How to rent a house & escape bad tenants
Whether you’re brand new to property and are just starting learning how to rent a house and what it takes to be a landlord, or whether your an old pro and have successfully run a thriving rental portfolio for many years…..
You’ll probably already know that being a landlord comes with many challenges.
Some are pretty easy & straight forward and with a bit of research you’ll quickly pick them up, like learning about gas safety certificates (www.gassaferegister.co.uk) or making sure you have the right type of insurance.
But some challenges are a little trickier to handle, and only with experience, hindsight and often as the result of a bad experience, do you learn how to overcome them.
Dealing with bad tenants and everything that goes with it, is one of these challenges.
Learn From Other People’s Mistakes
This isn’t unfortunately something you can pick up from a book or learn on a training course, it’s in the trenches experiences that are the only way to get to learn this kind of knowledge and the reality is, it’s an experience that’s best avoided where possible.
But there are a couple of tips that I can share with you below that will certainly help you land in this type of situation.
Now when it comes to bad tenants, they can cause a myriad of problems and bad tenants is kind of a ‘catch all’ phrase.
Rent arrears, damage to property, causing noise nuisance would certainly all fall under the category of a bad tenant.
But what about a tenant not only racking up rent arrears but then playing the system and refusing to leave when given notice?
Or to the very extremes of drug dealing and criminal activity?
All of these would certainly fall under the criteria of a ‘bad tenant’, and knowing how to deal with each situation can be tricky.
There’s no right or wrong answer, so the best thing to do, is where possible simply avoid the situation all together.
This may sound easier said than done, but there is a way around this…. and that all starts with thorough tenant referencing and learning how to rent a house properly.
I’ve been investing in property since 2005 (http://propertyinvestmentsuk.co.uk/see-why-im-different/) and I’ve made my fair share of mistakes. But nearly all of these situations have arisen when I’ve been too eager to rent a property out and haven’t done proper tenant referencing.
In the early days I didn’t have a set process or system to follow when I was referencing new tenants.
I made mistakes by taking in a few tenants that seemed OK on the face of it, but without proper checks because I was worried about a void period.
But after getting short changed once too many times and with the last one doing a runner on a property with £2.5k worth of arrears and £1k worth of damage, I decided to change all of that.
Blueprint to Successful Tenant Referencing
A simple way to ensure you’re getting the best tenants is to use a letting agent. You can find some great one’s by using an organisation like ARLA. (www.arla.co.uk)
But if you’re doing your own tenant find and management, then you need a process to help weed out the bad tenants.
I learnt that finding a tenant is easy, but finding good tenants is where the skill lies. So I came up with a process of tenant referencing that I now use on all my properties.
This is the blueprint I use for all my new tenants when I’m renting a house and I’m happy to share it with you below. It’s a simple 5 step process…..
Step 1 – The initial phone call
This is pretty straight forward. You don’t need an in depth enquiry form here, the initial call is simply to give the interested tenants some property details, ask their situation and see if it sounds like the right type of tenant for you.
Asking simple questions like:
“When are you looking to move?”
“Why are you looking for a rental property?”
Will help you get a clear idea on the tenants situation. A tenant that’s desperate to move in by tomorrow or is sofa surfing on their friends couch …. can sometimes be the first red flag.
Step 2 –Meet them at the property
Never rent a property to a tenant without meeting them first.
It’s very unlikely to end well.
I’ve had a couple of tenants ask to rent a property and are happy to take it without seeing it. But what kind of long term tenant is that likely to be?
This is definitely a warning sign to keep an eye out for.
Step 3 – Give interested tenants a tenant application pack
I always give tenants a pack at the viewing, which includes application form, confirmation of ID required if they want to go ahead, a guarantors application form and a letter confirming they are happy for me to register them with the LRS on the tenant default register, should a problem arise during their tenancy.
This is great, because bad tenants are instantly put off and good tenants are happy with the documents.
It also speeds up their application giving them the paperwork at the viewing too and creates a great sense of urgency if you’re doing block viewings and potential tenants see you handing out forms to other interested viewers.
Step 4 – Referencing
There’s no excuse not to do tenant referencing now days. The level of information you can get is great and you can cheaply outsource the work to a professional company.
I’m less worried about credit checks to be honest and more worried that their story and background checks out. Address history, work history, references from employers or previous landlords, and of course the lifestyle referencing by LRS is a god send for this.
Step 5 – Property Visit
Finally if all checks out, but my gut feeling is telling me something doesn’t seem right (always trust your gut…. it will help you evade many bad tenants) then I ask the tenant if I can meet them at their current property.
I’ve dodged one or two bad tenants because of this last check. By visiting the property you can see the condition they currently live in and how they are likely to treat your home.
One recent tenant I very nearly accepted, but I felt like I needed to do a final property check because something didn’t feel quiet right.
I decided to do an impromptu check and got their about 10am. There was a full on party in the house, garden was a mess and the front door had foot print marks and damage like it had been repeatedly kicked in. Safe to say I never went with those tenants in the end ….
Tenant Referencing – The safer way to rent a house
I hope this hasn’t come across as all doom and gloom, because it’s certainly not the case.
Bad tenants are in the minority and being a landlord can be fantastic and highly rewarding.
It’s a great way to earn a living and you can build a real financial nest egg.
But to be successful you need to operate it like a business. Treat your tenants well and look after your properties and you can avoid the hassle that goes with the unfortunate part of being a landlord and that’s dealing with the odd bad tenant.
Furthermore, follow the above blueprint when finding new tenants and you will give yourself a great head start with your property portfolio.
I hope you’ve found this article useful and if you want to learn some further tips on UK property investing or building a cash-flowing property portfolio, please feel free to take a look at http://propertyinvestmentsuk.co.uk/blog/ or come and check out my facebook page at www.facebook.com/propertyinvestmentsuk.
To your Success
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