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Quality Tenants Are The Answer

By: Don Magsino

There are many insurance companies that offer landlords peace of mind. These policies will guarantee you receive the rent you are expecting from your property regardless of your tenants personal circumstances, ability or willingness to pay the rent.

Personally, I dont believe on credit-checking tenants. All letting agents insist that you do this, but I disagree. Credit checks costs between 17.50 - 94.00, depending on what service you require. For me, it is advisable to have this check for only certain types of tenant and areas.

If your property is in high demand area, it is worth credit-checking because the tenant is paying all the rent and you can be choosy. This ensures that you get the best tenant. Most of these tenant can pay the whole year rent upfront! I would suggest you ask for employers reference as well to make sure he is what he say he is.

If the property is in a low demand area, you cannot be choosy. Most people will fail a credit check - even a chartered accountant I know who earns 250,000 per annum on his rental business alone have a default that he is currently investigating from 18 months ago for 4.89, which renders his credit check as a failure. A credit check is computer generated based on a persons past circumstances but it doesnt guarantee a best tenant. It is very important to get employers reference. A 4.89 default does not make a person uncreditworthy at all.

Do not be afraid to ask. How much is his earnings and then compare that earnings to the rent you are charging. If the monthly rent is approximately 1/3 of their monthly income, then he can probably afford it. There are many reasons that a person can pass a credit check but still end up on these:

• He lost his job. Things happen and this is inevitable.
• Divorce or separation issues. Circumstances change and people change. It will be very difficult for them to keep their commitments and that is why they default.
• Overspent and misbudgeted. Tenants sometimes are indulging themselves on luxury holidays and stuff. I usually ask them prior to the signing of the Tenancy Agreement if they have any idea of all the costs in running a household, has he got a supportive family to be guarantors for the rent and has he got a permanent or temporary job.

Asking key questions is a must. When you ask for an employers reference, demand that it should be written on an official letterhead. This will give you the details of his company address and the contact person. I then go online or dial an information directory to obtain the confirmation of all the details on the reference. I double-check that all the details (i.e. address, telephone numbers) are correct. I will call that person who issued the reference letter and do some checks on my prospective tenant. Beware of fake reference letters and false documents! When you do credit-checking, ask your tenants approval first to cover your back and he is aware you know what you're doing.

Always ask for one month advance and one month deposit. I assume that if someone can afford this, he will probably be able to pay rent in the future. If you let him in and hand-over the keys to them with just two weeks rent without deposit, youre heading for a trouble!

I prefer to collect rent via Standing Order. A standing order is an instruction you give to your bank or building society to make payments to a specified third party's UK bank or building society account. In this case, your tenant will need to set this up and you just have to wait for the rent to be in your bank account regularly, as agreed on the Tenancy Agreement. This will keep you from reminding your tenant's rent and will save you time and effort.

Avoid to be a friend with tenant! I turn them down when they invite me on birthday party or Christmas celebration. I always put a boundary between us. For this reason, I also ignore my personal friends to be my tenant. Familiarity brings contempt.

Survey says that the non-paying tenant is relatively small compare to the good ones. By doing these exhaustive checks, so far I have never went wrong; I always trust my instinctsso far so good.

Don Magsino MBA Ateneo De Manila University Professional School of Business

Article Source: http://EzineArticles.com/?expert=Don_Magsino