Anyone can buy a property but not everyone can buy the right property and worse still, some persons buy the right property but end up with the wrong kind of tenants. In this article we take a critical look at the top 7 tips to finding a tenant.
You will be making one of the biggest investment decisions of your life by investing in real estate, albeit you can also be making the biggest mistake of your life by buying the wrong property. And woe betide you if you admit the wrong group of tenants into your property.
Buying the wrong property may not be a common trend when it comes to investment in property, what is more common is accepting bad tenants.
Your days as a Landlord are numbered if you have wrong tenants in your property. Bad tenants can make your life miserable and make you feel less of a landlord
The right tenant, on the other hand, will look after your property like it’s their own and make your job easy. That’s why it’s so crucial to invest time and effort in your tenant choices.
Here are 7 tips on finding the best tenant for your property
1. Don’t rush into it
Many landlords just go ahead to admit any tenant into their apartment as long as that tenant has the money to pay for the property. This happens mostly when the apartments have been empty for so long and they are losing in on money.
Normally, an apartment should be occupied almost immediately the previous tenant vacates the property to ensure money doesn’t stop flowing in. But in cases where the rooms become empty for months, at this point desperation sets in and the landlord goes ahead to admit anyone that comes his way into his property without running through the right agreements in toto – they just want to get them filled up, and get the cash flow flowing.
The thing is that the cost of the wrong tenant is far higher – and far longer term – than the temporary hit you’ll take on an empty property while you’re searching for the right person to live in it.
2. Know your strategy
You need to have a strategy of the kind of tenants you need in your property – social class, family size inclusive. Are you targeting young professionals, middle-level officers or people on benefits? Are you looking for business owners, skilled professionals, single people or students in your property? You need to match your tenants to your property, and stick to your strategy.
How much risk is associated with your tenant type?The answers to these questions will affect who you rent to, how you find them, and what kind of arrangement or contract you put in place.
Using a letting agent or other third party to find your tenants is a valid strategy – but it does mean you have much less control over who’s in your property. Landlord ought to retain some sort of involvement with their investment.
Even if you are using an agency, you can still have some level of oversight. At the very least you should make sure you understand how your agent plans to vet applicants, and you can even meet or checkout the final candidates yourself.
3. Know the system
As a landlord you must be a step or several steps ahead of your tenants. Bad tenants are usually quite knowledgeable with the tenancy law of the land and they wait for you to falter so they can use it against you to their own benefit.
For instance, once someone is in, they can stop paying rent and it will take you time and effort to serve an eviction notice. Tenants can live rent free for up to 2 years while you’re jumping through legal hoops.
Make sure your contract is watertight. Being prepared for the worst and getting the right support around you is absolutely key. You should have a great solicitor on your team from the very beginning
4. Do Your Due Diligence
In as much as you have a strategy or criteria for admitting tenants into your property, you must still do what it takes to ensure you won’t have to be judging a book by its cover. Ensure you do your due diligence and don’t just dismiss a tenant just because of what you perceive. That person you turned down may just be the best tenant you will never have.
5. Turnover can be good but…
Having a high turnover of tenants in your property may be a good thing for your investment, but it is also one of the reasons finding the right person is so important. You won’t want to put a 20 year old lad in the midst of four middle aged women. What you want is not a tenant that will stay one year, but a tenant that will leave your place to only become a landlord.
So, turnover can be good but you still have to get it right.
6. Be flexible if you can
To get the most out of being a landlord you have to be flexible. Yes, keep your strategy and your end in mind, but think outside of the box about how to get there.
For instance, if you’ve got a family home and you want long term, reliable tenants, consider what you can do to be flexible for the right family. Are you prepared to allow pets, or allow them decorate the house as they like? Because they are your tenants doesn’t mean they can’t enjoy a level of freedom too.
Be prepared to adjust a times to keep your tenants happy.
7. Look after the good ones
Don’t underestimate the value of a good tenant. If you look after your tenants, they’ll look after your property, and they are worth their weight in gold. Keep those lines of communication open.