How to attract and keep a good tenant

Good tenants are the bread and butter of a thriving property portfolio.

The Importance of Good Tenants

This article explains the importance of attracting and keeping good tenants at your property investment.

If you are an investor seeking to lease out your property, your choice of tenant is just as important as the choice of the property investment itself.

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A strong cash flow is a key ingredient to sound property investments, and good tenants will help to provide you with an ongoing income stream. Good tenants are those tenants that follow and abide by the terms of the lease agreement, pay their rent on time, and regularly report maintenance issues before they develop into high expense issues for a property investor.

A bad choice of tenant can result in your investment losing money. Bad tenants are those that are late or default on payments, and those that may leave your property in a state of disrepair, causing you expensive maintenance and damage bills which will inevitably eat up into your cash flow.

If you are a property investor, whether that may be in the Residential, Retail, Commercial or Industrial sector, you need to know how to attract good tenants to ensure that your properties are making you money on a monthly basis.

How to distinguish good tenants from bad tenants

The first step in distinguishing a good tenant from a bad tenant is to conduct an applicant vetting of your potential tenant when marketing your property’s vacancy. These are things to consider in your applicant vetting process:

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  • A good tenant vetting will consist of a credit check to find out if the potential tenant has a good credit score as well as to determine if the applicant has any history of defaults, judgments or any other red flags relating to their credit history.
  • Another step in the vetting process is to analyse the applicant’s bank statements for the last 3-6 months. The idea behind this is to check if the applicant has been regularly paying their rent at their previous rental as well as to determine if the applicant has healthy spending habits and good money management.
  • It is also wise to request references of the applicant’s previous landlord – This will help to determine if there were any instances of late payments or complaints during the applicant’s previous lease.
  • A recent payslip, as well as employer reference, should be requested to determine if the applicant is employed and earning a stable income. In the event of a self-employed individual, it may be best to critically analyse the applicant’s bank statement to verify income.
  • Further to this, it is always wise to verify the applicant’s ID to ensure that they are who they say they are and are not pretending to be someone else.
  • Lastly, you want to ensure that the applicant can afford the rental amount you are seeking. A general rule for this is to ensure that the applicant earns 2.5 – 3 times the rental amount in their monthly salary.

If you are a property investor seeking to conduct a tenant vetting on your own, a good platform to help you do this is TPN. They provide various options to effectively conduct a tenant vetting of your applicant.

How To Keep Good Tenants at Your Property?

Once a good tenant is placed at your property it’s always a good idea to maintain good relations with the tenant, as a good tenant could potentially end up staying at your property for a few years ensuring you a stable cash flow from your investment.

One of the key methods to keep good tenants at your property for longer is to ensure that the property is well maintained and taken care of. Oftentimes, good tenants will point out potential maintenance issues that require fixing. However, a landlord should not always rely on the tenant to find out if there are maintenance concerns at the property.

Landlords should aim to conduct regular checks at the property to identify potential maintenance issues before they develop into larger issues which could result in higher costs. A general timeline to conduct these checks can be between 1-2 times a year with the permission of the tenant. During these regular maintenance checks, areas for concern can be attended to and fixed.

Another way of keeping good tenants at your property is to allow for rental negotiations as per competitive market standards. It’s better to have a competitive market rental income from a good tenant than to have a vacant unit which forces landlords to settle for bad tenants.

Lastly, another way in which landlords may keep good tenants at their property is to offer their tenant incentives, such as free Wi-Fi, free gardening services, or even free Netflix.

In conclusion, a good tenant will provide you with a stable cash flow on your property investment and will help to reduce maintenance and operating costs, in the long run, resulting in a well looked after property that is bound to lead to capital appreciation.

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