Many property owners ask the wrong questions when looking at tenant applications, potentially turning away suitable tenants because they focus on irrelevant information.
Asking for too much personal information or looking for tenants with a certain lifestyle is not only intrusive but could lead landlords to turn away potentially suitable tenants. It doesn’t matter if they have green hair or go to church or vote X, Y or Z – but it does matter that they have a good track record for paying rent on time!
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 or emotionally involved with the property. *
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 end up with a longer vacancy because they are never satisfied.
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.