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Selecting The Right Tenant

How do you match the right tenant with the right home or landlord – is it a science, or part intuition? How do you attract the best tenants and what is the right process for selection? Elite Property Manager and Console invited four leading professionals to comment on the challenges they face, what works for their businesses and how they make sure they secure the best tenants.

  1. DOES YOUR AGENCY HAVE SET CRITERIA AROUND TENANT SELECTION?
    Rosie: Our office doesn’t have set criteria or specific rules in place; however, some things we look for are good references regarding payment and looking after the property. It’s also important that the tenants have sufficient income to support the rent. Taking that into account, we like to work on a 30 to 35 per cent ratio, meaning the rent is less than 30 to 35 per cent of their income.Shann: We are in a pretty different socio-economic area to Rosie, so we don’t experience the same type of bad tenancy issues. We do the income and the track records, the basic stuff, but we do want to get to know them prior to making a selection.
    Maggie: Number 1, that they have the ability to take care of the lease and the property in terms of the rental and maintenance, and the size of the property.
  2. WHAT ADVERTISING TENDS TO DRAW IN THE BEST TENANTS?
    Rosie: I believe a range of advertising brings in the best tenants, but I think that advertising through websites such as realestate.com.au, domain.com.au and rent.com.au bring in a large amount of our quality tenants.Shann: We try and get professional photography and good copy. We focus not only on attracting good tenants, but also on giving our business a good image.Maggie: Ninety-five per cent of my listings have professional photos taken. It really draws in the people. That ad is the first point of contact. Having those photos and rotating them on a regular basis is important, and also having a really easy-to-read ad. I like point form.
    Samantha: Presentation is a key factor: floor plans, good photos. It’s really important to present the property to attract the type of tenant you want. I have used staging, but I think it can turn some people away because it can almost make a property look too good. You want a good tenant who feels comfortable living in your property, not too scared to put a dirty dish in the sink.
  3. HOW IMPORTANT IS ‘THE PROCESS’ IN SELECTING TENANTS?
    Rosie: I think the process is extremely important to minimise the risk of tenants falling into arrears, damage of property and so on.Shann: We have a culture whereby a property manager is empowered to find quality tenants. They know that their job’s going to be a lot easier, and they’re going to have a strong relationship with their landlords if they get that tenant selection process right. By giving them control of the tenant selection process we’re aligning our goals with the landlord’s.Maggie: The process is extremely important, but you get a feeling about people as well. I’ve been doing this for almost 15 years, so you do trust your intuition a bit. You talk to people at the open homes and you can gauge what they’re going to be like as tenants. When you start having to chase people for information, that’s when I start to lose interest.

    The references from their current property manager, if they have one, are very important. Not only in getting the ledger from them, but also picking up the phone and saying, ‘I’m going to have a candid conversation with you about this person. What are they like to deal with? Are they easy-going? How have the routine inspections been?’

    Samantha: We take details and offer an application for the property. We ask you to put that application in, if you are interested, as soon as possible. You might ask for another look. That’s great too, but we will be working on that application while we arrange to show you the property again.

    Then we check your tenancy history. We talk to people if we need to, but with today’s privacy laws I’m finding it a lot harder to confirm employment than 10 years ago. We ask for letters of offer, your employment contract, at least three recent payslips to make sure that there is some form of continuance of income. If there are any major concerns we ask them to pay for a credit check.

  4. WHAT ARE THE WARNING SIGNS OF POTENTIALLY BAD TENANTS?
    Rosie: Ones that come with bad references who are blacklisted on tenant databases; if their tenant ledger is showing constant rental arrears or termination notices being issued, their routine inspections are showing damage to the property, and anyone with tribunal applications or processes regarding arrears or damage in the past. We are sure to call all references that tenants have supplied on their application, both rental references, both current and previous employment history and employment references, if applicable.

    Shann:
    We don’t have a high rate of bad tenants in our area, but generally we’ve found that bad tenants are often prepared to pay more rent than good tenants. If we’ve got an overpriced property we think is sitting above market, we’re very wary that it may be attracting bad tenants who can’t compete with good tenants at market rates.Maggie: I’ve mentioned some already, but people who don’t turn up to appointments or reschedule a couple of times, those you can’t reach easily, with gaps in their rental applications between rental properties. Private rental references can be one as well; they may have been covering for a bad reference from a previous agent.

    Samantha: At an open, I’ll ask you to remove your shoes. People who refuse to remove their shoes on a wet day automatically get a cross! (laughs)
    I’m a big social media troll. I will look at your Facebook account. Desperation without reason is [usually also bad news]… “I desperately need to move this week.” “Why?” “Because I just do.”

  5. WHAT ABOUT PETS?
    Maggie: The attitude towards pets has really changed in the last five years, especially in the area that I work in. There’s a lot of houses, so they’ve got yards and families, and with families come pets. I’m very pro-pet, and I try and educate my landlords to see that pets don’t cause that much damage, if any. Sometimes children can cause more damage than a pet. As long as the pet has had a great reference from their previous agent, that’s number 1 for me.I think accepting a pet into a rental property might mean that you have the tenant for longer, because it is a little bit harder to find that next property for them.Samantha: I manage mainly apartments, being in an inner city area. I’ve been doing property management on and off for 20 years; I’ve had some tenants who have been great with pets, but when it goes wrong it costs thousands, and then there’s the fleas that might hatch out of the carpet later on. I’m a pet owner myself, but I’m also a property owner, so I’m pretty harsh on tenants with pets. It’s got to be the right property.
  6. HOW IMPORTANT ARE BOTH GOOGLE AND SOCIAL MEDIA IN TENANT SELECTION? HAVE YOU EVER SAID NO TO A TENANT BECAUSE OF THEIR SOCIAL MEDIA PROFILE?
    Shann: We use LinkedIn, Google and Facebook. It’s really easy, even for our prospective vendors. Whenever someone rings up – a prospective landlord, vendor or tenant – the first thing we do is Google them and jump on LinkedIn. We see if we know someone who might know them, or Google the history about who they are. Yes, we have ruled people out by some of their social media presence.

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