How Could Selecting the Right Tenants Protect Your Investment?
For many people, renting a property is a very strong investment with a good turnover. That is, providing the tenants you have don’t destroy the property and cause issues, and providing that they actually pay the rent. Choosing the wrong tenants could be a very costly decision which could even result in you defaulting on your buy-to-let mortgage and losing the house altogether.
Why is Having Good Tenants Important?
Let’s face it, as a landlord you want an easy ride. You want to be able to put tenants in the house and leave them to it; using their rent to pay off the mortgage and give you an extra bit of cash to splash. The last thing you want is tenants who are constantly breaking things, calling you about every little problem, and who need chasing up for the rent. So want can you do to stay away from nightmare tenants?
Run a Credit Check
The most important thing here is that they need to be able to pay the rent. Late payments can mean that you are struggling to keep up with mortgage repayments, which if missed could end up giving you a bad credit rating. And if you miss too many, as mentioned, you could risk losing the house; this can have a large impact on your investments, and will also leave the careless tenants homeless.
Make sure that you credit check any prospective tenants to ensure that they have the ability to keep up the payments. If there is any doubt then make sure you have a guarantor in place; this can give you peace of mind that there is someone else responsible for making payment if the tenant defaults.
Meet Them in Person
In this day and age it is far too easy for someone to rent a house without having met the landlord. By meeting your tenants in person you can make more accurate decisions on their suitability. This way you can also set down the ground rules, such as no smoking, no pets etc. Ensuring they know the terms of rental will give you much stronger grounds for compensation if they break the agreement. By doing this, if there is any damage to the property it will be the tenants who are legally required to pay for the repairs and not you.
Longer Tenancies, Less Cost
One of the biggest costs of being a landlord is advertising for tenants and having an empty property. By carefully selecting your tenants you can keep the same ones for long periods of time which is beneficial for two reasons:
- They are likely to treat your property with respect
- You won’t have to regularly spend money advertising for new tenants.
Both of these can help to protect your investment property by keeping the value high and the income regular.