When first starting out in property investment it is important that you take the time to make sure you find the right tenant for your rental property, and gathering tenant references is a vital element of this process...
For a start they enable you to gain a greater perspective of who your potential tenants are as a person and what risk you may be at when striking a tenancy agreement with them.
Firstly, you need to make sure that your tenants have completed, signed and have sent to you their Tenant Application Form
This form allows you to access everything you need to allow you to start contacting their bank for credit checks and sending requests for personal references.
The references you need to ask for should enable you to gain an all-rounded perspective of your potential tenant.
The ones we recommend you contact are:
- Previous/current landlord
- Current employer
- Personal Referee
Acquiring each of these references, will give you a strong perspective of who your potential tenants are and will ensure that you know if they have not got a bank account; is starting work for the first time or has not rented before.
Having a problem getting references?
Should a tenant come to you with an issue gaining one or more of their references, here are a few extra tips to help:
No bank account
If they do not list a bank account on their application form, check to see if they have got a building society account instead. The fact they haven’t mentioned one, could have simply been a misunderstanding on their part.
If you then go on to find that they don’t have either, you need to tread very carefully. Without an account there is no physical proof that they will be able to provide you with the rental payments you need.
For example where is their current salary paid into? If they have got a job it needs to be paid into something somewhere. Cash in hand is not worth the risk.
Starting work for the first time
There will be cases where your tenant has just left school/college/university and has never worked before.
In this circumstance you can substitute this with a personal reference from a tutor. All you need to do is get your tenant to provide you with details of the educational establishment they attended instead, and their tutor could become your guarantor.
No previous landlord
With the property market as it stands, more and more people are opting to rent rather than invest in a mortgage. For that reason you will come across tenants who have never rented or had a landlord before.
In this scenario we recommend that you get your tenant to supply you with the details of two professionals who they know can vouch for their character e.g. Doctor, dentist or a solicitor.
Other things to remember
1. Never let your tenant send you a reference
We know this would make life simpler, but there is no guarantee that they have not written these references themselves. Instead, ensure that your tenants have provided you with all their referees’ details so that you can make direct contact yourself.
PLEASE NOTE: Due to data protection legislation you need to be careful how you use the information that has been provided to you by your tenants.
You should not for example disclose any of their personal information to anyone outside of those they have allowed you to.
2. The references you acquire should not be disclosed to your tenant’s unless their referee has given you permission.
3. Make sure you take the time to look over all the references thoroughly, and compare them to the credit checks we mentioned earlier.
Using all this information you should be able to determine if your tenant is the right one for you.
Still unsure how to tackle tenant applications? Contact one of our property experts today on 01908 309274 and let us help you to iron out any confusion or concerns.
Alternatively, why not sign up to one of our FREE 2 hour taster sessions. For no extra cost at all, you can take FULL advantage of the advice of trained property experts who have been investing in the property market for the last 20 years...