Private Landlords & Selecting Tenants

Nowadays, in many areas, landlords can afford to pick and choose amongst the increasing numbers of tenants looking for somewhere to live that doesn’t cost an arm and a leg. This should make it easy for landlords to be sure that any tenant taking over their property is a good one. But many property owners focus on the wrong questions and fail to get the information they need. What are they doing wrong?

Agents picking up the pieces after the event report that many people also don’t know how to analyse and interpret the information they end up with. Investors managing property for themselves often get too involved to be impartial. They know that maximising investment income is entirely dependent upon keeping arrears, vacancies and repairs and maintenance to a minimum and yield and capital appreciation at a maximum, but find it difficult to do in practice.

Evaluating the two most important background checks - previous rental history and employment record – is difficult when you are inexperienced and emotionally involved. *

What does the information mean in terms of tenant performance? For example, tenants might pay their rent up to date upon vacating but might have been a problem during the tenancy. Or someone might be in full time employment for many years and still not be a good tenant. One or two factors are insufficient to build up a profile of the prospective tenant. On the other hand, inexperienced do-it-yourselfers tend to ask for too much information, which means they sometimes turn away potentially good tenants and end up with a longer vacancy.

Many investors are unaware that personal references are not a valid indicator of tenant reliability. Most agents report that, in all their years of managing property, they have never seen a bad personal reference. Friends and relatives don’t write negative things about those close to them and even if they do, prospective tenants are not going to offer bad references to landlords or agents.

* Those asking for tenant references should remember to comply with all governing legislation and regulations that apply in the location of the property being rented.