Tip 1 – Cherry Pick your Quality Tenant
The best way to be in a position to cherry-pick the new Tenant that you will place in your Investment Property is to have more than one applicant.
And the best ways to have more than one applicant are:
- Your asking rent should be 5% cheaper than comparable properties. Having a quality tenant that pays you on time more than compensate for that
- Appoint at least three Letting Agents to market your Property.
Different Letting Agents have different marketing strategies and databases of prospective tenants. Tap in as many of them as you can, it’s free to appoint a Letting Agent until they secure a Tenant for you.
When in doubt about a Tenant you have three options:
- Look for a better one; in our experience this is always the best option
- Ask for Double Deposit and / or
- Increase the Rent by 10% and Get Rental Insurance
Tip 2 – Review your Applicant’s Bank Statements
As a Landlord, you are extending, at least indirectly, financial credit to your Tenant.
The same way a Credit Provider would ask for your Proof of Employment / Income AND a copy of your last 3 or 6 months Bank Statements, you should do exactly the same.
Make sure that your Prospective Tenant is not only able to afford the rent payment but that she or he is highly likely to make such Rental payment in full on time. Looking at your Applicant Bank Statement will give you a very good idea of that and allow you to check dates of previous rent payments (if they were paying their last landlord late, would they not do the same for you?)
If you are accepting Self-Employed Tenants please ensure you get 12-month bank statements to ensure that they have a regular and predictable income and they do not depend on once-off short-term contracts.
Tip 3 – Always Be the One that Makes the Final Call
As an Expert Property Investor, you have mandated one or more Letting Agents to find you a suitable Tenant. Assuming that you will manage the Property after the installation of your Tenant, the Letting Agent has a strong incentive to persuade you that a Tenant will be a good Tenant for you since they earn their commission as soon as the Deposit Payment has been made.
Beware! Not all Letting Agents have always your best interest at heart especially if you have a small portfolio and you are not likely to be a repeat customer of them
Some Letting Agents even have sneaky clauses in their Mandate Agreements that allow them to accept an Application on behalf of the Landlord.
Our advice is to avoid signing any letting mandate whenever possible (and it is not that difficult to do so) and that,if you do need to sign a Mandate, make sure you cross out any clause such as the one above. And if they don’t agree to it…find another Letting Agent, there are many out there.
Ultimately ask for a full copy of the Lease Application with all supporting documentation and evidence.
Review thoroughly and be the one that makes the Final Call whether such Application is good enough for you to have them as your Tenants.
Nobody has your interest at heart as much as you do
HAPPY INVESTING FROM THEPROPERTYCOACH.CO.ZA
