If you’re renting out a property, you’re probably looking get the most from your investment. This includes ensuring that it generates income, and protecting its value. To achieve this, you'll want to find (and keep) a great tenant. So, what are you looking for in the 'right' tenant?
1. Financial stability
Having a steady income is a good sign that the prospective tenant will be able to pay their rent on time. A common rule of thumb for determining if your tenant is able to afford their rent is the rule of thirds.
Rule of thirds: The rent should be less than a third of the prospective tenant’s income.
However, take this with a grain of salt as it doesn’t give any insight into their spending habits. A high-income tenant may have may have poor spending habits. Conversely, a tenant with a modest income may be quite careful with their spending. That's why, when reviewing financial stability, you'll also want to look at the credit score.
A tenant’s credit score is a reflection on whether they are likely to pay their rent on time.
It can also 'flag' any major debts that you may want to be aware of before taking them on as a tenant. Credit checks can be expensive to Property Managers and inexpensive Landlords, however, online providers (*cough Pickmee.io *cough) can do this for you as part of their service offering.
2. Good character
You’ll want a tenant that is honest, respectful, reliable, and drama-free. This one is really important because the 'wrong' tenant can cost you thousands, and be very hard to shake.
The 'wrong' tenant may hide certain events that affect their ability to pay rent, or fail to notify you of issues. They may cause damage to your property and try to cover it up, leaving you with an unexpected cost at the end of the tenancy.
Most tenants will put their best foot forward when they meet you, so whilst criminal checks are a good filter, you'll still need to check their references (regardless of how 'lovely' the tenants are!).
The best references come from previous landlords, an employer, or friends and family. Previous landlords will generally provide honest answers, especially if they’ve had a bad experience with the tenant.
3. Care for property
Your ideal tenant should care for your property as if it were their own home, leaving your investment in pristine condition when they move on.
A good tenant has a history of keeping their rentals clean and tidy, reporting maintenance issues promptly, and (if applicable) maintaining the garden regularly.
If a tenant leaves these untended, issues can escalate and cause serious, permanent damage to your investment. If cleaning and repair costs exceed the bond, the cost will fall on you, cutting into your profit margin - never mind the stress!
While this can be mitigated through regular inspections during the tenancy, it's always good to cover this in your reference checks.
Unlimited, reliable & automated tenant vetting
Property Managers and Landlords spend up to 4 hours and hundreds of dollars per tenancy getting this right. Pickmee's digital platform processes tenant applications for you (including unlimited credit, background and reference checks) so you can compare the best tenants side-by-side.
Find out more at www.pickmee.io.