What to know about screening tenants

Written by realestateview.com.au in Investment on November 24, 2014

Appetite to rent_RESIZEDProperty owners who are new to investing will undoubtedly have concerns about who it is that will live in their asset. This is often even more so the case when the property has been the owners’ home at some stage.

While problems with tenants causing damage are not as commonplace as some may have you believe, screening tenants with the assistance of your property manager can help you feel more at ease with your latest occupants.

When you are screening tenants, the most important thing to remember is that everyone is human. Even if you pick very carefully, there is always the possibility that they will not treat your property the way that you would have hoped for. Prepare adequately with the right insurances to provide yourself a safety net.

You are checking for two primary things when screening tenants:

  1. Can they afford this property?
  2. Will they look after the home?

If you employ a professional property manager to assist you with tenanting your property, it is likely you will find that they may have access to a tenancy database that will enable them to double check whether the applicant has a black mark against their name.

While this screening explanation is written in terms of one tenant, if multiple people are applying for the lease together then you will want to undertake the same checks with each.

First impressions

One of the hardest things to check is your gut feeling. Your first impression when you or the property manager meets the tenant is going to be invaluable.

Are they presentable and interested? How do they act around the property? Those that ask reasonable questions and take their time to look at the home are more likely to be first on your list of preferences compared to someone that rushes in and scribbles down some answers on their application.

Basic referees

Either you, or your property manager, will want to ensure that each of these references checks out. Where possible, double check that they are who they claim to be (a quick look online at the property manager’s agency, or the phone numbers of their past employer should assist) and then call them.

residential tenancy agreement

If they are not the right details, then this can be your first warning sign that something is not quite right. If they are correct, you will want to ask them about the reliability, character and punctuality of the applicant.

Employer or past employer: When speaking to the employer, double check their length of employment, whether it is full time or another arrangement and confirm their pay grade. You may also want to double check how far their place of employment is from the property – this may be a red flag to bear in mind. You can also ask them whether they expect the employment to continue for a long time.

Past property manager: Ask whether the tenant received their whole bond back (if they did not, get details as to why not), the length of the tenancy, whether they paid their rent on time and any problems they had with them.

Personal referee: Personal references can be helpful in getting an understanding of what your tenant is like. Ensure to double check the relationship of the tenant to their referee and remember that this is likely to be the least useful and most biased of the referees provided.

Do not rely on written references, instead call the writer of the reference and ask them to clarify that they wrote it. Ask your own questions for a more revealing response.

Documentation to request

  • Financial information, including payslips and tax returns
    Does their income level leave them enough to afford both the home and their living costs?
    How often have they changed jobs?
    Do they have any major expenses that may affect their ability to pay their rent?
  • Previous addresses and time periods of residence
    How quickly have they moved from one property to another?
    How different are those properties from your residence?
  • Proof of residency rights/visa
  • Identification

Other checks and questions

Find them online: Google your tenant and see if they have any social media profiles you can check. While this may be unfruitful for many, it’s worth knowing the type of person that you are going to be renting your property to.

Ask them simple to the point questions:

  • Why are you moving?
  • When are you available to move in?
  • Are you looking at any other properties?
  • What attracts you to this property?

Warning signs

While a tenant offering the full 12 months rent upfront or willing to provide excess amounts over and above the advertised weekly rent may seem attractive to some, it’s a well-known warning sign. It is best to treat this sort of behaviour with caution, and to ask yourself why they are so desperate for the rental.

Remember, you cannot refuse tenancy due to discriminatory grounds. Make sure that if you are refusing tenancy then it is for just reasons.

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