“Thorough background checks are critical when choosing the best tenant for your property.”
No one likes asking tough questions, especially about personal issues or money. But when you’re checking out prospective tenants for your investment property, you quickly need to get past feeling like you’re prying. While getting along with prospective tenants is a great start, it’s not enough to sign someone up based on their first impression and a quick phone call. Due diligence is an important part of any business proposition and renting out a property is no different.
WHAT SHOULD YOU BE CHECKING OUT?
Thorough background checks are critical when choosing the right tenant. You want to make sure that anyone who signs up to rent your property is truthful about their identity and their intentions, that they have the financial wherewithal to pay the rent on time, and that they will look after the place.
Making background checks gives you fact-based information to help you choose the right tenant. For example, if a tenant’s background shows a tangled history with the Tenancy Tribunal, it might suggest they’ve had difficulty talking things through with past landlords before they become a problem. Similarly, someone with a complicated credit history and a trail of bad debts might not be as solid on the finance front as they seemed when you met them at a viewing.
WHAT CAN YOU ASK?
When you’re choosing tenants you want to feel comfortable that they’re a good fit, including making sure that they’ll be able to pay the rent on time and look after the property. You can legally request the following information:
Remember, tenants are real people and renting is a two-way street. It’s equally important that you make a good impression on your tenants so they feel trusted in their new home and comfortable coming to you with any issues. You can’t ask questions that have no bearing on the tenancy, such as about their religion or ethnicity, just as you wouldn’t want them to ask those questions of you.
If you need more information, you can ask potential tenants to provide more detail so you can make an informed decision. For example, you can’t ask for a bank statement, but you can seek proof of income (so you can work out if the tenant will be able to cover the rent). You must have written permission from potential tenants to seek any information about them - it’s a good idea to include this in any tenancy application forms that you ask them to fill out.
HOW THE PROFESSIONALS CAN HELP
If you feel uncomfortable about asking prospective tenants specific or direct questions about their renting history or finances, you might find it easier to outsource the process to a professional property manager.
When you use a property management service, you can feel completely confident that they know what to ask. Asking tough questions is our job - we don’t back away from potentially awkward conversations about past Tenancy Tribunal matters or bad debts.
We want to ensure that we’re recommending the right tenants for our clients’ properties. We also have an obligation to prospective tenants - we don’t want to put them in a situation where they can’t meet all their financial commitments. We’re not going to put the wrong tenant in your property because that makes it our problem, not yours. What we want is a win-win situation, where the landlord and tenant are both honest, upfront and happy.
Juliet has owned and operated Quinovic Property Management (Nelson) since 2004. Previously, she worked in the banking sector for 10 years.
Sign up to our newsletters to stay in the loop with new content and news.