You’ve gone through all the hard work of finding the right property in the right location as the right investment for you. To make that investment work, you will want to place tenants that have the same commitment to their relationship with you as you have for the investment you’ve made. It’s not always easy, but it is always important. It’s about responsibility, reliability, track record, and mutual respect.
Before you begin the process, you should decide whether you want to go the route of using a letting agent, or handling the process yourself, directly.
Using a letting agent
Appointing a letting agent is helpful in terms of having a focused point of contact that handles the administrative details of the agreement on your behalf from vetting to securing, contracts, rental collections and any other related costs that may arise throughout the term of your agreement with that tenant.
This function comes at a cost which is commonly based on a commission of the monthly rental figure. Finding the right letting agent is as important as finding the right tenant and should ultimately be someone who applies detail-driven screening methods while being meticulous and mindful of your requirements.
Doing it yourself
In many cases, people prefer not to involve a middleman and elect to manage the tenant process themselves. If the hands-on approach is more in line with how you choose to manage your investment, make sure you take an informed approach from beginning to end.
Consider the following guidelines to help you get the best out of the business model of your property rental, from screening to drawing up the agreement, and then throughout the rental relationship on an ongoing basis.
Finding a tenant
Get the word out. From word of mouth through trusted friends and relatives to classified ads, notice boards or via social media, be sure to communicate your offering in a clear, succinct way. This will save you the time of having to answer endless, unnecessary questions.
Describe the unit
How many bedrooms? How many bathrooms? Is it a ground floor unit or upstairs with a balcony? Garden? Parking? Security? What are the communal areas within the development like? Does it have a prepaid electricity meter or is that billed monthly? Then list the amount you are charging for the unit on a monthly basis and be sure to state what this includes versus what will be billed as a separate amount on a monthly basis.
Establish a professional relationship
Meet your tenants in person. Ask questions. Get to know them in a way that is relevant to the context of them living in the property that is your investment. Their interests will tell you a lot about their lifestyle and will give you a good idea about the potential fit for a good relationship. Find out about their previous living arrangements; do they have long-term arrangements, or do they move around a lot? There could be good reasons for both, but these are things that would be good to be aware of while you’re getting to know them.
Start the process
Once you have shortlisted your potential candidate(s), supply them with a tenant application form. We’ve included a standard rental application form as a PDF that you can download and use when screening, vetting and setting up the agreement that you should have in place with your prospective tenants.
Along with the completed tenant application form, be sure to secure the following:
1. Proof of identity — a certified copy of their Identity Document(s)
2. Employment details — confirmation of employment and/or most recent payslip
3. Proof of financial stability — three month’s bank statement and/or ITC clearance
4. Background credit check — their agreement to undergo a credit check
5. References — written references from previous landlord(s)
6. Details on all the relevant people who will be living there
7. A signed copy of a written code of conduct that you have shared with them
While you should be methodical about the paperwork part of the checklist we’ve proposed here, consider doing your own extra research by looking them up on social media for example. Are they really into the quiet life as they’ve told you, or are they part of an eight-man drummer band?
Once you have all the information you need, you’ll make a decision. Trust your gut instinct. Ideally, both parties want the best dynamic from this relationship. Thereafter — and once you have approved the tenant — draft the final agreement including the duration dates of the rental period and make duplicate copies for both parties to sign and keep.
Before your tenant moves in, you should collect a deposit (usually the same amount as the monthly rent) and one month’s rent in advance.
A deposit is necessary to protect your investment and works as a security fee that should be used to cover any damages caused or defaults incurred during the rental term.
The deposit is secured for the duration of the rental agreement and is refunded to the tenant at the end of the agreement, once they have vacated the premises whereby both parties will have agreed that all is in order and there are no damages, discrepancies or disagreements as to the state of the unit and/or any outstanding monies owed to you, the landlord.
As the tenant is most likely to need this money for their onward arrangements, the deposit serves as an assurance that the tenant has your best interests at heart.
It’s a big decision deciding on who will be living in the unit you have invested in. Getting rid of a bad tenant can be a tricky process, so you want to be as sure as possible about the tenant(s) you’ve chosen — before they even move in.
From all of us at Reeflords, we wish you a prosperous relationship that serves the purpose of growing your prized investment.
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