Key Considerations to Find The Best Tenants
As a landlord, you surely want to protect your investment in your rental property by finding a tenant quickly. But renting to someone who fails to pay rent or damages your property could make you suffer severe financial losses and a lot of stress. Yet, when renting out, you can never be guaranteed to find great tenants. However, you can follow certain steps to minimize your chances of landing a risky tenant.
You need to remember that the law prevents you from discriminating against anyone due to his/her race, sex, sexuality, or religion. This means you should treat your potential tenants equally and fairly by having a uniform screening process for everyone.
Here are some tips to find great tenants who’ll respect your rental property and pay the rent on time.
Broaden your applicant pool
The more people you get to choose from, the more would be the probability of finding a good tenant. Thus, based on what your budget allows, you should market your property as much as you can.
Try to find out what’s the demand for properties similar to yours in the region, target particular tenant types who would be interested in such properties, and market to them. You could even invest in BTL (buy-to-let) properties that certain demographics would find attractive.
When trying to find good tenants, you could focus on retired couples and corporate clients. Don’t be driven by preconceived notions like retired people aren’t financially secure. In reality, these people may be downsizing and could be trying to generate income by putting their own property on rent.
Another safe choice is letting out to corporate clients. Since you’ll be doing business with the employer of your tenants, who could be held accountable for property damages or non-payment of rent, you’ll have an extra level of security.
Draft a form to serve as your rental application
Ideally, you should draft a rental application form that lists all the questions you want your potential tenants to answer and the documents that they need to submit.By making all your applicants fill this form, you’ll have therelevant information that facilitates comparisons to make your choice somewhat easier. It’ll also help you to stay on track in case you warm up to someone and get tempted to deviate from the standard procedure by trusting your instincts.
Conduct checks at multiple levels
When trying to find the best tenants, you shouldn’t accept anything at face value. Instead, opt for thorough background checks, which are vital.
Perform reference checks
Always ask your tenants for references from previous landlords, if any, or their employers. Even personal references from an independent party, say a doctor or a college professor, could be considered. Make sure such references are genuine as they will help confirm your applicants are actually who they say they are, which would help you to save both money and time in the long-term.
These days, one out of ten landlords browses social media to know their prospective tenants better. You too could take a look at their Facebook, LinkedIn, Twitter, and Instagram accounts to know more about the person, including his/her employment history.
Run financial checks
To verify your potential tenant’s income, you should ask for proof of income such as salary slips and/or copies of bank statements. Some tenants may refuse to submit their bank statements as they consider this an intrusion into their finances. Just because they refuse shouldn’t mean they are financially unstable. However, taking a look at their bank statements would let you know for sure what their financial condition is and if they’ve got a solid job that pays a regular income. Knowing these would let you enjoy peace of mind.
It’s recommended to find a tenant having a monthly income that’s almost three times the rent you plan to ask for.
Do credit checks
To find if your potential tenant has a bad credit history or faced problems paying his/her bills in the past, you should do credit checks. If you don’t have the time to do it yourself, you can let companies such as TenantVERIFY and Experian do it on your behalf.
Check your tenant’s right to rent
After you’ve identified the most promising applicants, you must conduct immigration and passport checks of your potential tenants to ensure they’ve got the legal status to live in the UK. Such checks must be run on all tenants aged 18 +, irrespective of whether the tenancy agreement has their name on it or not. You shouldn’t discriminate during such checks as the law prohibits you from checking only those you believe aren’t British citizens.
If you let out your property to someone who doesn’t have a ‘right to rent’, you could end up paying a fine of £1000.
Fix a meeting with your applicants
It’s highly recommended you meet the most promising applicants face-to-face to get a better idea of whether they’ll be the right tenant for your property. Meeting someone online or over the phone isn’t enough to form an opinion that would help you to arrive at a decision.
Don’t be shy about asking questions
To find the best tenant, you should ask your prospective applicants plenty of questions like these below to know them better and have more clarity about what kind of tenant they would turn out to be.
- How long did you live in your present property? And where is it?
- Why are you moving house?
- When are you looking to move?
- Have you been evicted earlier? Or had problems with your neighbours? Or had an argument with your landlord?
- Do you smoke or have pets?
- Will your previous landlord or employer provide references?
- How long do you plan to rent?
- Who else will be living with you in the property?
- Where do you work at present and how long have you worked there?
Rely on your instincts
Despite doing all the checks and screenings to find the right tenant, your instincts are sometimes the best evaluator of a probable tenant’s character. So, trust it.
Try using an agency
If you don’t have adequate time to handle the entire process on your own or feel it too tedious to deal with, you could hire a letting agent to get the job done. Apart from having extensive knowledge of the local market, a letting agent can also help in marketing your property successfully to attract the right tenants. Such an agent may even have the ideal tenant already registered with them. These agents also possess the required legal knowledge and expertise to run thorough checks on all potential applicants.
From finding you the best tenants to making arrangements for running credit checks, handling the tenancy agreements, collecting the tenancy deposit and sometimes, the monthly rent as well, letting agents can do them all. During the tenancy, many could even offer property management services that you can benefit from.
Despite being careful, you could still face problems with your tenant. However, by getting landlord insurance, you can protect your interests. Though investing in landlord insurance and hiring letting agents will raise your overheads, they’ll also help reduce the impact and expense you’ll have to bear because of a bad tenant. Additionally, you’ll have greater peace of mind, which is simply priceless.