The tenants you choose have a significant effect on the success of the investment property you manage or own. Read our guide to learn more about the steps you can take to maintain a happy and positive relationship with your tenants.
Many of us have experienced the financial burden and time spent resolving bad tenancies. For those agents and homeowners who are lucky to avoid this, there are ways to minimise the risk of it occurring. There are many quality tenants out there, but it can take patience to find them. If you take extra consideration to search for and choose the right tenant now, you can save time and alleviate stress in the future.
In May 2019, Ireland reported its lowest rental housing availability of all time. Housing Europe report that the trends are similar across the EU. As tough as this is, this means the odds are in your favour to choose the best tenants as there is no shortage. Our guide below outlines what the ideal tenant is, why they are important, and how to find them.
What is the ideal tenant?
For many, an ideal tenant is one who respects the property and consistently pays the rent on time. This is an excellent start, but what about landing those top-quality tenants that give you complete peace of mind? These are the tenants that make the property a worthy and stress-free investment, and the ones we have valuable, uncomplicated and rewarding relationships with. These are the ‘Happy Tenants’. They exist and are looking to rent a home. The secret to finding these tenants is looking for candidates that really suit the property.
The Happy Tenant: who are they?
A Happy Tenant is the right tenant for the right property. This extends beyond the textbook description of a tenant that follows the law as set out by your governing legislation. A happy tenant is someone who has a good quality of life with the property they live in as a contributing factor.
Consider this scenario
You have an applicant named John, he has a perfect rental history, excellent references and the rent cost is only 30% of his salary. He also has a large pet dog, but his references specify that as an upstanding tenant, there have not been any issues. John has applied for a property 1.5 hours commute from his work without a backyard.
As an agent/homeowner, you are looking for an excellent tenant for a long-term tenancy of ideally a minimum of 4 years.
Is there a risk?
John certainly sounds like a top candidate with a rental history and the income to demonstrate he can pay the rent and look after the property. But is he the most suitable? There are many variables to consider when finding the right tenant. In this case, you are looking for someone in the long term. Someone who needs to travel 3 hours every day for work and owns a large dog is not the best tenant for this property without a backyard. Will this lifestyle keep him happy? There is a risk that John might not stay in the property for long when you consider the physiological and psychological needs of humans and pets.
The ideal tenant can be anyone; they can have pets, they can be a first-time renter, students, working professionals, families etc. A pet owner could be a perfect tenant, as having a pet takes responsibility and they are likely looking for a long term home It comes down to whether they want to and can make a home in the property. We will explore why this is important below.
Why do Happy Tenants make a difference?
“We have to be ahead of the game as far as possible in thinking about the happiness of tenants. In the end, they pay the rent and we want to find the highest rent and the most loyal tenant in the long term.” Emerging Trends in Real Estate®: Europe 2019 – pwc.com.
It is true, the right tenant can make a major difference to how the tenancy carries out, and how the investment performs. Just like a satisfied worker who loves their job, a happy tenant is someone who respects their environment and will go beyond the basic requirements to maintain, preserve and improve it. This is the difference between the people that consider their rental a property, and others who consider it a home. Here’s a closer look at some of the benefits of ideal tenants:
Re-letting a property is time-consuming and costly. Long term tenancies minimise the time and costs involved in managing vacates, and the surprises that may come with them. They also lessen advertising and re-letting costs, along with the downtime from the property being vacant. As a result, long term tenants provide sustained financial security for the homeowner. In addition, minimal turnaround reduces the risk of bad tenants, and wear and tear caused by regular move-ins/outs.
Property Maintenance & Upkeep
Tenants who see their rental as a home share a common interest with agents and homeowners to maintain the property. This means reporting maintenance issues in a timely manner before they escalate into something that will cause a higher financial burden.
A good relationship results in cognitive trust, respect and practical communication. Overall, it makes the whole rental partnership easier. If you have a strong relationship with your tenant, contractual needs and etiquette will be mutually enforced and respected.
In summary, finding the right tenant will save you time, money and hassle. Not only will it make your life easier, but it will have an invaluable impact on the life of the tenant.
How do you find Happy Tenants?
You have the power to find the right tenant when leasing a property. A tenant CV will help you determine what an applicant is looking for, or you can ask questions. You need to determine whether the property you are leasing matches the needs of the potential tenant. Some questions you may want to consider:
- Are there any specific amenities they require?
- Are there any specific attributes they are looking for in a property? E.g. Do they need a backyard or secured garage?
- Can you accommodate for any of the things they need that you don’t currently have on offer?
- How close is their workplace? Will they have a long commute?
Find a suitable solution
Targeting multitudes of candidates is counter-productive when you consider the amount of time it takes filtering through applications to find the best one. You could instead save time and find someone that is most suitable by reading their tenant CV. Another way for agencies to find great tenants in the area is to form relationships with local businesses; word of mouth and referrals are effective ways to find interest locally.
How to figure out tenant suitability
A great indicator of tenant suitability is to find out how close the property is to someone’s workplace. Let’s revisit our applicant John: John has submitted a tenant CV, his CV specifies that he currently has a large dog, but it is going back to his ex-wife in a month. It also states that although his office is located in the city, he works remotely and is looking for somewhere further out of town to suit his lifestyle.
Suddenly, with a little more information John seems like a very suitable tenant. Thanks to John’s tenant CV and your extra effort to search for information, you have found someone that is an excellent fit and is likely to stay for the long term.
A tenant that makes the effort to put together a CV shows that they care about finding their ideal home. It shows they are responsible and accommodating as they have taken action to make your life easier by providing you with the information you need. If they provide references that are already verified by a third party, this is a useful indication of whether they are trustworthy and organised. It is difficult to truly know what type of tenant someone will be from an application form; so reading a CV can help verify a candidate’s needs and whether they are suitable.
Key Takeaways: Happy Tenants
Agents and homeowners have a difficult job in managing properties, but they have the capacity to make it easier. This can be done if you find a Happy Tenant that loves coming home to your property and treats it as their own. It’s business – According to Forbes and many business leaders, becoming more customer-focused leads to a profitable organisation. If you take a professional and empathetic approach to tenant needs you can develop a loyal, successful and long-term relationship.
Requesting Tenant CVs is the smartest way to find great tenants – Find out why!
- Lowest rental reported in Ireland (p. 5) https://www.daft.ie/report/2019-Q2-rental-daftreport.pdf
- Europe Housing trends: http://www.housingeurope.eu/resource-1000/the-state-of-housing-in-the-eu-2017
- PWC Emerging Trends in Real Estate 2019 https://www.pwc.at/de/publikationen/branchen-und-wirtschaftsstudien/pwc-emerging-trends-in-real-estate-europe-2019.pdf
- Forbes – Prove your credibility to customers https://www.forbes.com/sites/forbescoachescouncil/2018/10/03/small-company-big-success-10-ways-to-prove-credibility-to-your-customers/#22158e3e666f