December 20

The buy-to-let landlord’s guide to dealing with rent arrears – Part 3

Safeguard against bad tenants

Avoiding a tenant from hell is every bit as important to successful property investment as researching location. A nightmare tenant could damage your property, cause problems with neighbours, and rack up months of rent arrears.
In this article, you’ll learn about the first defence against rent arrears and the other problems caused by tenants from hell: tenant vetting. From the viewing to the referencing process, every step is a chance to discover a little more about your prospective tenants.

Make the most of your first meeting

The first time that you meet a tenant, it will probably be at a property viewing. It is an excellent opportunity to get to know something about the applicant and can give clues about how the tenant will treat your investment property.
My advice here is never conduct group viewings – they don’t give the one-on-one time you need to ask questions and make a considered first impression.

What can you find out from the viewing?

It’s a misconception that the viewing is designed solely for the tenant to make a decision about renting your property. It’s also your chance to start the process of assessing tenants. To make the most of this time, you’ll need to know what to look for: the telltale signs that an applicant is going to make a bad tenant.

·      Watch for body language and behaviour giveaways

For example, have they arrived on time? If they’re late, did they phone ahead to warn you?
It may be that they have had to come to the viewing from work. I’ve met prospective tenants who have walked off a building site and straight into a buy-to-let landlord’s front room, concrete spots and muddy footprints trailed across a brand new carpet. An applicant who wipes their feet or offers to take their shoes off before entering a house is one that is likely to treat the property with respect.
Prospective tenants may also bring children with them. Do they let them run riot around the property, or are the children well behaved and well managed by their parents?
These are the sorts of behavioural attitudes to which you need to pay attention, and that will tell you so much about the tenant applicants.

·      Ask questions and use social media

Make sure you ask lots of questions, too. Ask about their job, their previous living arrangements, and why they are moving. If they had problems with a previous landlord, you’d  need to decide whether those problems are because of the landlord, or in spite of the landlord.
Here’s a tip for your vetting process in this interconnected world of ours: social media accounts can provide a wealth of information, so make use of Facebook, LinkedIn, and use Google to search for information that can confirm what you’ve been told.

Check tenant references

Always ask for references, and always check them meticulously. The majority of buy-to-let landlords who find themselves with tenants from hell and rent arrears stretching back months are those that don’t follow up on references supplied. You should ask for references from current and previous landlords, and current and previous employers. Carry out a credit check, too.

·      Employer’s reference

Phone the tenant’s employer and speak to their boss or HR manager. Ask how long the tenant has worked for the company, whether full-time or part-time status, contract length and salary, commissions and bonuses. Ask for confirmation in writing. One more tip here: never rely on the tenant’s contact details for their employer – they could be a serial nightmare tenant, with a friend who is happy to pose as their employer. Search the Internet or use local directories to find contact details.

·      Landlord references

Forged references from current and previous landlords are not an uncommon occurrence when dealing with applicants who are playing a game with which you don’t want to be involved.
You should ask for written references, and then follow up with a phone call to the named landlords. There are ways to confirm that references (and referees) are genuine: cross-check addresses on utility bills, for example, and ask the landlord to confirm the exact address of the property that had been rented. Make sure that the tenant treated the property with respect, paid rent on time, and gave proper notice.
Ask about the tenant’s general demeanour – were they easy to get on with, did they report problems promptly, and so on. Be wary that a current landlord might not tell you the whole truth if they are desperate to move a bad tenant on. With experience, you’ll be able to tell when a landlord is not wholly truthful.

Check the tenant’s identity

Don’t take the applicant’s word for who they are. There are hundreds of stories about people being conned by someone who wasn’t who they said they were. Proof of identity includes:

  • Current utility bill
  • Photo ID, such as a passport or driving license
  • Bank statements – which will also help to confirm the tenant’s ability to pay rent as well, their income, and their current address

Always check credit scores

Use a major credit check company (Experian or Equifax, for example) to check the applicant’s credit score. It will tell you about how the applicant conducts their financial affairs if they are in debt, and how well they pay their bills.

Don’t ignore your gut instincts

As you become more experienced in the vetting process, you’ll get better at ‘reading’ prospective tenants. Your gut instinct can tell you a lot about applicants. While a first impression is not a reason to dismiss an applicant out of hand, don’t dismiss your feelings. You’ll be searching for a long-term tenant, and it’s a lot better to have a tenant that you can work with than one who you don’t trust.

Vet every tenant

A common mistake I’ve found among less experienced landlords is that they vet just one of the tenant applicants. When you sign a tenancy agreement, it’s likely that you’ll sign with more than one tenant (or occupant). Go through the vetting process with every tenant, not simply the ‘lead’ tenant. You never know what you might uncover − and as they say, one bad apple could spoil the whole bunch.

Don’t let the viewing be the only meeting between you and your tenants

Once you’ve found what you believe to be great tenants, make sure that you continually vet them by carrying out regular inspections. Check for maintenance and repair needs, and make sure that the house is being respected. While you won’t want to become best buddies with your tenants – it’s a business transaction, after all – be friendly in your dealings with them, and use every inspection as an opportunity to check that their life is running smoothly (stability at work, for example).

Vetting expertise comes with experience

Each time you vet a prospective tenant, you’ll become a little better at it and more adept at the process.
You’ll need to invest a little time when vetting tenants, but doing so could stop you from investing in a tenant from hell. The majority of nightmare tenants are taken on by landlords who fail to vet properly. Don’t be one of the buy-to-let landlords who regret rushing into a tenancy agreement.
To discover more about the tenant vetting process and our comprehensive referencing practices, contact one of the Ezytrac team or me today on+44  1522  503  717.
Yours in effortless property management,
Brett Alegre-Wood MARLA MNAEA


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