Owning an investment property can be a balancing act.
On the one hand, you’ll be seeking to achieve the highest rental return possible on your property. On the other, it’s essential to have long-term tenants that pay on time and look after your property.
The rental application process is a critical step in securing a good long-term tenant. Considering the current market – where vacancies are low and demand for rental property is high – the quality of a tenant’s rental application should not be overlooked in favour of a tenant offering higher rent... as tempting as it may be.
When considering a potential tenant, it’s important to take into account the following:
• Does the applicant have a steady, reliable and sufficient income? • Is there more than one income? • Does the applicant have dependents? • What is the nature of the applicant’s lifestyle and occupation? • Who are the applicant’s referees? • How did the applicant’s last lease end?
With a little initial leg-work – and through using the above as a filter – you should be able to sift through the mass of competitive rent-seekers in order to find yourself a quality tenant.
Give and take Once you’ve identified and secured a quality tenant, you’ll need to be proactive in order to maintain a competitive level of rent. Importantly, you’re looking to build tenant loyalty.
Nothing will see your tenant out the door faster than if you substantially hike up the rent at the end of the lease term. After six to 12 months the market might be on the move, but you need to consider the consequences of your tenant discontinuing their lease if they can’t afford to stay.
On this note, think about the agency fees, time and effort invested in the application screening process, and risks of securing a new tenant.
Weigh up the prospective rental returns you hope to achieve through securing a new tenant in light of the benefits of a clean, stable and reliable sitting tenet. You’ll most likely find that the loyalty you enjoy with a tenant that treats your place with respect, and pays their rent on time, is invaluable.
And loyalty works both ways. If a tenant wants to repaint, hang pictures, or make other non-intrusive additions and seeks your consent, you should reasonably consider his or her request. They’ll feel like the place is their home and will want to stay longer.
Feel free to give me a call if you’d like to chat through some tired and tested strategies for building tenant loyalty.