Tenant Selection
I was talking to a new client the other day who is an active investor and was amazed that they had never given any thought to the selection of the tenants they place in their properties (mind you the reason for his call to my company was that one of his tenancies had gone bad). When I asked him why he said “its all about the capital growth” to which I replied “capital growth is not much good to you if you have not got a tenant in there to help pay the mortgage” or in this case not helping to pay the mortgage and doing a runner causing damage.
So here is a list of things 3 you should be getting if you are a Private Landlord or have your property managed by an agent:
- 100 points of ID
- To a completed Tenancy Application Form (TAF) with more than just their name and Date of Birth
- A tenancy database search
The TAF is the most important thing (I have included a link to a draft one we supply our clients) as its out best tool in tracking them down if the do a runner or cause damage. http://www.barclaymis.com.au/snippets/YumYum_Iron_Cheif/DraftTAF.pdf
Its all well and good buying investment properties but remember that it’s the tenants that help pay the mortgage and few extra dollars on selection could save you thousands in the future.
Any questions drop me a line
Hi Bendbanks,
Can't open the link…
Can you please explain what you mean by 100 points of ID ? Sorry if it's a common term but I live OS and haven't heard it.
Or do you just mean check their ID through many avenues?
Cheers
ElkaAt the end of the day the tenant qualifying process is pretty much a waste of time.
Here's proof;
Property 1, tenant 1; Brand new townhouse, rent – $350 per week in a blue-chip suburb.
Single, middle-aged nurse with 2 almost teenage boys in a townhouse complex of 4. Good income, past tenant history supplied; good payer. Tenancy database check is clear.
Moved in, immediately starts to put other residents offside by parking in front of other garages (hers is full of crap now). Won't move car, argumentative with other residents, kids and kid's friends leave bikes in driveway, excessive noise etc, etc.
Body corp is established by us owners to control these sorts of incidents (her). Still no compliance by my tenant.
I decide to sell townhouse, she won't allow inspections unless she is present. Never available. We end up allowing her to break lease and move out.Property 2, tenant 1; older 2 bed unit, rent $165 per week.
Young couple, no rental history. Both have employer verification and references. Good income. Allow druggy friend to move in with them unknown, place is trashed and tenants do runner.Property 2, tenant 2;
Older pensioner couple. No rental history, only pension for income.
Exemplary tenants for 3 years; no problems, excellent payers.Property 3, tenant 1; older unit, rent $210 per week.
Young couple; no rental history. Self employed so no employer references or income proof.
No problems, good payers since day 1. Still there (5 years later).Property 3, tenant 1; newer unit, rent $180 per week.
Single, 30 year old mining worker. No rental history – new to the area. Good income.
Exemplary tenant for 2 years, good payer, kept property in good condition.So, I have had the high earner professional mum in the schmick townhouse who was a disaster, and the dodgy single guy who might party hard after a tough week in the mines who was a champ. Go figure.
My view; give 'em all a go and take their money. Let 'em have pets too. Just charge more rent to cover the possible damage from the pets.
If they are no good get rid of them and get another one. Most people are good by the way.
You can't judge books by the cover I've found.
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