If you are among the many South Africans who have invested in property, you are already familiar with the headaches that can come with having tenants.
As someone with an investment property, thoroughly vetting prospective tenants is important before putting the final stamp on the dotted line.
A previous conviction is among the key red flags to lookout for. Whether working with property agents or as an independent landlord, there are other factors to look at for ensuring you make an informed decisions about future tenants.
According to Property24, the objective of the vetting process is to empower the rental agent and landlord about the calibre of the prospective tenant and be confident of the ability of the tenant to pay the agreed upon rental fee and for the rental agent to establish a good relationship with the landlord.
This approach can significantly reduce the risks of property damage, disruptive behaviour or potential conflicts within the community and not only contributes to a safe and peaceful living environment but also protects the interests of other tenants and the overall reputation of the property.
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It's inevitable that some tenants might be troublesome and as a property owner, there are procedures to follow.
MoneyExpert states that South African laws in recent times have been relaxed in favour of the tenant and many of them may push things to the limit when exercising their rights. Therefore, landlords need to take the necessary precautions to protect themselves if such a situation arises, especially given that it can be quite hard to find responsible tenants who pay rent regularly these days.
These include the appropriate insurance to cover unfortunate events such as malicious damage to your property, refusal to pay rent, any loss of earnings due to damage or the tenant making the property uninhabitable and damage to the structures that lead to water damage etc.
So, before you commit to rent out the property you've spent your hard-earned money on, here's what to look out for:
1. Strong rental history
Ensuring a strong rental history can get you a clear picture of your past tenant’s rental history. According to Simoné Muller, residential property manager at Acsiopolis, contacting previous landlords allows for an assessment of the tenant’s rental history, and overall behaviour as a tenant which will impact other residents should they become a tenant.
2. Good credit
Checking their credit report is good to understand their overall financial well-being – such as their number of credit cards and outstanding loans, as well as any past issues like bankruptcies, repossessions, or judgments against them that may indicate financial trouble.
3. No history of past evictions
Evictions are a major red flag against a potential renter, and a good reason to decide not to rent a unit to a prospective tenant.
4. Stable and predictable income
Verifying a tenant’s financial stability is equally important and this can be done by requesting proof of income or employment, credit checks, and evaluating their ability to meet rental obligations.
By assessing these factors, landlords can ensure that tenants have the means to fulfil their financial responsibilities and maintain a stable tenancy mitigating bad debt down the line; the knock-on effect of which can be disastrous for a landlord’s cash flow.
5. Good communication
Communication is one of the most important parts of a tenant-landlord relationship. Once you’re renting to a tenant, you want to be able to communicate with them quickly and get a response as soon as possible.
Simoné says a potential tenant can look ideal on paper, but it can be enormously beneficial for landlords to consider conducting in-person interviews with prospective tenants. This allows for a direct interaction, enabling landlords to gauge a potential tenant’s demeanour, communication skills, and compatibility with the property and community.
