When it comes to managing an investment property, choosing good long term tenants is always the ideal, to reduce the costs and extra wear and tear of a tenant turnover. Ideally, you’re looking for responsible tenants that pay on time, respect the property, and stay for the long haul. But trying to find the right tenant is tricky and choosing the wrong one can quickly result in costly evictions and potential damage to your property. Though finding responsible tenants is best left to the professionals (i.e. a property manager), there are a few things you can do to vet a potential tenant. Read our article ‘How to pick a good tenant’ below for some handy tips.
How to pick a good tenant
What are some qualities of good tenants?
Ideally, good tenants are reliable with their payments and communicate easily with from their landlord. They treat the property as their own, and let their landlord know if there are any maintenance issues that need fixing. Additionally, good tenants stay in the property long term, as frequent tenant turnover can end up being quite costly.
Write your rental ad carefully
If you’re wondering ‘how to pick a good tenant’, you’ll first want to attract desirable candidates. It’s important to clearly outline what you’re looking for in a tenant and advertise in the right places. For example, it’s better to use websites that are specifically used for rental advertising, rather than places like Gumtree. This might include specifying that you don’t want pets or highlighting nearby amenities that might appeal to your perfect tenant (i.e. nearby schools).
Choose a tenant with stable job history
If your tenant shows signs of switching jobs or moving often, it’s likely that pattern will continue. A history of unstable employment means a tenant could suddenly be in a position where they can’t pay rent, which will leave you looking for starting a search for a tenant all over again.
Be sure to verify income
You can verify income by asking for some copies of recent payslips backdating at least three months. As a rule of thumb, it’s recommended a tenant’s rent is at maximum 30% of their income. Of course, if a tenant has a stable employment and rental history, then some allowances can be made for this ratio.
Do they have a stable rental history?
On top of past references and employment history, it’s worth finding out how long potential tenants have spent in past rentals. Ideally, you want a tenant that’s going to stay long term, so a track record of short-term leases will give some insight into how long they’ll stay at yours. If you’re able to contact a reference, some questions you should ask include:
- Did the tenant pay rent on time?
- Why did the tenant move out?
- Did the tenant give adequate notice before leaving?
- Where there any issues that resulted in the bond being used?
- How did the tenants present the home during inspections?
- Were they cooperative and respectful?
Consider the tenant’s lifestyle
A young family or expectant mother are likely to stay in the property for the long term, as moving can cause a lot of disruptions. Similarly, though often disregarded as good tenants, a student may prove the perfect tenant as they’ve committed to three years in the area and are less likely to move as well.
Hire a property manager
If you’re worried about potentially choosing the wrong tenant (and incurring the costs that come with it) consider hiring a PM to manage your property. A PM has extensive experience attracting, finding and choosing the right tenants, and will be able to quickly discern whether a tenant is the right fit. They can also take the time to run background checks and comb through employment and rental histories, call for reference checks, and manage the ongoing relationship with the chosen tenant.
We hope our article on ‘How to pick a good tenant’ has given you some idea on what to look out for. If you’d like any help finding the right tenant, or have any questions regarding property management, contact Beyond Property Management for a discussion today.