Keep an eye on your investment
By Tameka Gordon Assistant business co-ordinator firstname.lastname@example.org
Rental income is often used to foster other investments or facilitate the lifestyle of the landlord. Tenants who do not pay up, can create more problems than just the stress of collecting.
This is why tenants' ability to pay in full and on time is a key factor in deciding whether or not to grant them occupancy, realtors say.
"A good landlord and tenant relationship hinges on the tenant's timely payment of the rent," Coldwell Banker's Andrew Issa said.
To safeguard against difficulties, which may arise, especially in collecting the rent, the broker recommended that at least three character references be sought, one of which, he advised, should be obtained from a bank.
"In the same way an employer thoroughly checks the background of a prospective employee, so should the landlord in relation to the tenant before he allows them into the property," Issa said.
A careful interview of the prospective tenant was strongly touted as a precautionary measure. While personality may not be an indication of the tendencies of tenants, realtors agree that, coupled with a thorough background check, an interview could unearth issues that are note worthy.
"One of the things that may come out is whether they have moved around a lot," Issa said, adding that this may be a red flag.
While noting that rental in all income brackets may not follow the same culture, the broker cautioned that landlords should seek to gather as much information as possible about the character of their prospective tenant.
"It is acceptable that one would want to display a certain level of trust, but with all that has been happening, the more you know about the person you are allowing into your property, the better," he said.
Other industry insiders echoed Issa's sentiments, noting that the current harsh economic times and the resultant reduction in spending power have made it harder to collect from tenants.
Speaking on condition of anonymity, one realtor suggested that landlords visit or call the prospective tenant's work place to confirm that they indeed were employed and able to pay the requested sum.
Utilising the provisions of a lease or tenancy agreement to safeguard against possible exploitation by tenants is a "must do", say landlords.
"It is advisable that landlords visit their premises at least once a month," Issa said, adding that this could become a "contentious issue" if not stated in the lease or tenancy document.
The rental agreement should also stipulate that the landlord reserves the right to request copies of the utility bills periodically.
Issa explained that this measure allows one to track whether the tenant is paying consistently, a lack of which could indicate abuse of these facilities.
He warned that this measure would prove "less costly than having to reconnect utilities or pay off outstanding sums if the tenant leaves without clearing them.
Another precautionary measure would be to transfer the utility bills into the names of their tenants, one realtor said, so the outstanding sums leave with the tenant.
Having the meter read a day or two before the new tenant takes up residency is a good way to ensure a fresh billing cycle is started Issa said.
This would ensure that both parties agree on the state of the utilities before hand.
The matter of repairs to the property should also be outlined in the tenancy agreement.
It may be that the tenant is responsible for repairs, which cost up to $5000 while the landlord pays for repairs above this sum, one realtor suggested.
But whatever the agreement, putting it in black and white is strongly recommended.
Landlords should also ensure they are aware of exactly how many persons will be occupying their property.
The realtors recounted instances in which tenants approach landlords as single individuals or as couples but it was later revealed that other members of their family or friends also lived on the property.
"Sometimes they even move out and the landlord just stumbles upon the other people living there," one realtor said adding that collection of the rent can then become an issue, as the new occupants may not want to pay.
The landlords' role of ensuring that the tenable state of the property should however, not be ignored by the reckoning of the realtors.
"One must also be willing to compromise," Issa said.
He advised that helping to secure the tenants abode and peace of mind by allowing them change the external locks to the property is one area on which a compromise would reap a better landlord and tenant relationship.
"The previous tenants may have made copies of the keys which creates a security risk," he said.
The tenant could therefore be allowed to use their lock with a copy of the key held by the landlord until the individual quits the premises.
The realtors agreed that keeping a keen eye on one's property while building a good relationship with the tenant yields the best results.
"At the end of the day you need to protect your investment and your income," Issa said.
"You can't turn your back on the property after it is occupied," he warned urging the use of "common sense" to guide one's decisions.