As a landlord renting a property, it can be incredibly worrying when you’re trying to find tenants to fill the house – with the worst-case scenario being destructive tenants that refuse to pay rent and end up costing you thousands. We Buy Any House know how risky it can be when advertising for new tenants, so have outlined some of the popular methods landlords use to reduce the risk.
- Always get references – and read them properly
While most landlords will request references, all too often they go unopened and get forgotten about. Most places won’t give a necessarily bad reference, but there’s a big difference between a great reference and a very average one.
You can ask for a reference from an employer, from a previous landlord, or both, and get an idea of the person that is applying for your property. While a written reference is standard, you can also call them – often, listening to tone of voice will give you a good indicator as well, helping you decide if you’re happy with the applicant or not.
- An air-tight contract
A strong contract seems like a very obvious point to make, but landlords will miss things out and fall into loopholes that can cause them havoc. Always make sure that your contract has been read over and checked thoroughly to protect yourself, and keep copies of the signed contract just in case.
Hopefully, you won’t need to apply this clause, but it’s recommended to put into your contract some rules about late rental payments, such as an interest build-up each day until the payment is made. Not having this in place can mean your tenant won’t be concerned about making late payments which is not a cycle you want to fall into.
- Always take a deposit
Even if you know the person that you’re going to be renting to, it’s imperative to take a deposit for your own wellbeing. Tenants that don’t pay a deposit are often careless with the property as they aren’t worried about getting anything back, which can result in damage to the house that you need to repair before a new tenant moves in.
Deposit rules for renting have changed in the past few years, and now you’re unable to ask for a deposit higher than 5-weeks of the rent. However, this can still be a substantial amount that will cover anything it needs to if damage is done, meaning it doesn’t come out of your own pocket. Remember, your tenants’ deposit legally needs to be safely stored in a protection scheme otherwise you can be liable for compensation claims.
- Use an agent
Often, landlords find that it’s much easier to have an agent in place to manage the property and deal with finding tenants and doing background checks to ensure that they’re a reliable option.
This does come with its own costs, but it takes a lot of pressure off of landlords and makes things much easier; the agency will advertise the property for tenants, do the relevant checks, and arrange any repairs or maintenance that’s needed during the rental period too.
- Ask for a guarantor
A guarantor is someone who agrees to step in and make the necessary payments if the tenant is unable to do so. Asking for a guarantor can put some applicants off, however, it’s another level of safety for landlords and ensure that you will get your rental payments from someone.
Some landlords will accept any guarantor in place for tenants who either have a lower income or no references, whereas some will say that the guarantor has to be a homeowner to increase the level of security for the landlord, but you can decide what works best for you and even do it on a case-by-case basis if need be.
- Run a credit check
Credit checks are a great way to get a snapshot of someone’s financial responsibility and will highlight if they are likely to be a risky tenant for you. If they are prone to making late payments or have large amounts of debt, this lets you know that there could be issues with them making their rental payments to you.
Remember that a credit check won’t reveal everything about your prospective tenant, and that there could be issues in their past on there that no longer apply, so your decision shouldn’t be solely made on the credit check alone; it should be kept in mind but not used to make the final decision, especially if they have a strong income and a guarantor in place.
The best way to assess your applicants is to use several of these methods to get a good idea of who they are and what kind of tenant they’re going to be. Remember, while bad tenants can be a risk, good tenants will keep your investment growing and see you in profit, so being a good landlord is also important. By assessing your applicants correctly and ensuring that you’ve covered your back, you should be able to select reliable tenants for your property.
