damage to both the building and its furnishings.
It’s important to understand that just as you’re trying to find the right tenant for your property, potential tenants are trying to find the right property for themselves. It’s important then to give them the opportunity to ask you questions, so that they can identify whether or not the rental is right for them.
Just as Thomas, Dick and Harriet need to earn the right to step inside your home, so too should potential tenants have to earn their place in your rental property. The benefits of conducting a thorough vetting process are plentiful, while the risks of rushing it don’t bear thinking about.
The 10 questions to ask potential tenants that we’ve listed above, while simple, are an excellent place to start.
You might also be interested in How To Retain Great Tenants, The Ultimate Guide to Leasing Property in a Slow Market and 5 Top Tips To Make Your Tenants Feel At Home.
Did we miss anything in The Top 10 Questions to Ask Potential Tenants? Please email [email protected] to let us know.