Introduction: As a landlord in Brisbane, you have the opportunity to stay ahead of the…
The Importance Of Choosing the Right Tenant For Your Property
It’s a known fact that a vacant property is costing both the landlord and agent money. Some agents will want a landlord to approve the first application that is submitted so they are able to start generating an income for their agency and for the landlords.
Would you rather rent your property to tenants who do not meet affordability and have a negative reference or have your property vacant for a couple of extra weeks to find the best tenant?
Choosing the right tenant is absolutely crucial to ensure your investment property is being looked after, minimise any risk associated with renting and that tenants are respecting your asset as well as your agent.
Below are some of my tips on how to minimise Residential Tenancy Disputes (RTA) and Queensland Civil Administrative Tribunal (QCAT) claims ;
- Affordability & employment history
- Rental Reference, care for premises & any gaps in renting history
- Tenancy database search
Always stick to the facts – ability to afford the rent and ability to care for the property
As a rule of thumb in Property Management, affordability is calculated as 30% of the combined weekly net income. E.G. 30% of $1000 pw net income = $300 pw affordability
If applicants do not meet these criteria, your agent should be asking for the following documents which may push the affordability up;
Proof of savings (approx.3 months bank statement)
Centrelink statements to show what they are receiving keeping in mind any additional COVID-19 relief payments they may be getting and what are the conditions of these regular payments such as, do they need to prove to Centrelink they are applying for x number of jobs each month. If they cannot provide proof of this, Centrelink may stop these payments temporarily.
Any additional income which may assist with meeting affordability
It is also recommended to ensure their employment status. If all applicants applying are casually employed and aren’t being guaranteed a certain number of hours each week, this will impact of their ability to pay ongoing rent especially if they do not have any savings
Checking rental references and obtaining them in writing from current and previous agencies. Not all tenants are renting via an agent and if they are renting privately, it is recommended your agent calls them for a chat to ascertain if the applicants will be able to care for the premises. Note: some private landlords will provide a glowing reference just so they do not need to deal with those tenants anymore so by having a chat with them, you may be able to pick up on something like this.
The use of tenancy databases is a risk management tool for property agents/owners to screen tenants history of applicants. It is also a tool where you are able to list defaulting tenants once the tenancy has ended and under certain conditions. These conditions are outlined on the RTA Website below;
The use of a tenancy database comes at a cost to the agents/owners therefore, not all agents/owners use it but using it can end up saving you thousands of dollars in the long run.
As a professional property manager, you have developed a sixth sense when dealing with people. If it doesn’t feel right to your property manager, trust their intuition and resist the temptation to approve a tenant that is less than desirable.