Who you select as the tenant for your investment property will have a major impact on both your financial return and your peace of mind.
There are three things that you need to look for in a tenant:
This is mainly about paying the rent. You need to be sure that the tenant can afford to pay the rent without undue strain. As a general rule of thumb, rent should be around a third of the (combined) gross income of the applicant(s).
How will your tenants treat the property? It’s important to make sure that they will take the appropriate steps to keep the property clean, minimise any wear and tear and are ready to advise of any property issues that may come up. A careless tenant, on the other hand, will create extra problems which means more costs to you.
In the event of a problem the last thing you need is an uncooperative tenant. Willingness to collaborate and assist will not only make life easier for all, but will also reduce costs and time.
The first two points can be easily addressed with an effective tenant application. You will want to follow up on the application to confirm financial details with employers and past tenancy performance with landlords and agents. As a final measure, you can also run a check through a tenancy database such as TICA or National Tenancy Database to make sure they are not listed as a problem tenant.
However, recognising a co-operative nature may require more of a gut feel evaluation. Use the time during inspections and negotiations to assess the personality and character of the potential tenant. Their attitude during these moments can be very revealing.
Many of the problems faced by property investors can be avoided by selecting the right tenant. It’s the tenant that underpins the success of owning an investment property, both commercially and emotionally. So it’s important not to take risks or compromise when it’s time to choose a tenant.
George Astudillo is the founder of Property Quarters, an agency that values communication and great relationships with its landlords.
George now has more than 30 years in real estate, including 15 years as the owner of a national real estate franchise. He’s also an accredited auctioneer and is the author of “The Landlord Mindset”, a book with his best tips to help landlords look after their investments. His book has been quoted in the SMH, The Huffington Post and The Age.
As the founder of Property Quarters, George takes great care in looking after his landlord’s investments. Having seen it all and worked with may landlords and tenants, he’s a strong mediator and negotiator and knows how to navigate through property legislation.
George is trusted by his landlords to advise on the financial management of their investments. He’s put in place proven processes to ensure each property he looks after is managed effectively to retain its value, quality tenants and rental income.
If you’re looking for a property manager who thinks like a landlord and whose business is built on tested processes, contact us by clicking HERE.
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