Hi all,
Having just been through the ringer with a tenant who refuses to pay rent (it’s ongoing, but I’m on the verge of being able to get bailiffs in and will take him to court if necessary) I’m seeking tips to avoid this situation.
This guy presented well (don’t they all??), had full-time employment and gave me 2 referees who both vouched form him being a great guy (though they weren’t former landlords).
ANY tips on screening prospective tenants would be most appreciated because I don’t want to go through this costly experience again.
thanks,
CarlinFind a good Property Manager.
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http://www.depreciator.com.auYou need references from previous landlords and you need to phone up and check them out. If you can’t get that info, then that tennant is not for you.
Six months ago, I got a new tenant and out of the three that I thought might be good, one had a dodgy reference, one didn’t want to give a reference at all and when I called up her previous PM, she said that she’d not rent to this woman again as she was always late with the rent. She presented well, had a full time job and seemed really nice. The third had a good reference and would rent to him again and he’s been great. No probs and he’s asked for a 12 month lease now that the initial one is up.
I’m sure there are a lot of other things to look at, and I’m sure I experience more than a fair share of dumb luck when it comes to property and tenants, but talking to the previous landlord is one thing that I would never overlook when choosing a tenant.
Do you have landlord’s insurance? Would that cover these costs that you’re dealing with now?
I hope you get it all sorted out soon.
Finding a good property manager can definitely be more difficult, costly and time consuming than finding a good tenant.
It’s the same as saying all your mechanical troubles can be fixed by finding a good mechanic, all your legal troubles solved by finding a good lawyer and all of your plumbing problems sorted by finding a good plumber.
Fantastic advice, until you start wading through the dross of service providers and you soon come to the realisation that they are all not equal.
We left the tenant sorting task to three of the most reputable agencies in Perth 8 years ago. All three PM’s were woeful. Lip service was great, pamphlets were great and the suits were nice and pressed and sparkly. All three picked c*ap tenants who cost us oodles. Owners are fully at risk, not the PM’s. When the going got tough, all three dumped it straight back in our laps (not enough cash and too many headaches for them to worry about).
Carlin – what’s the solution to your dilemna ?? Keep the trouble in your lap – don’t palm it off to PM’s at great expense. When the going get’s tough, it’ll up back in your lap anyway.
If it’s residential, insist on a bank guarantee from the tenant….that’ll sort the men from the boys. (You can’t ask for a bigger bond as your hands are tied).
Good luck…it definitely isn’t easy.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
I’d say just Get yourself a good Property Manager..
Roy H.
L.R.E.A., Dip FS (FP)Guardian Property Specialists (GPS) is a research-focused company that specialises in sourcing and providing residential investment properties Australia wide!
I agree that Property managers can be a mixed bunch. Guess I’ve just been lucky with mine. And some of them have handled some tricky situations.
Tax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auThanks for the advice.
No, I’m not hiring a property manager. Too many stories about duds + I like to handle things myself so I know what’s what. I’m a firm believer that no-one looks after a property more than the owner.
Re-getting references from previous landlords – this guy who’s just caused me grief had been staying with friends. Claimed he hadn’t rented for years – how do you go about checking the truth in that??!!
Dazzling – pardon my ignorance, but what do you mean by a “bank guarantee”? Do you mean making sure that there is an automatic debit system (from their account to mine) set up before they move in?
thanks again,
CarlinCarlin,
No I don’t mean that, but I do insist on a direct debit form to be signed. If the tenants don’t bank with the same institution as me, they cop the intra bank fee imposed if any.
A bank guarantee is just a lump of money deposited with the Landlord as a ‘monetary buffer’, just in case they go off the rails.
Most Residential Tenancy Acts only allow the Landlord to charge 2 weeks rent in advance and 4 weeks security bond, and maybe up to $ 100 extra for a dog.
I insist on the following ;
1. 4 weeks rent in advance
2. 4 weeks bond
3. 8 weeks bank guarantee
4. Direct debit form signedIf they whinge and moan they can’t afford the 16 weeks cash in advance, then I’m not interested in dealing with them. No point financially dealing with people of no financial substance.
This doesn’t apply to residential situations, because as I said before the tribunals and RTA have completed knackered the Landlord. Play that game if you want…good luck.
As was so elegantly quoted in a parallel thread on what Landlord’s can do to extract money out of recalcitrant tenants who refuse to pay you what they owe, even after chasing them thru the courts…the answer is stiff cheese…nothing…Landlord eats the cost. What a fantastic recourse. Other people on this forum believe this to be a scratchy record, so I’ll put my headphones on now and listen to my music by myself. [biggrin]
Good luck in your residential endeavours.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
look at taking out Land Lords insurance to protect you from loss of rent, malicious damage, public liability and find a good real estate agent. If the one you have is not cutting it find a new one.
Hi Carlin
Tenant selection is just about the most important process for a landlord.
The criteria for tenant selection varies with the type of property. If it’s an old rundown place, then you can expect mostly “marginal” applicants, and no gems.
If it’s a moderately good property or better, then it will attract better tenants, so you can raise the selection criteria bar. As a rule, I insist on previous rent records from REA’s only, no private rental records because they are difficult to substantiate. This filters out the applicants who want to use a friend as a cover story.
100 pts ID is vital, to ensure you have the same person as the one you are researching. This means enough of the following to guarantee ID :
driving licence, medicare card, bank plastic, phone/elec/gas bills, rego papers, pay advice, REA full rent record printout, copy of current or previous lease, copy of bond form or refund. These should match signature on each other and on the tenancy application. See them sign the application. Addresses should match. Insist on originals and Xerox the originals yourself.Check the phone book to confirm the numbers on the application(excl silent numbers). Ring their work ( & confirm position held, permanent or casual, how long, income,) REA, (mobile numbers not acceptable), immediate relatives are not acceptable referees. Inspect their car, any excuse to walk them to their car, especially look at the interior, your property will look the same after 3 months of their occupation. If anything doesn’t gel or there are any basic contradictions, and the explanation cannot be 100% confirmed, decline the application.
Use a good tenancy application form from an agent, it will provide you with the applicant-signed clauses relating to the Privacy Act so you can legally collect info about them.
Ask TICA for a subscription, (not sure if they still accept non-REA subscribers. You need a default tenancy database to vet tenants properly.
Good luck, hope you find geed tenants.
cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
A few months ago I downloaded an absolutely amazing .PDF file that went into so many area’s regarding avoiding bad tenants. It talks about a lot of issues & also went into explaing a lot of your rights & the rights on future & current tenants. I’ll have to dig it up in my computer & e-mail it to anyone intrested?
I’ve read over it and I beleive it’s indispensable to anyone interested in being able to asses future tenants in a comprehensive manner.
Originally posted by carlin:Re-getting references from previous landlords – this guy who’s just caused me grief had been staying with friends. Claimed he hadn’t rented for years – how do you go about checking the truth in that??!!
I wouldn’t have rented to this guy simply because he can’t provide references/phone numbers from previous landlords. That was a huge risk you took. It’s his problem that he can’t give a reference. You don’t have to make that your problem.
Also be careful of the insurance you get. Insurance companies will also look for excuses to knock back your claims. They are not always the answer for bad tenants who cause damage.
C2
Having had a “learning experience” recently with a tenant from hell I would agree with Oshen. If they don’t have verifiable a reference(s) from a landlord don’t rent to them.
Anne.
Many thanks for all the advice, but what would you do in this situation? Neat and tidy Indian couple, just arrived in Oz, have confirmed their employment details and their IDs but, of-course, no rental history here in Aust.
It seems that what many of you are advising is that – if the person has no references from a previous landlord – then don’t rent to them. What about people who’ve just moved out of home? What about people who have sold a house and are renting for a while?
And what about people like this couple, from India, knowing just one person here and having a friend + 2 officers from the migration/relocation services as their referees, people who’ve only just met them?
I think any one of these groups would have a clear case for discrimination if I just ruled them all out.
So what alternate ways can you check someone out, in the legitimate absence of references from previous landlords??
Cillenmolin – I would REALLY appreciate a copy of that info you mentioned.
Carlin
I agree that some people, for whatever reason, don’t have a recent reference. I know many will think us mad, but for over 25 years of privately managing our IPs, we have never asked for a reference. We go on gut instinct. It has only gone really pear shaped once (this year). My parents have had IPs for 30 years and they also manage privately and don’t ask for references.
I realise this is easier when you meet the prospective tenants personally (as opposed to 600km away).
Your gut instinct is usually right (we have found). After this year’s problem though (original tenant was fine, boyfriend was the problem – and we didn’t meet him at first), I think we will (perhaps) ask for a reference. But I still believe that first instinct about people is a powerful guide.
We used to give the first week’s rent to local agents if they found us a tenant. Usually we never hear from the agent but once an agent did find us a great tenant – a pro who had once been in jail for stabbing someone – hey thanks!! I assume because the one off finding of a tenant puts one week’s rent in their pocket and they don’t have to worry about how bad the tenant might be, because they will not be dealing with the problem.
My thoughts, Wylie.
Carlin, are you asking a fair rent for your properties? Are the only people who apply the ones that don’t have references?
If you have a good gut instinct then fine otherwise, why take the risk?
What do you think the guy you’re having trouble with will say when he tries to rent again? Do you think he’ll give them your number or do you think he’ll say he hasn’t rented for ages but has being staying with friends?
If you want to give someone a break, then good. Just be aware that you are taking a risk and be prepared for the worst. If you can’t handle that, don’t take the chance.
If you want to rent to this couple, follow Dazzlings 4 points about the rent so you’re covered. If they’re legit, they will understand. I think that is an excellent way to “check someone out in the absence of references”.
Remember that you don’t have to take on other peoples problems. They won’t be homeless if you don’t rent to them. They’ll just wander around a bit till they find Wylie [rolleyesanim]
Choosing tenants has to be a business decision.
Rhys_T – please find that info, looks like a few people could use it, we all need to be on the ball with tenant selection. I still have bandaids all over me from being a PM, made most of the popular mistakes at least once.
Tenant selection has a risk factor, and by your own efforts you can minimise that percentage, or not.
PM, tenant selection and social work do not mix.
A tenancy applicant without a favourable and verifiable history must be regarded as at least a high risk, and must be placed in the same category as a bad tenant. Sounds harsh but, in both cases, you cannot verify a favourable history. And, that’s not your fault.When you give a tenant the keys and access to your property, you are risking not less than 10 weeks rent, plus damage. That’s the minimum time/cost required to remove/replace a tenant who does no more than ceases paying rent, and stays put. If the tenant resists, with help from Tenants Advice & Advocacy Service (or similar in other states), pleads hardship, knows the ropes and uses them all, you can kiss the value of 3-6 months rent goodbye.
So, why not treat the tenant selection situation as an application for a loan from you – to the tenant, for say the equivalent of minimum 10 weeks rent ? How much is that to you ? $1000 ? $1,500 ? $2,000 ? After all, the tenant is promising faithfully to pay right ? And you’re giving the tenant the keys and legal possession of your $100K/$200K/$300K (whatever) property ? But, the tenant gets the property NOW, (donkey gets carrot), and promises faithfully to pay (pull the cart) LATER.
Sorry about the verbal 4 x 2 but this is business and PM is a tough game. With tenancy applications, as with CV’s, truth is an early casualty.
So, if you want to minimise the risk factor, decline any weak applications, and never explain why. Confirm your legal obligations in your state under the Discrimination Act before you conduct interviews, so you know how to conduct yourself.
Set your rules, and stick to them, be firm.
good luck.
cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Hey Oshen, nice try, but a bit cheeky. What I am trying to explain is that my gut instinct would kick in pretty quickily if someone gave me the old “I haven’t rented in a while and have been staying with friends”. Red flag right there. I also realise that people who like to deal with owners and not agents sometimes want to avoid the agent because they have a bad record and agents have access to databases we do not. We take all that into account.
But believe me, there are many people who just hate dealing with agents, for reasons other than they are bad tenants. Many people we have rented to have paid deposits for several houses and missed them all.
Please don’t think we just rent to the first person who comes along. Between my parents and us, over 30 years, we would have rented (mostly without references, and on gut instinct) to hundreds of people. We have only had one money losing experience (this year, lost probably $1000).
So people can wander around looking for us, but when they find us, it doesn’t mean we will rent to them.
We don’t have a foolproof method, but our gut has stood us in good stead for 25 years.
Regards, Wylie.
Hey Wylie
I think it’s great that you can choose tenants that way. I would love to be that intuitive and objective myself but realised early on that I’m not. I’m a sucker for a sob story.I meant to say that if someone is legit, they will find a home even if some people like me turn them down because they don’t have references.
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