Renting is hard work for landlords. If you own rental properties, you might complain about managing difficult tenants, receiving your rent late and damage to your properties.

The learning curve for property management can be steep, and if you are just starting out as a landlord, learning as you go can be an expensive exercise. Without the right way to choose your tenants, they could badly damage your house, as illustrated in the following pictures. In the worst case scenario, some investors are forced to sell their rental houses to avoid the hassle of managing tenants. Then they might lose a good opportunity to build their wealth.

There are good tenants and bad tenants. That’s why in this week’s blog, our guest expert in property management, Cary Chong, discusses three factors that you should consider when you are on the lookout for good tenants for your rental properties.

Cary has many years’ experience in property management. She has been working for New Zealand local real estate agent, Professionals, for more than five years. In 2018, Cary was awarded the top first and top two prizes in the Business Development Manager area by professionals and REINZ – the Real Estate Institute of New Zealand - respectively. In 2019, supported by Professionals, Cary founded her own property management company, Upper House Property Management, to provide Auckland landlords with rental services for their residential investment properties. 

3 Tips to find good tenants for your rental properties

Video Timeline:

1. Position your rental properties -- 01:07

2. Screen your prospective tenants when they view your rental properties -- 03:36

3. Do essential background checks on your prospective tenants -- 04:03

1. Position your rental properties

As a landlord, you need to think about what kind of tenants your house is suited to.

If your house is looking old and needs maintenance, you should avoid renting your house to tenants who are seriously concerned about the condition of the houses they live in. For example, if the tenants find there are some marks on your wall, they might feel unhappy and keep on chasing you until you fix the issue. However, if your house is newly furnished and in good condition, you can choose the “picky” tenants. They take care of each detail of your house and if any maintenance is required, they will report it to you immediately. 

2. Screen your prospective tenants when they view your rental properties

Every landlord should have a set of questions to ask any prospective tenants when they view their rental properties. This is a great chance to find out more about your prospective tenants, so that you can start to decide on whether they would be good tenants or not.

Once you decide upon some essential questions to ask prospective tenants, you should know whether their monthly income is enough to pay your rent, whether their personalities are a good match for you, and whether they can keep your rental properties tidy and clean, and so on.

3. Do essential background checks on your prospective tenants

Doing background checks on your prospective tenants is the last step towards choosing your ideal tenants. You can’t afford to choose a tenant for your rental property by following your heart instead of your head. There are two essential background checks: the tenant’s rental history and credit check.

3.1 Tenant’s rental history check

If possible, you should talk to your tenant’s previous landlords. Here are some questions you, as a landlord, should ask:

• How long did the tenant live in your house?
• How much did the tenant pay in rent? (For example, if your tenant’s previous rent fee was $500 per week, and yours is $1,000 per week, you need to consider if they are financially capable of paying their rent on time.)
• Did the tenant keep your house clean and tidy?

Pro tips: Before you contact the previous landlord that your prospective tenants refer to, you need to make sure that you contact the right person, not their friends. If you use a property management service like Cary, they can access their internal system to verify the homeowners.

3.2 Tenant’s credit check

The credit check is the last step you need to do when you screen your tenants. It includes answering these questions:

• Does the tenant have a history of paying their bills on time?
• Has the tenant ever been bankrupt?
• Has the tenant ever been to court?

Looking for an experienced property manager?

Whether you’re a first-time landlord or an experienced property investor, managing your rental portfolio can be a complicated and time-consuming process.

For some landlords, hiring an experienced property manager to look after your investment properties can be a good option. A property manager with extensive experience can help you deal with the various issues that can crop up in rentals. A property manager can also keep up-to- date with the latest, complex legislative changes regarding rental properties. What’s more, they can save you a lot of time - from finding tenants, to carrying out extensive reference checks and keeping in regular contact with your tenants.

For all these reasons, we highly recommend you choose Cary to manage your rental portfolio. You can contact Cary via email: cary.chong@upperhouse.co.nz, or phone: 027 250 0389.

Disclaimer: The content in this article are provided for general situation purpose only. To the extent that any such information, opinions, views and recommendations constitute advice, they do not take into account any person’s particular financial situation or goals and, accordingly, do not constitute personalised financial advice. We therefore recommend that you seek advice from your adviser before taking any action.

Prosperity Finance - here to help

Prosperity Finance looks at property investment strategically, empowering you to make the best long-term, informed decisions. We are professional mortgage brokers and are here to help. Give us a call today on 09 930 8999.

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