Letting Agents Hereford: 10 ways to Ensure you ALWAYS have the BEST Tenants for your Rooms
As I am sure you are all aware, tenants are the life and blood of your investment property. Without tenants, you don’t receive any rent and therefore any profit. This could therefore actually see you having to fork out money to cover your mortgage if you have one and thus turning what could be a very profitable investment property into a real thorn in your side and series liability. Arguably tenants are the most important element of your property and due to the nature of the beast of HMOs and letting to typically younger tenants who yet to have much experiencing renting properties. Ensuring you have the best tenants who are going to look after your property, pay you rent on time and not cause problems will ensure you have the least void periods possible, fewer maintenance costs and confidence the rent will be paid in full and on time.
Choosing tenants can be incredibly hard, especially if your room has been empty for a few weeks and you are getting desperate to let it again meaning you might end up taking a less desirable tenant than wished. This might solve a short-term issue but it could have significant longer term ramifications and cost associated with it.
We have all heard of the terrible experiences other landlords have had with bad tenants destroying their properties and never paying rent but if you choose the right tenants, this risk is dramatically reduced and so in this short blog I aim to give you some easy and practical tips to ensure this never happens to you and you always get the best tenants for your rooms and thus reducing tenant turnover, costs of marketing rooms and maintenance as well as confidence your property will be looked after and your rent paid on time.
10 best tips to choose the right tenants
Make sure you’re marketing to the right sort of tenants you desire
This may seem incredibly obvious but you but this is often overlooked. If you are looking to get the best tenants, and this is very subjective and completely depends on the type of tenants you are looking to attract for your HMO, then make sure your marketing is aimed at the higher end of each tenant type. This can be done through asking for higher rents, having better photography of your rooms and ensuring you have strict criteria for the type of tenants you are looking for. For example, if you are looking for the best student tenants for your HMO, then charge fractionally higher rents to attract the students who can afford it (as long as your property is worth it which I will cover below) and hopefully, this will mean you attract a slightly higher calibre type of student. Make sure your photography is as good as possible as so many tenants just look at the pictures to either click on it or skip past your advert, even better take a marketing video and most importantly if you are looking for these higher calibre students. Make the criteria for letting your property tougher than potential other properties such as asking for both a despite and guarantor and not just one or the other or impose a certain type of job required for professional tenants or minimum income and yes of course this may put off some tenants but it will certainly help you weed out the better quality tenants who are more likely to be able to pay the rent and keep the property in good order and if you look after them stay there for as long as possible.
Ensure your property is in the best condition possible
As I slightly alluded too above on the marketing front, one of the easiest and best ways to ensure you attract the best types of tenants are to provide them with quality accommodation they will want to stay in for a long time and look after. Tenants are much more likely to treat a property which has been poorly looked after in the same way as they feel it’s already in that state to why bother trying to look after it and will be looking to move as soon as they can to a nicer property whereas tenants who move into a property which has been clearly looked after, is well maintained and the landlord spends money on are much more likely to want to keep it that way and stay there for longer. The better-quality accommodation you can provide, the more likely you are to attract a better type of tenant. This also means regularly spending money on the property to keep it in this way and upgrading it constantly. The higher rents and lower tenant turnover will more than certainly cover the cost of doing this overall.
Pre-qualify enquiries to eliminate undesirable tenants
Whenever a tenant enquires about a property we always advise people that the landlord should firstly conduct a pre-qualifying style questionnaire on the phone or by email to determine whether this tenant would be suitable or not and thus not waste your time. At Relo whenever a potential tenant rings up or emails us we will always ask them some basic questions like:
Their full name
Their Phone number
Their Email address
What their job is
What they are looking for
When they need to move and why are they moving
Do they have the admin fee of £150 and first month’s rent up front?
Ask Is it just them moving into the room? (as Relo doesn’t usually want couples)
This will give you a good indicator as to whether you want to let them view the property and if they are the kind of tenant you are looking for. If the tenant doesn’t meet the criteria you have set for these questions then don’t let the room to them which we have seen a lot of agents do just to fill a room quickly. This will also give you a good indication to is the tenant is polite or rude and tells us a lot about the kind of person they might be.
Have a slightly more time-consuming application process
One little trick Relo uses to ensure we always get the best quality tenants for our landlords is we have a somewhat lengthy application form to fill out and more complex process. The reason behind this is if a tenant is unwilling to fill out an application form and go through a few loops to rent the room then they are unlikely to be the best quality tenant for you. We want the people who are happy to spend some time on filling out our application process and thus in our experience providing a much more desirable type of tenant who is willing to look after the property and pay their rent on time and as they have put some effort into renting that room are more likely to stay longer to not have to go through the process again. Relo requires tenants to fill out an application form, a guarantor form as well as write a paragraph on why we should rent that room to them as well as photograph their ID and bring all the right documents with them as even though this can all be done on our app on the Ipad it shows us who is willing to put the effort into renting the room or not and therefore who is more likely to be a better tenant.
Charge an application fee
Very simple, if a tenant isn’t willing to pay an application fee, it is unlikely they will pay their rent on time, if at all. It’s a good first test to whether they are the kind of tenant you are looking for. Relo charges £150 admin fee and we suggest landlords do the same. It shows the tenant is also serious about renting the room.
Use your gut reaction
One of the best ways we have found on determining whether a tenant is going to be suitable or not is using the very simple method of gut reaction. If the tenant turns up late, is rude to you, doesn’t show any manners then in our experience we have found these types of tenants to cause problems. It’s very easy to gauge someone when you meet them on how you think they would fit into the property and what they would be like as a tenant and nine times out of ten, your gut is right. The potential tenant could look fantastic on paper but there might just not be something right about them in their manner or perhaps even the opposite, if they don’t quite meet your criteria but then you meet them and you just know they will be a good tenant as they are polite and grateful then it might be worth giving them a chance. Talk to them about what they do and why they are moving and try to understand a bit more about them and their circumstances and who they are. I guarantee you this will become one of the key ways you determine which tenants will be good and who not the let your rooms too.
Spend time and money properly referencing them
Referencing a tenant is one of the easiest and most thorough ways of ensuring you only let your rooms to the best type of tenants but I would like to point out that even though we suggest you put most emphasis on this element, it is still only one element of ensuring good quality tenants. This is probably the best way, along with gut reaction of assessing whether you will have a good tenant or not. There are many companies out there would perform this for you and we highly suggest you pay the fee to do it properly by a professional firm. You will want to ensure you get a full credit check on them along with any CCJs or other previous issues. Most firms will charge anywhere between £20-£50 for this service. At Relo we also take it one step further from this and we make sure we obtain references from the tenant’s previous landlord and the one before that, as if the tenant is bad then the current landlord will want to get rid of them so will obviously give them a good reference, even if they are not a good tenant, so we go one step further back to make sure the landlords reference holds true. If the potential tenant was with a letting agency then we will make sure we talk to that letting agent about the tenant, for example, Relo had a tenant recently that looked great on paper, passed the credit checks, had a fantastic and high paying job etc but when we spoke her previous letting agency it turned out she was 4 months in rent arrears.
We also always obtain an employment reference to make sure the tenant actually firstly has a job and then to double check their salary along with getting an insight from their employer on the potential tenant. We would also look at at least 3 months’ worth of bank statements and check their payslip.
One crucial part of the referencing process is to check the tenant’s ID to firstly make sure it’s actually them but also to compile with the new Right to Rent checks (for more information please see our blog on right to rent)
You need to make sure that you are happy the new tenant meets all the above criteria and you feel comfortable with the information that they will be a good tenant.
Have a good contract in place and point out the key areas to tenants
It’s all well and good vetting your tenant heavily to start with but you also need to be aware of managing that tenant going forward to make sure they stay a good tenant. One way Relo does this is to have a very tight AST in place which the tenants obviously have to sign but before they do that we go through it with them and point out the key bits of information they need to know such as rent and date the rent is due etc but also the less obvious bits like no blue tack on walls or the utility fair usage policy we have etc BEFORE they sign it so if they then were to break one of the clauses, they have very little leg to stand on as we know they read it and were happy about it. It’s obviously important that you choose the right tenant at the start but you also need to make sure that tenant stays a quality tenant.
Make sure you take a deposit and ideally guarantor as well
One way to de-risk choosing a not so desirable tenant is to make sure you take a good-sized deposit from them so if they don’t pay their rent or do damage something then at least you won’t be out of pocket. The size of deposit depends on you and how much you would like to know you could access if needed but usually, deposits are no more than one month’s rent. Ideally, you would also get the tenant to have a guarantor in place so if it was needed you could pursue the guarantor for any outstanding monies owed. A tenant who has paid a sizable deposit is not going to want to lose it so it is a good incentive for them to pay their rent on time and look after the property to ensure they get all of that money back at the end and tenants hate the thought of their guarantor having to step in so if they haven’t paid their rent, you could threaten to call their guarantor and more times than not the rent is suddenly paid so the guarantor won’t find out!
Look after them!
As I mentioned earlier, finding the best tenants isn’t just about vetting them at the start (even though this is obviously the main way of telling if they are going to be good or not). If your tenants to look after your house, pay their rent on time and stay there for longer then you need to be looking after your tenants on an ongoing basis. This is as simple as dealing with requests as soon as they come and to knowing their names and a little about them. At Relo we also take it won’t step further for our tenants by sending them birthday cards and Christmas presents as well as dropping off boxes of beer or pizzas for our tenants to ensure they feel they are being well looked after and therefore much more likely to pay their rent on time and treat the property well which in turn obviously then directly benefits our landlords as we would not look very good if the rent was always late and damages were high and hence why landlords choose Relo to manage their properties over any other agents.
There’s two sides to it, getting the right tenant and then making sure those tenants remain good throughout their tenancy. Of course, there will always be tenants who are not perfect however heavily you reference them and nice they are but you need to do as much as you can to reduce the risk of this and I hope the few points above will help other landlords attract and retain better quality tenants. Relo does all of the points I have discussed and hence why out average tenant is 17 months and our tenant and landlord satisfaction is so high, however we do realise this can be a lot of work but we urge people to do all of these things as it will pay off in the long run or they can get Relo to carry out this work for them and not have to worry about it at all and still get the best tenants for their rooms!
If you think this would benefit you then please get in touch with us and see how we can ensure you get the best tenants for your property.