As a property investor, choosing which tenants to accommodate in your properties is one of the most important steps to ensure the growth of your portfolio, but Smart Property Investment’s Phil Tarrant and property investor MJ Anthony agree that the best tenants are not necessarily the same kind of people.
Many landlords tend to hold prejudices when reviewing tenant applications. “They think, ‘This person's not like me, therefore, they won't be a good tenant,’” according to Phil.
However, years of property investment experience proved to the avid investor that an open mind is the key to finding the best tenants for your properties. Instead of paying too much attention to their personal lives, Phil and his property managers spend their time looking closely into applicants’ rental history and their references, which are often good indicators of how good a tenant they can be.
“It comes down to basically assessing, ‘What is their rental history? Can they afford the property? Do they have good references, which would show that, [regardless] of their story or their background or their current circumstance and situation, [I can] put them into my house…?’ ” Phil explained.
“As a landlord… you want assurance and you want consistency, so keep an open mind.”
Look at their attitude
For MJ, who has used property managers throughout his 13-year property investment journey, an applicant’s attitude towards other people is one of the ways to determine whether he could be a good tenant. He also considers their outward appearance and their history to gauge an applicant’s quality as a future tenant.
“My property manager… had applicants who have looked okay on paper, but then, they're swearing to their kids as soon as they walk out… She also looks at their teeth, [which could be a sign of] a lot of drug problems,” he said, “It's usually the references, as well. What have you done? Your history is not always your future, but it's a good indication.”
How much do they want it?
Both Phil and MJ agree that an applicant who shows eagerness to get the property often turns out to be the best candidate for tenancy.
Phil shared: “I'm trying to rent out a place I've got up in Brissie [Brisbane and] the property manager gave me a call… and she just started talking through them... I said, ‘Who wants it the most?’ and she went, ‘Well, this person here has now called me. They've sent me a note—they're really selling themselves the reason why they should have this property.’ ”
As long as the applicant’s desire is backed up with good references and a good rental history, then it’s not too hard a decision to make for the property investor.
Listen to the tenant
Many property investors tend to regret their decision once they have accepted an applicant who turns out to be the kind of tenant that they hate. However, MJ advises his fellow property investors to actually listen to the tenant’s “complaints” because some of them may actually be reasonable.
“I had a tenant who is known to my property manager but she's known as a whinger—she complains about the cold… the heat… the dust. She complains about anything. I'm like, 'Okay, that's all right. We can always say 'no,’ but… she always pays rent on time and things that she wants [to be] fixed are very reasonable” he shared.
“It's [also] listening to the tenant, as well. As long as they're reliable and pay rent, that ticks in my book.”
Tune in to MJ Anthony’s bonus episode on The Smart Property Investment Show to know the essential things to observe when appointing a new property manager, how to find and keep the perfect property manager, and how to avoid being a difficult landlord yourself.