To maximise their profits, many landlords tend to rent their properties as soon as possible, without taking the time to find good tenants for their property. These landlords put themselves at the risk of encountering problematic tenants, who can disrupt the profit potentials of their properties. Some concerns regarding problematic tenants include payment issues, frequent relocations, high maintenance, eviction, and criminal history.
Therefore, it is of utmost importance for landlords to find quality tenants before renting their properties. New and inexperienced landlords may be clueless in choosing quality tenants. Thus, here are some useful methods on how landlords should find and select suitable tenants.
1. Don’t rent immediately
Landlords who own vacant properties are likely to rent quickly without regards to tenant quality. As landlords, we want trustworthy and reliable tenants who will take good care of our properties and minimise our concerns. Hence, instead of securing a tenant quickly, more time and attention should be given to selecting a good tenant.
If possible, wait until you have several prospective tenants. Then, take your time to understand their backgrounds and the reasons for renting your properties. Besides, identifying your deal-breakers can help choose suitable tenants for your properties.
2. Real Estate Agent
Hiring a real estate agent can save you the hassle of selecting a good tenant for your property. Besides being professionals in every property-related matter, real estate agents also have extensive connections that can provide you with quality tenants in no time.
What’s more? Real estate agents possess updated and accurate information regarding the property market. With useful information, they are capable of offering you tips and trends in the property market. For instance, you can adjust your rental rates according to the market trends so that you can attract more tenants.
In addition to that, real estate agents can also help you to issue all legal procedures while renting your properties. With their help, you can avoid confusions that are caused by unfamiliar legal documents and jargons. You can also request your agent to negotiate rental prices with potential tenants on your behalf.
3. Financial Checks
Landlords should conduct two types of financial checks on their potential tenants, namely income check and credit check.
An income check involves checking the tenant’s pay stubs. This is to ensure that your tenant is financially capable of affording your rental rates and paying rentals on time. Hence, before renting your property, request and check on three to six months of your tenant’s pay stubs. To verify the figures, you can also contact your tenant’s employers to cross-check the information. Here’s a rule of thumb: your tenant should earn thrice the money of your rental rates.
As for a credit check, you will need the help of an external screening company. The screening company will review your tenant’s history, including his or her civil judgements, bankruptcies, prior evictions, and so on. Your tenant’s background information should be taken into account before renting your property.
4. Reference Checks
Your tenant’s legal and financial history tells you little about his or her personality and conduct as a person. In other words, a tenant who possessed no criminal or bankruptcies history can be irresponsible and untrustworthy.
Thus, you can conduct reference checks on your tenants by contacting their previous landlords. Take note of the former landlords’ overall experiences and make sure you don’t spot any of your deal-breakers.
5. Tenant Screenings
There are two ways to conduct tenant screenings to find good tenants; one includes hiring an external screening company, while the other involves interviewing your tenants in person. This screening process reveals information such as your tenant’s commercials and criminal records, as well as employment history.
If you choose to conduct an informal interview with your tenants, make sure to let them clarify the reasons for their stays. Besides, please take note of their personalities by getting to know them during interviews. At Rumah-i, we screen and assess tenants using RAM Credit Information (RAMCI) to verify their credibility as good tenants. A tenant’s previous history of renting may affect their credit score, which is a helpful indicator of trustworthiness.
The age group of your potential tenants matters. Many landlords have reported that student tenants tend to cause more messes in their properties. If this is one of your deal breakers, you might have to consider ruling out students as your potential tenants.
Middle-aged adults tend to be a popular tenant choice of many property owners. Their working lifestyles and maturity are often favoured over youngsters’ vacation or short-term stays. However, age is not the sole factor in determining your tenant’s maturity and accountability. It is still necessary to conduct the checks and screenings as mentioned above on your potential tenants.
7. Property Conditions
A great property is more likely to attract quality tenants. Therefore, it is advisable to continually maintain the conditions of your properties by keeping them in good shape. Implicitly, the terms of your property give an idea to potential tenants regarding how they should leave your property after the tenancy.
Besides maintaining your properties, you can also set a budget and improve their current conditions. The changes range from small improvements, such as cleaning, painting, and planting, to large scale renovations. Rumah-i’s services includes a house makeover, property maintenance and cleaning service. We make the property stand out from the rest in the market and become the choice of tenants.
However, it is also vital to avoid over-improving your properties to charge higher rental rates. If your rental rates exceed the neighbourhood’s income level, you can have a hard time looking for a tenant. That being said, make sure to survey and research on the neighbourhood’s property market before making improvements to your properties.
8. State Upfront Expectations
It is possible to receive a significant number of responses while renting your properties. More often than not, you will notice that most potential tenants do not meet your expectations. Thus, stating your expectations upfront can be an effective method to filter out the responses from problematic tenants.
To do so, you can include a list of your expectations on your property’s advertisements, be it online or printed copies. If you’re hiring real estate agents, you can also clarify your expectations so that they can help to screen and find good tenants. Alternatively, expectations can be stated during informal interviews with your prospective tenants.
There you have the effective methods on finding a suitable tenant for your property. By practising these methods, landlords can protect their properties and maintain a steady income while avoiding long-term vacancies. If it sounds overwhelming or too much to handle, engage a property management company like Rumah-i and sit back to collect the rent. Let us do the work while you reap the benefits of a stable revenue source.