How to find a good tenant?

So I suppose, at the end of the day, it is recommended to hire a good PM in order to ensure they will take all necessary steps to find a quality tenant who will pay on time and keep the property in a good condition.

Is this the general consensus?

 

I think a general consensus would be that you need to manager your manager.

The same way a business owner checks up on the managers of all their departments. I don't mean call and ask something general like "is it all going ok", I mean have a list of things they need to do and when to do it, and contact them throughout the year in advance of each thing that needs to be done and if needed, give them details on how to do it.

I have just done this with a PM who said that we don't need to give a termination notice at end of lease because they will just go onto periodic.

Your list should include at minimum:

• finding a tenant - did they call last agent? employer? check tenant database?
• got a tenant - did they do a comprehensive report before they moved in so if tenant damages something you have proof? get them to send you this report so you know it has been done.
  
• after 3 months - did they go and inspect it to see the tenant is taking care of the place?
• 3 months before lease end - did they check current market rental comparisons? will they send out the increased rent notice in time for it to be legally binding? did they send out a new contract in time to avoid going to periodic lease?

Manager your manager. Don't assume they are doing their job.

You might be lucky and find a great manager that is actually on top of things and that is fantastic, but assume it is not the case so that you take steps necessary to make sure things are getting done because who pays the thousands of dollars when they screw up.

Also, not calling their employer for privacy reasons is ridiculous, as is asking only one question "did you get a good vibe" - like well dressed and polite people don't lie.
It is your money on the line - if you don't like the idea of losing thousands of dollars then do your due diligence and check everything you possibly can.

 

Call ALL the references - The most important person to speak with is the agent or owner your potential tenants are currently or previously rented through. Calling rather than emailing is great because on the phone you will be able to hear any hesitations which could definitely be a warning sign.

Ask them:
Did they pay the rent on time?
Would you rent to them again?

You could even ask their current/previous landlord if they would rent their own home to them. Hesitation or a 'maybe' might be a concern.

 

In our recent search for a rental property we submitted 3 applications which included references. Not a single referee was contacted. I've also been a referee for people in their rental applications and never been called.

 

I'd say its more important to FIND a good manager and let them do their job.

 

50% of the time my tenants move out, I never get a call... as their most recent Property Manager!?

 

Is it because the new agents call the second most recent property manager?
They are the ones who won't be interested in 'moving them on?

 

Okay, well if the advise is to find a good manager who'll be the best shot I have at securing a quality tenant...

How do I go about finding a good Property Manager? How would I go about doing my due diligence on that?

 

Search for Agents there was a pretty good checklist in that thread

 

Good tenants are also attracted to well maintained properties

 

If you're paying a PM you might as well be paying a competent one you don't need to micromanage. I personally don't understand why you would pay someone anything if you're unhappy with the service they provide, there's plenty of excellent PMs out there. Sure, sometimes it can take a while - but don't waste your time or hard earned cash on someone who is incompetent.

Like @Tom Rivera I rarely get requests for references, it's insane - I don't understand it.

When looking for PM I would also add to the list how often they go to tribunal (VCAT, SACAT, QCAT - whatever it's called in your state). A lot of tenancy problems I believe happen because PMs don't vet tenants properly and a lot can be avoided at the application stage, if someone is at tribunal every other week it's probably a pretty good indication they're doing something wrong.

 

Don’t downplay the power of the network and connections of a good PM.

In a smaller city like Perth a local PM knows a lot of people. They can often connect to somebody like an employer at a personal level and get a true reference.

I always speak more candidly to people I know, or who are referred to me, rather than a stranger.

 

No body is going to look after your best interests like yourself and it doesn't harm anyone if you keep a check on things. I've caught a lot of PMs out not checking when things have been broken by tenants or doing follow ups after the tradie or handy man has been in for repairs. To be fair on PMs I think a lot of the problem is the industry itself as a whole.

 

You should define at least rental and exit strategies when buying an IP. A good PM will get you a good tenant fitting your rental strategy.
If not sure, a good PM will tell you the type of tenants you should look for with your property, and if it requires any modification / renovation to get you the right tenant.

 

As well as having a management agreement in place when you hire a property manager, I think it's best to put your expectations in writing early on. Especially in relation to general communication and how maintenance is dealt with. Then you can refer to what was agreed in writing, if an issue arises. This should eliminate the need to "manage the managers" too much.

 

It's not that I want to make hard work for the PM, it's the fact that I know more about the my house than they do. Sending an electrician out because the tenant doesn't know how to turn on a sensor light and operate a range hood is just crazy when I can show them for free and it's only 15mins of my life. You just want to work in together with them not try to boss them around.

 

I wish more people would ask me about how often we go to tribunal- I haven't been in over three years!
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Expanding on your point above regarding competent PM's- I am concerned that the vast majority of investors don't understand just how big a different there is between a good and bad PM, and that both are out there in all different types of businesses. As a result, most investors don't seem to have the motivation or understanding they need to select a great PM.

Flattered and thrilled as I am every time someone decides to sign us, I often don't even get the opportunity to open my listing kit. I could count on one hand the amount of clients who have really grilled me with technical questions before making their decision (It's great to be able to show off PM skills instead of being a 'salesperson').