Tenant selection is not an exact science but there are processes, checks and balances that should be taken to ensure you approve the best tenant for your property. Tenants can make or break a successful tenancy, so we have established a policy around how we find the strongest applicants for our investors properties.
Will they pay their rent on time?
This may seem obvious but there are areas of a potential tenant’s financial background that you can check to ascertain this. In general, the monthly rent shouldn’t be more than approximately 30% of the combined net income of the tenants.
We do this for two reasons, firstly we want to ensure tenants are not put under financial stress to pay their rent. Especially in Sydney where demand can be high which can push up rents. Secondly, if their financial circumstances change, say they lose their job or have to pay for an unplanned large bill, they will be in a better position to cover this cost if they have a buffer and their rent is not draining their account each month. We can never account for their overall spending, but this method has proven very successful for us.
As part of our on-boarding process we explain the process of rent payments and talk to them about options if they do get into financial difficulty so, if the situation arises they have options.
Are they easy to deal with?
Relationships work best when both parties feel equal. Our tenants are our customers and we want them to be happy and enjoy the experience of living in their home. We are clear from the start on what our expectations are, and we work hard to meet their expectations too. The most successful tenancies are where the tenants feel supported and listened to. We act promptly when they have an issue and they are accommodating when we need to do inspections or access the property.
Relationships work best when both parties feel equal
We provide small things like long term leases to give them security in their home. Our tenant portal provides everything the tenant needs to know about their lease, rent payments, inspections and when repairs are being done. This level of transparency provides comfort to our tenants that they are being looked after and have a trusted professional who will make their life easier.
Will they look after the property?
Property repairs and maintenance are an essential part of managing a property. Ensuring the property is well maintained is necessary for the tenant as much for the property investor. This starts at the beginning of the tenancy where we outline the importance of reporting repairs early and making it really easy for the tenants to do this. Then, we need to act quickly and effectively. At Property Alchemy we have an automated system to triage repair requests meaning the tenants receive an instant response and usually these issues are dealt with on the same day. By assuring the tenants that you will act quickly on their requests they are more likely to report repairs and maintenance early which often means a small problem is dealt with instead of something going unreported and turning into a large, expensive problem.
Common mistakes
- For whatever reason your property may not lease in the first few weeks and it’s at this time that you can start to relax your stringent policy around the quality of the tenant and this is when problems can occur. Our advice is, sometimes it’s better to reduce the rent or perhaps do some cosmetic changes to the property rather than getting desperate and putting anyone into the property.
- If the tenants are late with rent, don’t present the property well at inspections or are difficult to deal with you have to issue the appropriate breach notice. These breach notices are an important part of your fiducial responsibility to the property in case the actions of the tenants worsen and you need to terminate the tenancy.
- Don’t miss the little things. At inspections you need to look out for extra tenants, unauthorised pets or any odd behaviour that could be in breech of the tenancy agreement. It’s always better to be curious and ask the question rather than let things slide, chances are they will come back to bite you.
A great tenant is worth their weight in gold.
Over my 16 years in real estate I have found that if you have a great tenant and you look after them they will look after the property. Most people do the right thing and want to live in their home peacefully and enjoy it. We go out of our way to ensure our tenants are happy and have any issues resolved quickly. It has worked for us and has meant our tenants stay in the properties longer, have no issue with market rate rental increases and work well with us to fix any issue. This alone makes everyone’s life a little bit easier and who doesn’t want a bit of ease in their life!
