There is an old saying that when you buy a property, location isn’t just the most important thing, it’s also the second and third most important. But is this the case when you are buying a property for rental purposes?
Let me ask you a question? Would you prefer to have a property in a good location with a bad tenant; or a property in not such a good a location with a great tenant?
If you ask a seasoned and successful property investor they will tell you that finding a quality tenant is more important than the location of the property every time.
First-time property investors tend to spend too much time on the property and not enough time finding the right tenant. That is someone who will pay the rent on time and take care of the property as if it was their own.
Property investors who get lazy and don’t invest as much time in securing the right tenant or who simply look for a guaranteed monthly income for a fixed period of time may discover only too late that they have the tenant from hell. That is someone who doesn’t pay the rent, neglects the property or even both.
Many landlords have admitted to me over the years that the latter scenario has occurred with their rental properties.
Without a doubt it is difficult to hold out for and find the right tenant to move in, but, let me tell you it is far easier than trying to get a bad tenant to move out.
A recent survey conducted by an on-line leasing agency discovered that 60 per cent of landlords and property managers said that finding the right tenant was the most challenging aspect with Buy-to-Let properties, however, it is the most important.
Perhaps you are what is termed an “accidental landlord” where you must rent out all or some of your own property to meet mortgage repayments. Or maybe you are thinking of buying a property to rent as an investment.
Let’s take a look at how you should go about being a landlord. We’ll start with the top priority - the Law.
Before you even start to look for a tenant, familiarise yourself with the legislation governing the rights and obligations of private rented accommodation. This is set down in the Landlord and Tenants Acts 1967–1994 and the Residential Tenancies Act 2004.
As a landlord you have many rights for example you have the right to set the rate of rent and receive it on the date it is due. You can review the rent annually and terminate a tenancy during the first six months without giving a reason. You also have the right to refer disputes to the Private Residential Tenancies Board (PRTB).
It is one thing knowing your own rights but you must be aware of the tenant’s, for example a landlord does not have permission to enter a tenant’s home without prior arrangement. A landlord may not take or retain a tenant’s property even if they have not paid the rent and they cannot charge more than the market rate for the property.
There are many other rights and obligations you have as a landlord so please familiarise yourself with what they are first.
Another important factor is knowing and understanding what constitutes discrimination. Whilst you may have some leeway in asking for tenants that don’t smoke or not allowing them have pets, you cannot discriminate against potential tenants on grounds of gender, civil status, family status, sexual orientation, religion, age, disability, race or membership of the Traveller community.
So now with the legal aspect studied you are ready to meet prospective tenants in person. I believe this is of the utmost importance because any of the successful landlords I know are very much the Hands-on type who meet with tenants themselves.
There is no hard rule about what the ideal tenant should look like, however, if they don’t take personal hygiene or their appearance seriously when meeting you, then it follows that there is a high chance that they won’t take much better care of your property than they do themselves. Regardless of what they look like go with your gut instinct, if there is something not quite right, then move on to the next person.
When you meet prospective tenants don’t be afraid to ask the right questions such as: How long have you lived at your current address? Why are you leaving that property? It is perfectly acceptable to request a written reference from their current landlord and it is not a bad idea to speak with them to ask if the prospective tenant took good care of their property.
One landlord I know of goes as far as visiting the property they are moving from - with the consent of the prospective tenant - and he says that the state of that property is indicative of how they will take care of yours.
Some landlords I have spoken to also ask to speak with the employers of the tenants simply to verify that they still work there.
The work doesn’t stop after you have secured the right tenant. Next comes the decision of self-managing or employing the services of a property management company.
Many landlords swear by managing it themselves because it is a great way for them to make sure the property is being taken care of. Going there, the old fashioned way, once a month to collect the rent ensures that they can visually inspect their holding.
This is time consuming but worth it every time as it takes far more time to make repairs to your property if you haven’t checked on your house in months only to find out too late that the property wasn’t looked after.