Making a living from investing in rental properties seems like a dream job to many. It’s like the money is making itself - and the owner can simply lean back and watch her income tick in every month. As a landlord yourself, or if you’re considering to become one, you know this is far from the truth. Investment properties have a lot of pitfalls; from concentrating your assets, to chasing tenants for rent each month.
Bad tenants can do more damage than withholding rent, though, and you should go out of your way to find the right kind of person for your property. Here is the best advice out there from landlords who’s been in your shoes - so that you can feel a bit more secure with your investment.
Know the red flags
A lot of work can be done when you meet the prospective tenant face-to-face the first time. It is probably when you show her the property, so prepare a set of questions and know what kind of answers you’d like to hear. Naturally, the first questions will be about income - and anything that doesn’t qualify for the amount you need each month is the wrong answer.
Their current living situation and reason for moving is also interesting, so keep the conversation going and focus on how confident they’re able to answer each question. A decent real estate company will be able to tell you more, so don’t be afraid of asking is a good place to start for homeowners or find a good letting company.
A potential tenant that’s late without letting you know, looks messy or disorganized, or behaves rudely should be dismissed quickly. Red flags are often the same once you’d be looking for when hiring a new employee - or the impression you get in general of a new person. We usually know who we like and dislike, so go with your gut feeling on this one.
Refusing a background check or credit check is also a bad sign; if everything is in order, there should be no problem with you looking into this.
Get in touch with former landlords
The tenants who will cause you the most trouble have most likely done it to others in the past. A lot of landlords skip this one, and choose to trust rather than to control - but a quick phone call to the owner they’re currently with or rented from in the past could save you from so many problems. Have a look at www.thebalance.com for more basic screening questions.
Remember to ask about more than whether they paid rent on time. Some people are irresponsible and rich, so they manage to pay every time but cause a lot of damage to the property. Others are responsible but with less of a stable income - they might pay a bit late sometimes, but they always deliver at the end of the day and would take care of the place as if it’s their own. Which of these would you prefer as tenants for your investment property?
Ask them if any complaints were made by their neighbours, too, so you avoid angry phone calls from the people next door.
Although being a landlord is a lot of work, you can make it easier on yourself by preparing thoroughly before deciding on the perfect tenant. Maybe you find the perfect one, quiet, responsible and polite - as we all should be.
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