Be a savvy landlord
Sometimes, tenants are amazingly cooperative and easy to manage. Sometimes, they’re not. And at other times, they’re really, really not.
Unpaid rent, complaints from angry neighbours, parts of your home damaged in ways you didn’t know were possible… These are just some of the nightmares that troublesome tenants could cause you.
Find yourself a good tenant, on the other hand, and earning that passive rental income every month becomes so, so, so much easier.
We’ve put together a concise guide for you landlords about how to screen prospective tenants thoroughly:
1. Personal information and history
It’s perfectly okay to ask for personal details such as race and gender – it’s only natural to want to know the very basic details of the people who might be living in your home.
Just as long as there’s no discriminatory intent, of course. According to the Council for Estate Agencies (CEA), anything that’s “discriminatory, offensive or stereotyped in nature against any particular race, religion or group” is against the guidelines pertaining to advertising properties.
Criminal record checks
It doesn’t hurt to be safe. It’s common to crack jokes like “they might be a serial killer”, but in all seriousness… They might be a serial killer.
For instance, are they smokers? Do they work odd hours or have lifestyle patterns that might be disruptive for others living in the house?
Think about what you want to know about your prospective tenants, and be sure to ask these questions – especially if they’re going to be deal breakers.
Why they’re moving out of their current home
Perhaps your prospective tenant is moving out of his family home because he’s finally ready to do this adulting thing.
Or, they’re a family that wants to live close to a particular primary school to get priority when enrolling their child into that school.
What your prospective tenants tell you can reveal a fair bit about the kind of tenants they’ll be.
For instance, said family will most probably be long-term renters, whereas someone who’s “just trying it out” might not further extend the lease upon expiry.
2. Financial information and rental requirements
Ability to afford rent
You’re renting your house out to earn rental fees, so this is obviously an important thing to tick off the checklist.
A general rule of thumb is to check that the rent doesn’t exceed 40% of your prospective tenant’s income – in other words, they’re not riskily living beyond their means. You can verify this by requesting a recent payslip.
You might also want to ask for their job history just to make sure they’re financially stable, and not constantly in and out of jobs.
If your prospective renters are students with no income, it’s not much cause for worry. Often, their parents are the ones paying the rent, and it’s uncommon for them to struggle with paying rent (maybe except for the occasional slip of the mind).
A prospective tenant who tries to bargain for cheaper rent is nothing out of the ordinary, but if they’re immediately asking about security deposit waivers or mid-lease terminations, this should raise some red flags.
Intended lease period
Your minimum lease period should be included in your rental listing description, but it’s still helpful to ask this question, since every tenant is going to have different rental needs.
Try to keep to non-leading questions. For instance, ask, “What is your ideal lease period?” instead of “Are you okay with a 1 year lease period?” so you don’t subconsciously influence their answers.
3. More tips for choosing your tenant
Ok, but first things first: How do you find these tenants to begin with?!
We did a little study amongst home-renters on Carousell about their renting preferences:
So if you’re reading this guide, you’ve got an edge over everyone else who hasn’t 😉 Read our complete Landlord’s Guide here!
If you can afford the time, don’t host an open house.
Instead, organise viewings for each prospective tenant one by one so you can interact with them personally and privately, especially if you’re going to be a live-in landlord.
This way, you’ll know if the prospective tenant is truly a good fit.
Maintaining the property
On one end of the spectrum, you’ve got super high-maintenance tenants who’d report even the slightest issues like a spider in the room (ok, we’re exaggerating).
On the other, you’ve got those trouble-free tenants who never report any maintenance issues… Until the issue blows up. Sometimes even literally – a small leak could escalate into an exploded pipe that would end up costing a lot more to fix.
When screening your tenants, it’s also important to align your expectations about how the property should be jointly maintained by both you and them, including what kind of maintenance issues should be reported, and what shouldn’t.
Important things to include in your Tenancy Agreement
Anyone can promise to pay rent on time and treat your home with TLC. But even after doing your background checks and interviews, it’s impossible to tell, upon first inspection, whether they’ll actually follow through.
To protect yourself as a landlord, be sure to include these clauses in the Tenancy Agreement before handing your home over to the new tenant:
Late payment policy
Failure to pay rent constitute legitimate grounds for eviction. Landlords also have the right to keep the security deposit necessary to cover the lost rent.
Damage to the property
This should cover anything beyond reasonable wear and tear.
For instance, a broken door can be considered damage that warrants keeping a portion of your tenant’s security deposit; a loose door handle isn’t.
Tip: Even if, rental gods forbid, the cost of the damage exceeds the security deposit, the tenant is still liable to pay for the remainder of the damage costs.
You can first issue the tenant a demand letter detailing expenses you’re claiming.
If the tenant is uncooperative, that’s when you take it to the small claims court, although it’s a huge hassle and, in all honesty, you might just be better off forking out the amount yourself and moving on.
Any rules you want to enforce strictly
For instance, quiet hours, whether pets are allowed, or how often they can have visitors stay over.
Renting out your property
We get it: Every day that your property goes unoccupied is money lost.
BUT don’t rent to just anyone who seems willing to pay the rent. These are all precautions you should take, especially when renting out your home as a direct owner.
Once you’ve found the perfect tenant, though, you would’ve gotten yourself easy passive income every month. Enjoy!