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Tenant selection process

Discussion in 'Property Management' started by JesseT, 20th Oct, 2015.

  1. JesseT

    JesseT Well-Known Member

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    Currently have a property in Logan advertised for lease, have received lots of interest and currently have 3 applications.
    I understand this a crucial point of investing and I am therefore in no rush and would really like to select the best long term tenant, first time.

    I wanted to ask, what information is important to you when selecting a tenant?
    Also, after looking over the Queensland Anti Discrimation Act there appears to be lots of questions that, as a landlord, I should not ask.
    Which is difficult because in this situation there seems to be lots of Centrelink incomes, unemployment and lack of reputable rental historys.

    Is it acceptable to ask for proof of savings?
    Proof of low debt?
    Income?
    Age?
    Marital Status?
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    You can't discriminate on any grounds of course, but you don't need to tell them the reason they were unsuccessful anyways ;)

    Age and income will be on the application form. You won't really be able to ask the others you've mentioned, but they should be obvious from meeting them, talking to them and reading the application form. You get an eye for people after a while and its not that difficult to verify/confirm the items they disclose.

    Verify their income with their employer and their previous rent payable with their previous agent/LL. If they're capable of paying the rent and are presented well, it's likely they'll look after the property. Remember to get references and check tenancy database.
     
  3. Ed Barton

    Ed Barton Well-Known Member

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    I'm not sure how you could possibly get proof of low debt?
     
  4. HUGH72

    HUGH72 Well-Known Member

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    Low debt? If this is the bench mark I would never be a successful applicant.:p
     
    Last edited: 20th Oct, 2015
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  5. D.T.

    D.T. Adelaide Property Manager Business Member

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    I don't expect most PM's to understand the difference between someone having a $5k credit card maxed out and $2mil worth of mortgages.
     
  6. JesseT

    JesseT Well-Known Member

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    Thanks DT

    Unfortunately I won't be meeting them , I am in Sydney so this part is in the hands of my PM.
    All 3 applications have passed database, as they are coming from Family homes, Private leases and even homeless, which also means that not 1 has REA rental history which is of a huge concern.

    By low debt I am referring mainly to credit card, I have just been through this process myself and was asked by PM at application to include credit card statements as a large amount of people choose to live beyond their means, I certainly don't have a problem with debt if balanced with assets!
    I also included Savings accounts and council rates for IP's
     
  7. D.T.

    D.T. Adelaide Property Manager Business Member

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    Coming from family homes / private leases is no match for my background checks, I verify the information is legitimate.

    Low debt is kinda redundant check. If they've always paid their rent previously (or mortgage if they were in a ppor before) [you can check both these things] then what they do with the rest of their money isn't really of any consequence.

    I think you should entrust your PM to handle it.
     
  8. DiligentPM

    DiligentPM Well-Known Member Business Member

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    Age and marital status is irrelevant as it constitutes discrimination to make a decision based on these factors - ask your PM to describe their robust screening process...it is about verifying ALL income sources (salaries and/or investment income), proof of income from employer and/or accountant for self employed; TICA checks; reports from previous rental agencies; if private home ownership proof of mortgage payments via ledger reports; rental ledger reports - it is about ensuring the tenants can (1) afford the rent and will not be placed under rental stress; (2) history of no rental arrears Notice to Remedy Breach and if this has happened to determine if it was a once off and how the situation was rectified and/or if there is a pattern and (3) report from previous PM re: looking after the inside and outside of their previous rental property - it is about verifying all information given and never taking a short cut
     
  9. JesseT

    JesseT Well-Known Member

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    PM has recommended one group in particular, says they sound really clean and should take good care of the place.
    No REA rental references, tenants have a history of homelessness, 3 adults on centrelink payments totaling $1200 pw, rent is $370.
    Seems that they should be able to pay the rent.

    They all Volunteer a lot of their time to a homeless shelter. Sound like great people but I don't want my house to turn into a shelter and would feel more comfortable with a working family,
    other people's thoughts?
     
  10. DiligentPM

    DiligentPM Well-Known Member Business Member

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    Check out who your 'customer' is - if it is direct debit from Centrelink and the Bond comes from Bond Connect then your customer is the government and they always pay up...there are risks in the property maintenance space that can be mitigated through regular inspections and expectations articulated clearly up front however the financial risk is low if your 'customer' is the government
     
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  11. Perthguy

    Perthguy Well-Known Member

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    I would ask the PM to call the homeless shelter to verify their story. The best feedback my PMs ever got was talking to employers.
     
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  12. DiligentPM

    DiligentPM Well-Known Member Business Member

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    Yes, verify everything with every applicant always
     
  13. Ed Barton

    Ed Barton Well-Known Member

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    The tenant can cancel their centrelink DD at any time.
     
  14. DiligentPM

    DiligentPM Well-Known Member Business Member

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    Indeed they can and then a proactive PM needs to re-connect with the tenant to work out another payment solution that works well for all; to date we have not had this experience...yet
     
  15. D.T.

    D.T. Adelaide Property Manager Business Member

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    Have never had a tenant drop their Centrepay payment.
     
  16. Ed Barton

    Ed Barton Well-Known Member

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    That's interesting to hear and a plus if I ever get a welfare recipient tenant apply. I'd imagine it's set and forget stuff for the tenant. Instead of getting say $800pw welfare they get 500 and their rent is covered in their minds. Otherwise might be tempting for them to spend the rent money and intend to make it up next pay - of course they're short at the next pay.

    My point was that having the govt DD the rent is not the same as having the govt as a tenant as Diligent PM stated.

    * I'm sure a fair deal of my tenants are on welfare, but it's welfare that society thinks is acceptable. Like baby bonuses and family tax benefits.
     
  17. D.T.

    D.T. Adelaide Property Manager Business Member

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    The benefit being that they can never lose their job :p
     
  18. Ed Barton

    Ed Barton Well-Known Member

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    LOL!

    Less likely now we have Turnball as PM. TA wanted to deny the dole to young people. There's talk in the media about cuts to middle-class welfare.
     
  19. Xenia

    Xenia Adelaide Property Manager Business Member

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    with all other factors being equal, you need to also consider minimising vacancies as much as possible. The one that can negotiate the quickest move in date can be considered more favorably. Vacancies can be a huge cost to investors.
     
  20. Jamie_

    Jamie_ Well-Known Member

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    Ummm? Thought you were an advocate for evictions :p
    http://somersoft.com/forums/showthread.php?t=105191