You can’t choose your family – but you can choose your tenants!
There are some well-defined procedures a landlord needs to follow in order to protect his asset and to ensure that his tenant is well-chosen to add value to his property and not turn the ‘landlord’ experience into a nightmare of regret.
Thankfully, the percentage of ‘bad’ tenants in the rental market is relatively low, only about 8%. Economic conditions, family or job problems beyond their control sometimes puts well-meaning and well-paying tenants in situations where maintaining payments is difficult. But most enter into arrangements or reach agreements that are acceptable to both tenant and the landlord.
However, situations are sometimes exacerbated by small rental agents who do not conduct thorough due diligence checks on tenants and avoidable problems are not exposed. It makes sense to follow the steps laid out from the experience of others:
- Applicant’s financial position – including confirmation of salary directly with the employer; credit bureaux checks
- Tenants shouldn’t pay more than 30% of combined salaries – this is where some letting agents fall short, by allowing people to over-extend themselves
- Testimonials from previous landlords should be checked, not taken at face value – some landlords have been known to give good references as a ploy to rid themselves of problematic tenants, hoping to pass on their ‘problem’ to someone else
- Sureties for young, newly-employed tenants should be sought from parents or employers
- If there are a number of ‘takers’ on a property, there is nothing wrong with requesting all parties submit tenders for the premises – this document can then address all the issues you need to safeguard yourself (financial information; testimonials etc)
It can be tempting to fill your newly acquired buy-to-rent property with a tenant so that it starts earning you income as soon as possible. But the experts agree that it is better to carefully select the right tenant, even if this takes a little longer than expected, rather than rush the application process and end up with a tenant who proves to be less than ideal.
Investing your own capital and making financial decisions and commitments as you use property investments to grow your wealth is a lonely business if you aren’t able to draw on the experience and resources of others. IGrow offers the very best advice that is available before making that final decision on how your money needs to be employed.
For advice and guidance, look to the independent specialists who have the right team of professionals working with them that gives them the track record of success, integrity and security that you want.
Contact me at IGrow Wealth – my team and I will help you on the road to achieving the success you deserve.