Steps to securing suitable tenants
The tenant selection process is one faced by all landlords at one point or another and is an important part of risk reduction. Failure to secure suitable tenants can result in an increased chance of rent arrears, damage or tenants only staying short term.
There are several important steps involved in this process:
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An effective marketing programme is essential in order to attract as many prospective tenants as possible. It goes without saying that good presentation and amenities will help increase the selection of quality tenants, and high demand generally means higher rents.
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A comprehensive tenant application should be provided so a landlord has all the information needed to process the tenancy request. An application should include (at the minimum) personal details (including current/previous employment and accommodation), required start date and authorisation to complete background checks such as verbal references and credit checks.
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A copy of a photo ID should be requested so there is no dispute in identity.
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Referees on employment and accommodation references should be contacted via phone or email. A verbal or up to date email reference is always preferable over a historic written reference provided by a prospective tenant on application. If a written reference is supplied then a short phone call to confirm the reference is also helpful to ensure authenticity. A copy of a previous rent ledger/rent record will also enable you to verify consistency of past rent payments. Some tenants may not be able to provide previous landlord references, for example if they have just sold their own home and haven’t rented for some time. This may also apply if the tenant owns their own business and there is no one senior at an organisation to provide an employment reference. General employment references should not ask how much a tenant is earning as from the employers perspective this is confidential and will usually result in them declining to answer any more questions. If you require this level of information then request it directly from the tenant. General character references from people in the community are another way to satisfy you of a prospective tenant’s background. Search engines and social networking sites are also being used increasingly to research tenants, much like employment agencies have used these techniques for some time.
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A credit check should be done and this can be completed online via many credit agencies. Remember to have the tenant’s permission on a signed application form. You should also complete a check via the Ministry of Justice on the Tenancy Tribunal database to see if the tenant has been to the Tribunal previously and owed a landlord money from an earlier tenancy.
Once you have completed as many of the above steps as possible you are in a position to make an educated decision on which tenant may suit the property. The above process should be completed quickly and professionally to ensure that tenants rights are protected and so you don’t lose quality tenants to another landlord. In a competitive market tenants often apply for multiple properties so you can miss out if this process is not given a priority.
If you are declining an application to rent your property then you should do so professionally without providing specific details as this will not usually achieve anything and can cause unnecessary bad feelings.
The above process is critical to ensure you have the ammunition to choose the best tenant suitable for the property and allow you to negotiate terms.
Remember, choosing a bad tenant is not a solution to solving a vacancy problem. You can refer to our past blog Attracting & Maintaining Tenants for advice on securing good tenants. The more varieties of people your property appeals to, the higher demand you will receive in the form of enquiries from quality tenants. If the rent is a reasonable market rent reflecting the demand for the area then this should also assist with enquiries.
Using an efficient property manager can assist with marketing your property to the world as they can provide established online exposure on multiple websites at the push of a button. They also often have existing tenant databases—the Allen Realty website allows tenants to register online and any new listings that meet their criteria are emailed to them immediately.
Allen Realty is a 100% specialist residential Auckland Property Management company with a growing network of local branches in Remuera, Mt Eden, Auckland CBD, Greenlane and Manukau. Visit www.allenrealty.co.nz for information on our services or
email simonallen@allenrealty.co.nz for more information.
You can read other recent blogs including Negotiating Tenancies, The Art of the Rent Review, Smoke Alarms in Rental Properties, A Landlord's Preparation for Winter, Reduce Moisture—Reduce Vacancies, Low Maintenance Gardens in Rental Properties and How Many Tenants on an Agreement?
Simon Allen | Allen Realty Ltd
REINZ Residential Property Manager of the Year 2011
April 2011
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Where can you find us? We have a growing network of local neighbourhood Allen Realty branches in Auckland CBD, Mt Eden, Greenlane and Manukau.
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