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High Risk And Low Risk Tenants To Rent To
You have the right to rent your place to anyone you want to. And you also have the right not to rent to anyone you do not want. Multi-national corporations spend millions of dollars building up systems to screen new employees. This is because they understand the potential costs of hiring someone who turns out as a disaster. You may not have a million-dollar budget, but you sure as hell should classify tenants into those of high risk and low risk. This is so that you will not put your own profitability into jeopardy.
You will however, have to follow these 4 rules when screening tenants on an investment perspective.
Rule #1: Your checks have to be as thorough as humanly possible. Use a professional service to help you.
Rule #2: You are not in a rush and have more time than you think
Rule #3: Don’t forget making a credit check
Rule #4: Conduct a phone interview first and be ruthless in discarding tenants you do not want
If you really went through with those 4 rules with a vengeance, survivors of your vigorous filters are already the types of tenants that many landlords would dream about. Being the meticulous calculative investor that you are, you are going to take it further with risk classification.
Pet Owners – High Risk
The common domestic pets are cats and dogs. A Chihuahua can be cute to look at and fun to cuddle. But when they are in the mood, they can urinate all over your walls, sofa sets, and carpets. Pet owners will inevitably insists that their pets are well-trained and you have nothing to worry about. It is at your own risks to believe pet owners on their word. Just remember where you kept the infra-red torch light in your store room.
The pragmatic thing to do as an investor is to employ a strict no-pets policy for your apartments. But maybe you would feel better to know that there are landlords who attack this niche by only marketing their apartments as pet-friendly. If you really have to rent out your house to a pet-lover, take note that you should charge more in rental for the potential added trouble.
Students – High Risk
Students used to be a tenant market that landlords salivate over. They come from somewhere far away to get a better education in the vicinity of your property. Since they can afford to travel such a long way via parent-sponsorship, their parents ought to be willing to fork out a steady rental stream to ensure their children have a roof over their heads. In fact, the assumption of a steady rental paymaster may be the only benefit of renting to students.
If you have a conversation with a real estate investor who had rented to students, what they can remember are probably the wild college parties, loud music, beer feasts, etc. You have to admit that students are probably not yet emotionally mature. And they can raise hell in your apartment under peer pressure.
Postgraduate students can however, be low risk tenants.
Retirees – Low Risk
If you are lucky enough to find retirees who are looking to rent, you better make your move fast. Because they are the best tenants. Experienced landlords will sign them up as long as there is a pen and piece of paper within reach. This is not to say that they are taken advantage of by landlords.
Retirees have basic needs and will be contented as long as those needs are delivered within reasonable time frames. They treat your property like their own. And for the most part, they take care of it and pamper it better than you will ever be able to. They make timely payments and can stay a tenant on your list for years as long as you show them respect.
White Collar Workers – Low Risk
White collar workers are those that perform jobs that require more soft-skills than hard-skills. These can include administrators, secretaries, nurses, bank officers, and basically office workers. They usually spend so much time at work that their home becomes just a place they sleep in. These types of tenants are usually more independent and reliable. They have a steady income and are generally very timely with rentals. They are also more self-conscious and will avoid confrontations while being fair and understanding.
They are also the group that are most commonly taken advantage of by landlords. You are of course, not one of those blood-suckers who wants every dollar of their annual bonus. When you run into one of these tenants, they are often at a stage where they are vacating their existing apartments for whatever reason. If you present yourself as a good landlord who is easy to work with, they are going to love you.
Young Couples – Low Risk
Young couples usually have very similar profiles to white-collar workers. The drawback is that they will eventually be looking for a bigger place as they start a family. Or when they obtain a financial windfall, one of the first significant things to buy other than a resort holiday is a new home.
You must be clever enough to see that the above is not a complete list of the types of tenants there are in the market. It is far from it. But they are the most common ones that you should take notice of.
Important things to note in your approach to landlord-tenant relationships
- Most tenants are really just looking for the basics. These include safety, privacy, cleanliness, accessibility, etc. It is your duty as s good landlord to deliver them.
- Your business is to rent to the tenants who you think is best for your investment. Don’t force your will, beliefs, and living habits onto tenants. Live and let live.
- When you run into problems, take steps to address them immediately no matter where the source of the problem is.
- Respect your tenants as individuals.