• How to find the right tenant for your first property

    When investing in real estate, the focus is often on picking the right property – but the next step, selecting who will live in it – is just as important. 

  • When investing in real estate, the focus is often on picking the right property – but the next step, selecting who will live in it – is just as important. 

    After making many sacrifices to purchase a property (yes, the FOMO is real), the worst thing first-time buyers can do is rush a tenant in, according to Ken Wilson, a RAMS Home Loan Specialist from Rosebery in New South Wales.

    Ken says while it’s natural to “want to start seeing a return as quickly as possible”, finding the right tenant for property number one is “absolutely crucial”.

    How to find the perfect tenant for your first property_Pic1 - moving boxes
     Finding the right tenant is not easy – but there are a few indicators you’re onto a good egg. Picture: Getty

    “The first step to getting a good tenant is appointing a great agent – and that’s not necessarily the agent who sold you the property in the first place,” Ken says.

    “Test the market, do your own research and ask friends and trusted advisors for personal recommendations for an agent, as they are vital to making an investment property work,” he says.

    “For your investment to be a success, you need a tenant who will look after the property, will pay rent on time, every time, and also stay for a reasonable amount of time – because there are costs associated with re-letting a property which can really impact on your return,” Ken explains.

    After appointing an agent, Ken recommends finding out as much as possible about prospective tenants.

    There are three key areas a good agent will focus on.

    1. Motivation

    How to find the perfect tenant for your first property_Pic2 - shelves
    Understanding your tenant’s reasons for moving in will help you decide if they’re sticking around. Picture: Erinna Giblin

    Ask applicants why they’re renting, Ken says. “This may seem like an obvious question, but it’s important to understand the motivation of a potential tenant,” Ken says.

    “It could be someone who is building a house and just needs somewhere to live for nine months, for example. This is key information,” he adds, “if you’re looking for someone more long-term.”

    2. Employment

    Always confirm an applicants’ employment status, Ken says, because the ability to pay on time is vital.

    Sounds obvious, but assuming someone is who they say they are, and works where they say they do, is a rookie move. As a landlord, you are entitled to proof of employment from your future tenant.

    3. Character

    “Always get references, always,” Ken says. “The previous landlord is the best reference to seek out, but if it’s someone who has just moved out of home, speak to their employer about what kind of person they are.

    “You are entrusting your property to this person, so you want to know as much as you can,” Ken says.

    Don’t stick to one or two options, either. When comparing character references be sure to interview at least five or six applicants, and then you’ll have a better idea of what a winner looks like.

    Once you’ve collated a wide selection of applicants, cross-checked them for character and employment history, and get to the bottom of why they want to move into your property, you’ll be set for a much smoother tenant-landlord relationship into the future.


    Originally published on flatmates.com.au

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  • Disclaimer:

    While such material is published with permission, RAMS is not responsible for its accuracy or completeness.  This information is general in nature and has been prepared without taking your objectives, needs and overall financial situation into account. For this reason, you should consider the appropriateness of the information to your own circumstances and, if necessary, seek appropriate professional advice.