How To Avoid Nightmare Tenants For Your Investment Property - Pearl Financial

How To Avoid Nightmare Tenants For Your Investment Property

By Shane | Investing

May 12

This article will go about the most important thing in managing your property- and that is how to avoid nightmare tenants before they even move in. Investment properties make up an important financial approach for many Australian property owners. However, many of the headaches that come with these properties are due to troublesome tenants. 

A crucial part of the return on investment to these properties is finding and keeping good tenants who will pay the highest possible rent, pay on time, and take care of the property as if it were their own. Finding the right tenants can really be a daunting task, so here are some tips for property owners to help avoid nightmare tenants.

  1. Look for a fitting property manager.

Finding the right person to manage your investment property is crucial. Your property manager should be experienced and have previous success with difficult tenants. He or she must attend inspections to cater to tenants’ needs and have a good strategy for vetting applications and monitoring rental arrears.

  1. Keep your property in top condition.

If keep your property in top condition, you’ll certainly draw tenants who take care of their belongings and property. It will also keep you ahead of the competition. Ensure property updates suit your target demographic. If your agent advises that the best potential tenants in the area are executives, it may be desirable to offer a furnished property and advertise it as an executive rental.

  1. Set the applicable leasing price.

It is best to keep your leasing price in line with similar properties in the area or other landlords will gain a competitive edge in the search for good tenants. Confirm with your real estate agent about the current market and what similar properties in the area are being rented out to decide on a convincing price.

  1. Run checks in the screening process.

It’s a good idea to include relevant checks in the screening process as it is usually safer to choose a tenant who has a good established rental history. Your property manager should look to see if any late payments by the potential tenant on their previous rental were a one-time deal or persistent, and how recently they occurred.

Another part of the checks that can be conducted is the applicant’s past addresses. It’s important to verify that these correspond with addresses provided on the application form to find out if the applicant is trying to hide something.

  1. Confirm if reference checks are made with employers and previous landlords.

It’s tempting to choose applications from potential tenants that show a willingness to pay more rent or pay a large sum up front, but keep in mind that this could mask a less than desirable rental history.

Make sure that your property manager makes reference checks with the applicant’s previous landlords, who can clarify whether the tenant paid their rent on time, allowed pets or anyone else to live on the premises without notification, and the condition they left the property in. A good screening question to ask is whether or not the landlord would rent to the applicant again.

  1. Take photos and document the property’s condition.

Take detailed photographs of your property before anyone moves in. A copy should be provided for the tenant, your property manager, and yourself. Those photos can be used as a deterrent from making any false claims regarding damage later on.

  1. Inspect the property regularly.

Your property manager will need to inspect the property regularly once your tenant has moved in. Although your tenants may have perfectly behaved, their pets or guests may not follow through.

  1. Consider getting a landlord insurance.

Landlord insurance is designed to protect your building against loss, theft, or damage. There are also policies that specifically cover the cost of unpaid rent or legal costs for chasing up on the lost income. The policies may differ so it’s best to compare your options carefully to find the right fit.

Stick to your systems, if a potential tenant is seemingly trying to force you to do things fast and attempt to skip some steps in the process or avoid your own rules and your system, rather move on and avoid the tenant instead of making a major mistake. One month of a shortfall is far better than the costs of an eviction no matter how you want to look at it.

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About the Author

Shane specialises in helping Gen Y professionals and business owners make an impact by accumulating more assets, generating more income, and having more time to enjoy life. He has a Master of Applied Finance, an MBA, and a Master of Financial Planning. He is also a terrible golfer.

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