Selecting Tenants – Top Tips for Buy to Let Investors

Choosing the right tenants can make or break your property investment. A good
tenant will ensure regular returns on your property, a bad tenant could not
only cost you dearly financially but also prove extremely time consuming and
stressful. Here are some top tips to get it right!

A few things to consider

Consider, initially, how you are going to find your tenants. What sort of
tenant are you looking for? Are you looking for students, or professionals?
Are you looking for individual sharers or family groups? Whilst these decisions
will be based largely on the type of rental property you have, it is important
to consider your target audience when advertising and when vetting your potential
tenants.

For example, if you are looking for students, one of the best ways to advertise
is through the local university accommodation office. Whilst this will mean
that you have to undergo a registration process, it will at least help to ensure
that you attract bona fide students. Similarly, if you advertise in professional
journals, it is much more likely that you will attract professional tenants.
Try to put yourself in the position of your desired tenant. Typically, what
do they read and where are they likely to look for a suitable property. This
will give you a clear idea of where to advertise.

When going through the selection process, it is important not to rush. Landlords
are often desperately keen to ensure that their property does not remain vacant.
However, this should not colour your judgement. It is much better to lose a
month’s rent than find yourself in the position of having to evict a
bad tenant, which can sometimes take over six months. When you are vetting
tenants, it is important to have a clear process in place, which you adhere
to, rigidly. Not only will this ensure that you don’t miss a trick, but
it will also help to prove that you have not been discriminatory in your selection.
For instance, it is illegal for a landlord to discriminate against potential
tenants on the grounds of race, religion, gender or disability. It is important,
therefore, that you keep suitable records of your decision making process in
case you have to deal with a future allegation.

Vetting

One of your first opportunities to vet will be the first time that you meet
and/or speak to the potential tenant. In many cases, the first contact will
be by phone. In this case, it is helpful to have a checklist prepared with
key information about the property (size, location, etc.) and also a set of
questions that you will ask the potential tenant, such as reason for moving,
duration of likely stay, whether they have children, pets or whether they smoke,
whether they are employed and whether they have references. Although you may
feel awkward asking these questions, it is important to remember that these
answers are fundamental and anyone who is annoyed with you for asking is unlikely
to be a suitable tenant.

Showing a prospective tenant around the property is a further opportunity
to vet the individual. Whilst you may well get a gut reaction, there are a
few other more tangible clues that you can use to help you make a decision.
For example, did they arrive on time as this is a sign of reliability and respect
for your time? How did they appear and how did their car appear? Someone who
is keen to make a good impression and who is clean and tidy is generally more
likely to be the type of person who is going to look after your property.

Remember the decision making process for tenants is often very quick and it
may be that the prospective tenant wishes to place a deposit on the spot. To
deal with this eventuality, it is wise to have an application form handy and
a receipt book if you decide to take a holding deposit.

An application form may seem a little excessive, but it is an excellent way
of ensuring that you have all of the necessary information and also of ensuring
that you have given the potential tenant all of the essential information about
the property. In many cases, this application form can be the basis of the
tenancy agreement, thus reducing time and effort, later on down the line.

Bear in mind that under the Data Protection Act 1998, it is essential that
landlords inform potential tenants that references and credit checks will be
sought. References are vital and more than one may be prudent. For example,
consider references form previous landlords, banks and employers. Ideally,
follow up these references with a phone call not only to verify that they are
genuine but also because people are often likely to be more honest over the
phone than they will be in writing. Another handy hint is to ask the previous
landlord for a reference, as the current landlord may give a wonderful reference
for someone they are trying to get rid of, or a landlord who does not want
to lose their tenant may give an unfairly poor reference.

Vetting a tenant is about consistency, careful planning and staying alert.
Resist the temptation to secure a tenant at all costs. Making the wrong decision
at this stage could be one of the biggest investment mistakes you make, so
take your time and NEVER take short cuts!

For information and guidance on vetting potential tenants take a look
at these resources:

www.arla.co.uk
www.vetting.co.uk
www.shelter.org.uk

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