Tips for avoiding terrible tenants
Managing agents are the “first line of defence” for landlords when it comes to keeping problem tenants out of their properties, so they need to ensure that they have the systems and knowledge necessary to do so.
“As the laws governing the relationships between landlords and tenants become ever more complicated, rental property owners are increasingly turning to professional managing agents to help them find tenants that are not going to default on the rent, damage their property, or involve them in lengthy court proceedings,” says Shaun Rademeyer, CEO of BetterLife Home Loans, SA’s leading mortgage origination group.
In addition, they are looking for help with lease documentation, and the consequences of getting things wrong can be just as serious for an agent as for the landlord, so here are some tips for steering clear of the “tenants from hell”:
Check the credit records of all potential tenants.
Even if you can see that they will be able to afford the rent on their salary, you need to establish whether they have a history of paying their debts on time and how much outstanding debt they have, because those repayment obligations obviously also have to come out of their monthly cheque.
Check their rental history with their previous landlords.
If that is not possible, look out for warning signs such as a history of moving around a lot. Most landlords prefer tenants who will commit to longer leases.
Interview potential tenants in person.
It is never a good idea to let a property to people you have not met and taken through the property yourself. Even more importantly, never give the keys of a rental property to a prospective tenant who has not paid the required damage and utilities deposits in full.
Make sure your paperwork is impeccable.
Keep copies of tenants’ identity documents or passports as well as their proof of income such as a contract of employment and most recent pay slips. You will also need their written permission to obtain a copy of their credit record and, of course, a copy of the lease and any supplementary documents.
Subscribe to a good online rental property management system.
This will help you track the rental payments, municipal account payments, inspection dates and lease renewal dates for each property in your portfolio, and to alert you immediately if something goes wrong. If a tenant defaults, you need to be aware of it as soon as possible so that you can inform the landlord and start taking action to remedy the situation right away.
Listen to your instincts.
If you feel uncomfortable renting to someone even when all the information and documentation they provide seems fine, don’t give them they keys until you’ve run a few more checks. If you’re an experienced agent, the chances are that your instincts were right and that you will find out not all was as it appeared to be – and be saved from a potentially costly mistake.