One common issue in real estate arises from challenges between landlords and tenants. It is a fact that landlords expect their assets to not only give them profit but also peace of mind. When both or one of these outcomes is missing, the property becomes a burden rather than an asset. Many property owners have had a sad tale or two to tell when it comes to having some types of tenants. While there is no crystal ball I am aware of that can predict with accuracy how a tenant will turn out, common principles of analysis can help prevent renting your property to the wrong person.
If you discuss with real estate agents, you will discover that there are certain profiles that some of them have created and some landlords also share this as well. What many have discovered is that profiles are not reliable and can even prevent them from objectively analysing a tenancy application due to their basic bias. Some people have ethnic bias. To some of these landlords, anyone from a particular ethnic group should not be allowed to rent or let their property. The reason for this is usually based on hearsay or general myths about a particular ethnic group. However, from experience and history, good and bad people are scattered to a more or lesser degree in every community.
Also, we need to downplay the role of money if we want to objectively evaluate a potential tenant. Having the ability to pay is one of the critical issues to consider but this should not be overrated. Landlords that place undue emphasis on money often end up regretting it. There are landlords that have absolutely no integrity when it comes to money. Even if they have committed their property to someone and they are offered the right price, soon after, they will give their property to whoever is ready to pay a new price. Some of them have learnt through bitter experiences that the amount initially collected may end up being the only rent that they will be paid until they are able to eject the tenant.
To minimise the risk of renting your property to the wrong person, it is better to give preference to referrals when evaluating a potential tenant. If you have good tenants already, it is smart to inform them of any available vacancy in your property before you inform the public. Birds of the same kind flock together. A good tenant is likely to introduce a good tenant to you and whoever is introduced will have a good check on his or her actions. This is many times less risky than when you bring the property to the open market and you have to carry out a full due diligence on any person that shows interest in renting your property.
One of the qualities of a good tenant is that he or she is open and information about him or her is easy to verify. If you have engaged an experienced property manager to handle your property, he or she will give every prospective tenant a personal data form that should give you some basic information about the tenant. Your property manager should endeavour to verify the critical information contained in the form such as occupation and place of work. A good look at the type of references provided by the tenant could show you the type of person he or she really is. If you are unsure as to the type of occupation, or there is falsehood as to the details of their place of work, do not rent your property to such a person.
Another thing to look out for is the prospective tenant’s capacity to pay the rent regularly and without dispute. The principal rule is to ensure that h he or she has a discernible source of income. One of the phrases used to conceal dubious characters is to claim his or her occupation as ‘business man or woman’. More often than not, a young person working in any company of repute should be able to afford the rent and should also be careful about maintaining a good name in the company. Of course, you are not entirely immune from risk but the general testimony is that young upcoming professionals are generally better at paying their rent than those who claim to be businessmen.
Finally, be observant and follow your intuition. One of the common steps before renting is property inspection session. While most landlords are absent during these times, it is actually one of the period when you can evaluate a tenant. A married man will usually inspect the property with his spouse, and their questions and reactions to several issues as they walk round the property could help you evaluate what their attitude will be like if they become your tenant.