When shortlisting prospective tenants for your investment property, there are a number of ways to ensure the applicant is reliable.
Property managers have two key selection criteria when it comes to choosing tenants – firstly, the prospective tenant’s ability to pay rent and, secondly, their ability to maintain the property.
In assessing a tenant’s suitability, the property manager will examine their track record to ascertain if there is any evidence of non-payment or late payment of rents. They’ll cross reference the tenant’s details with their own records as well as use state and national databases to assess whether the tenant is reliable and credit-worthy.
But what about prospective tenants who have no rental history? What do they do about establishing their credit credentials?
While a good property manager will maintain a zero tolerance policy on rent arrears, they’ll also have the experience and wisdom to recognise that not every tenant has a rental history and that there are some circumstances in which it is possible to lease a property to someone who doesn’t have the accepted requirements for pre-selection. It just may require some additional research from the property management company and a little extra information from the tenant.
Tenants with no rental history are primarily young adults who are moving out of the family home and establishing their independence – but they can also be new immigrants to Australia or professionals relocating for a contract job who may have even owned their own property abroad but who have decided to rent for a period in their new country.
Whatever the circumstances, when a tenant has no rental history, the property management company will ask them for another form of payment history that demonstrates their ability to pay regularly and on time. This could be a statement from a car loan, payment for an appliance through a finance contract or a savings account showing regular deposits. The aim is simply to show property owners that the applicant has demonstrated consistency and commitment in terms of their repayments.
Tenants with no rental history may also be asked for a guarantor who will stand as security for their application and guarantee to pay the rent. They may also be asked for a copy of their employment contract to prove that their job is stable and that they will be likely to stay for the nominated lease period and have a regular income to pay the rent.
Just because a tenant doesn't have a rental history shouldn't necessarily impede their ability to secure a lease, but professional property managers will look very carefully at their application and will request additional information to establish the tenant’s credentials.
Cindy Knight is the general manager of Time Conti Sheffield in Victoria Park. Cindy has been working at Time Conti Sheffield since 2002 and during this time has seen many changes in the property management industry in Perth.
Cindy is passionate about delivering the best service to every property investor that walks through the doors of Time Conti Sheffield and her insider knowledge of the local real estate market means she is an expert in her field.