Finding “The Dream Tenant”
The “dream tenant”…. is there actually such a thing and more importantly, how do you, or your property manager find them?
I’ve been fortunate with my tenants for the majority of my investment journey however, by being so connected to the industry, I’ve also heard some interesting challenges of investors trying to find that needle in a haystack tenant.
With the recent 6 month moratorium on landlords being able to evict tenants, it’s never been a more critical time to make sure your property has the right type of tenants. If you’re currently searching through haystacks trying to tenant your investment property, there are a number of things you can do to try and optimise finding your version of the “perfect tenant”.
Manage Your Property Manager
I have always taken the approach, manage your property manager and let them manage your property. It’s important you clearly communicate your expectations rather than just assume your property manager has the same standards as you do. Some investors take the full hands-on approach of being their own property manager, I’ve certainly done both and nowadays I find managing my property managers more enjoyable and easier to handle than dealing with individual tenants.
Know Your Market
Talk to local property managers to find out what the current demand is in your area – is it coming from young couples who want low maintenance properties without big yards, or from younger families wanting room to grow, are pets high on the list of requirements? While your property may not suit all of these requests, knowing what is in demand and then positioning your property to best meet that demand increases the number of enquiries you will receive. Ultimately, this means you will have a greater pool of candidates to draw from and can afford to be more selective.
A Bird In The Hand
Keeping your “dream tenant” is as important as finding them. Responding to repair requests in a timely manner is top of your priority list as a landlord and your property manager should be proactive in managing these requests to maintain not only the standard of your property but also the satisfaction of your tenants. Rental increases should be considered fully and be dictated by the market, not by your current financial needs or cashflow. It’s a delicate balance to strike and always look to your property manager for guidance in this area. Ultimately, the happier your tenant is, the more likely they are to stay – and the less work you, and your property manager, will need to do in the long run.
Check, Check & Double-Check
When assessing potential tenants, it’s vital to make sure you, or your property manager, have conducted full background checks. Contact their references and check them out thoroughly and don’t forget to talk to the current employer about the prospective tenant and their reliability and attitude at work – this will be an indication of how they will be as a tenant. Make sure the income they have is ample to cover the rent – if times get lean, the greater the buffer in a tenants income means the less likely you are to be the top of their no-pay/delay list. View the last three payslips to show the consistency of their income, talk to the employer about their job security & make sure their references are independent – not just friends and family. Ideally, talking to a previous landlord is going to provide the most valuable reference for your prospective tenant. Look for stability in their employment history – have they just started a new job, do they jump from job to job, or area to area often?
Safety Net Protection
Above all, the best defence against a poor tenant is to not wear rose-coloured glasses – no matter how thorough you are in finding your “dream tenant”, ensure you still have adequate landlord insurance in the event that issues do arise that result in rental default, damage to your property or legal disputes. Your property is a substantial investment and needs to be safeguarded to ensure it works towards your wealth creation goals, not detracts from them.
Taking these precautions will help protect you from your dream tenant becoming your nightmare.
Feel free to reach out to me to answer any questions you have about your investment property or portfolio.