One of the biggest problems property investor has is finding quality tenants. These are the tenants that are respectful, responsible and pay their rent on time, every time. Quality tenants are truly worth their weight in gold, they simply make your finances run far smoother, ensuring there is always a healthy cash flow. In most cases proper tenants screening, leads to quality tenants, you simply need to know how to screen your tenants.
1. Get the paperwork first
You should firstly ask for the following documentation from every potential tenant:
- A copy of their ID/Passport and TAX number
- 3-6 Months Bank Statements
- Proof of income
- Contact details of their employer
- References from previous landlords
- Credit Check with a well established credit bureaux
Many DIY landlords often make the mistake of asking for the documentation but not truly understanding what their suppose to look at. You need to analyse the bank statements:
- Does the payslip and the bank statements agree?
- Is the payslip amount enough to cover your rental rate?
- Does the bank statements reflect regular and on time rent payment (to their current landlord)?
- Is there a clear credit record?
- Are the references good?
2. How to do a credit check
You have to have the permission of your prospective tenant to conduct a credit check
A credit check can be done with any credit bureaux, but some institutions databases are bigger than others. It is for this reason that it is suggested you use an established credit bureaux for your tenant screening, such as TPN.
What you need for a credit check:
- Consent from your prospective tenant, ensure this is in writing. Landlords are allowed to refuse a potential tenant if their refuse a credit check.
- A copy if their ID/Passport
- A Tax number can give you more detailed reports
3. Don’t ignore your gut
We find ourselves often feeling that something is just not right, everything seems right the paperwork checks out…but something feels wrong. If this is the case I would suggest that you listen to your gut and continue looking further. The correct tenants for your property will come around. You just need to ensure that you are marketing correctly so that your quality tenant can find you.
Quality tenants are worth their weight in Gold, this somewhat common saying in the industry has proven itself over, time and time again. Many good property managers will wait until they find the correct tenant for their landlords. Especially seeing as getting rid of bad tenants can be emotionally draining and costly in South Africa. First comers aren’t always the best, wait and be patient for your quality tenants.
Tenant Screening, that leads to quality tenants can be a bit of a balance, between income loss and tenant availability. If you feel this is a balance best suited to the professionals then please drop Mafadi a mail.
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