When you have decided to invest in property, the major factor in whether your investment turns out to be a success or a failure, is the quality of your tenants. So, how do you choose a tenant, and how do letting agents choose tennats? The short answer is tenant screening.
Let us guide you through the tenant selection process so that you can be confident that those you entrust the keys to won’t let you down.
PROPERTY INSPECTION AND INTERVIEW
As much as one can speak on the phone to screen a prospective tenant, nothing can beat a face-to-face meeting. While it can be wrong to discount someone based only on first impressions, you will be able to gain much from seeing how someone carries themselves and how they interact with you.
If someone comes across as rude to you or your property manager at what should be a critical meeting for them, you can be confident that this trait will remain into their tenancy. However, if they are kind, cordial, friendly and behave professionally this should signal the type of relationship you can expect to maintain.
MAKING GOOD USE OF THE APPLICATION PROCESS
When someone makes it clear that they are interested in your property there is much that you can glean from isolating key details on their application form. Three primary areas can help you to know if you want to move on any further.
They are employment history, landlord referrals and credit history. Bear in mind, any prospective tenant who seems reluctant to give you the information to check these three areas is a red flag.
EMPLOYMENT HISTORY: CONFIRMING STEADY INCOME FOR YOU
As with any investment, if your chances of getting steady returns are low then it will always work out negatively. Therefore, one of the top priorities for any landlord should be that the prospective tenant can comfortably afford to cover the rent of the property. One rule of thumb is for them to earn three times the rental amount required.
This means that you need to be able to verify their employment status and see current payslips. Although this may seem invasive, not only is it industry standard but it is a major protection for you. The potential of having a financially unstable tenant is a risk not worth running.
In speaking to their employer, be sure to do some due diligence and check to see if you are really speaking to the person they say you are.
A quick search online via LinkedIn or other means should be enough to verify either the manager or HR representative in question. Be sure to ask about the length of their employment as well as their income.
Doing a deeper dive into their employment history can also help you find any noteworthy signals. For example, knowing that someone can afford to live in your property is one thing, but what if they have a history of leaving jobs after a short period of time? A new position can often mean a new location which may lead you to the conclusion that this person would not serve your best interests.
LANDLORD REFERRALS: A SIGN OF THINGS TO COME
Being able to cover the required rent is one important aspect, but knowing what kind of tenants they have been in the past is just as important. Being constantly involved with issues related to a tenant’s bad behaviour or mistreatment of your property would defeat the purpose of investing in property as a means of passive income.
To find this out the next step would be to ask for previous landlord referrals.
So, what kind of questions should you be asking a previous landlord? This can include things such as:
Did the tenant always pay on time?
Did they have any issues with the neighbours?
Did they give the impression that they were interested in a long-term lease and then cancel at the earliest opportunity?
Was there any damage to the property apart from normal wear and tear?
Were they clean?
These are the type of question that we at Vivid would ask to gain a good understanding of the impression that they have left behind, as it is likely that you will have similar conclusions if you were to become their new landlord.
CHECK THEIR CREDIT SCORE
While checking their income may seem obvious, a credit check can be the extra mile that some landlords tend to forgo. In doing so, however, you would be dropping the ball and missing out on vital information.
Knowing if someone is responsible about paying their bills on time rather than having a habit of delayed payments and a mountain of debt can give valuable peace of mind.
THE NATIONAL TENANCY DATABASE
With all this information a final check can be made on the national tenancy database. This source can give information on their rental history, any court judgements, if they have filed for bankruptcy or most importantly if they have been blacklisted.
There is a fee to use this service therefore it is best to make this enquiry only for those that you are seriously considering offering a tenancy to.
While it is up to you as a landlord to decide upon whom to rent to, knowing this information could be extremely useful in ensuring that you avoid anyone who could provide you with major complications down the line. If
learn firsthand: how do letting agents choose tenants?
While there is much room for trusting your instincts, you should not let personal preferences get too much in the way of you finding your perfect tenant. Under the Equal Rights Act, it is illegal to discriminate on the basis of gender, race, age, religion, sexuality etc.
As a landlord, your priority should be finding a polite tenant, pays on time and doesn’t cause any problems for you or their neighbours.
Doing so it an arduous task but it doesn’t have to be! A property management team has the expertise, resources and experience in vetting tenants so that you don’t have to. We at Vivid pride ourselves on our professionalism and we would be more than happy to manage the process for you.
Contact us today to find out how we can help you come by the best possible tenant.