Seeff shares advice on what qualities landlords should look for when vetting potential tenants
As a landlord, the search for an acceptable tenant is quite similar to dating; you sift your way through many potential applicants before finally settling on someone with compatible values, assuming they are suitable and trustworthy. However, instead of favourite foods and shared love languages, your goal is to find someone who likes en-suite bathrooms and built-in swimming pools and will not cause heartache or your living room to disintegrate.
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Good Financial and Credit History
As a landlord looking for an acceptable tenant, the first thing you should consider for any potential applicant is the state of their financials and credit history.
Most people’s living ecosystems are difficult to navigate, with rising rental rates, increased cost of living and considerable student loan debt amongst younger rental candidates. In light of this, it is no surprise that payment problems remain a primary concern for landlords when looking for an acceptable tenant.
Non-payment of rent can cause you to fall behind on your mortgage payments, business expenses and other pending bills. Furthermore, chasing down late payments from difficult tenants is every landlord’s nightmare and a massive waste of time and energy. A rental applicant’s overall credit history is a solid indicator of whether they are an acceptable tenant and if you will have trouble collecting rental payments from them in the future. When screening your potential tenants and analysing their credit history, you should pay attention to the following factors:
- Credit Score
- Late Payments
- Total Amount of Debt
- Derogatory Credit Marks
When looking for an acceptable tenant, you, as the landlord, should evaluate their credit history against the primary credit score factors to determine their financial accountability. As part of the vetting process for discerning an acceptable tenant, you can also request credit reports from your potential tenant using a trusted credit reporting agency. These credit reports should come in a legible format and contain a detailed history of all payment information and data security for renters. A poor credit history often stems from a lack of employment and income instability.
Stable Income and Employment
The next thing you should consider as a landlord looking for an acceptable tenant is their current state of employment and whether they have a stable income. As per the industry standard rent-to-income ratio, a tenant should earn three times the cost of rent in their monthly salary, although these standards could vary by province.
An acceptable tenant will willingly give an income estimate during the application process. However, this is not always reliable, and it is crucial to verify their income. In addition to conducting your own research, there are free and paid apps available to provide the following helpful information:
- The amount your tenant pays towards balances
- The variations of balances they carry
- The sum of the money that they spend
Rental apps verify whether an applicant’s estimated income aligns with their current salary, allowing you to determine whether they are an acceptable tenant. Applicants can share and further verify their information before signing contractual agreements, lowering the risk of future complications, improving trust, and saving you time.
As a landlord, it can be tricky to determine how much to charge your tenants each month. While rent calculating tools help you determine if your financial expectations of your tenant are fair, they don’t indicate whether your property is being charged profitably. Determine whether your asset is working for you using Seeff’s calculator.
No Criminal Record
Landlords seldom consider the possibility of undisclosed criminal records and choose acceptable tenants based on their instincts, which is not always wise. A thorough background check allows landlords to avoid applicants with serious convictions, thereby protecting the neighbourhood.
In South Africa, verifying an acceptable tenant’s history means requesting a criminal report via the SAPS. However, applying is simpler than ever before, with digital platforms made readily available to the public. Huru allows citizens to capture a person’s fingerprints and verify their criminal status. Potential tenants can prove their status by scanning their fingerprints online, at a Huru branch, or via call-out. Results take anywhere from 2 to 48 hours to become available via the app, making the process convenient and somewhat faster than applying via SAPS directly. SAPS charges an R160 application fee for direct applications, while Huru’s prices start at R299 per application.
As a landlord, note that a tenant’s digital consent and ID number are required before any legal details can be checked at SAPS, regardless of which system you use. In addition to this, eviction records will not show up on criminal background checks unless there is a record of past charges settled in civil court.
Responsible Renting Habits
An individual who treats the rental property with care and respect is an acceptable tenant. Excluding fair wear and tear, the property should be treated well and restored to its original state before being handed over to the next tenant in line. An acceptable tenant has the necessary income, is willing to pay, is trustworthy and has responsible renting habits. A few habits of good tenants include the following:
- Open and honest communication
- Respect and sensitivity towards neighbours
- Good organisational skills
- Cleanliness
- A clear understanding of the lease agreement
Acceptable tenants discuss maintenance issues, look after the property, and pay their rent on time. An especially desirable tenant has renters’ insurance to help cover the cost of their possessions in the event of damage or theft. As a landlord, this means you will not struggle with unexpected expenses that your tenant is unwilling to pay. In addition, the renter’s insurance covers damage to the property caused by negligence and relevant court fees.
If you are concerned and unwilling to rely on your tenant to be the responsible party, consider landlord insurance to protect your property investment.
Thoroughly vetting applicants and determining whether they are acceptable tenants is crucial. It is wise to decline applicants who are disrespectful, unreliable, and unpleasant to deal with before any legally binding documents are signed. Take the time to sift through applications and conduct background checks before deciding on an acceptable tenant. Being rigorous in your vetting process limits the likelihood of complications further down the line.
At Seeff, we can make finding your ideal tenant a hassle-free experience. List your property on our website today to ensure your investment and rental process is handled professionally, or learn more about our marketing services.
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