Tips for choosing a great tenant

Choosing the right tenant for your rental property is crucial to ensuring a smooth tenancy and protecting your investment. A poor tenant can lead to significant costs and legal complications, so it's essential to carefully vet applicants.

Key characteristics of ideal tenants

An ideal tenant has the following attributes:

• Stable employment: Financial stability is key to consistent rent payments.
• Good credit score: A strong credit history indicates that they pay bills on time.
• Good communication: Tenants who communicate well with landlords help resolve issues quickly.
• Respectful and reliable: Tenants must respect your property and the terms of the tenant agreement.

5 Tips for selecting the best tenants

1. Conduct thorough background checks

Before selecting a tenant, it's essential to verify their background. Look into their:

- Criminal history: Check for any criminal records that may be a red flag.

- Judgments or evictions: Ensure they don’t have a history of legal issues with past landlords.

- Identification: Verify their identity with a valid ID or passport.

- Tenant rights awareness: Tenants who understand their responsibilities are more likely to honor the tenancy agreement.

2. Assess credit scores and financial stability

Conduct a credit score check through an agency like TransUnion. A good credit score typically reflects financial responsibility. You should look for scores in the "good" to "excellent" range:

• Excellent (767-999)
• Good (681-766)

Additionally, confirm their employment status and monthly income. You want tenants who can easily manage the rent without struggling financially. This can be further validated by checking their bank statements and payslips to ensure they have a steady income stream.

3. Pre-screening potential tenants

Before setting up a formal interview, conduct a pre-screening to filter out unsuitable tenants. This process helps narrow down the pool of applicants and ensures you're only meeting with serious candidates who meet your basic criteria. Here’s what to consider:

• References from past landlords: Ask for contact details to verify their rental history.
• Basic requirements: For example, confirm whether they agree to the lease term, whether they have pets (if your property isn’t pet-friendly), and if they’re comfortable paying a deposit upfront.
• Communication preferences: Some tenants prefer email or WhatsApp for communication, so it’s essential to ensure you're comfortable with their preferred method of contact.

4. Interview potential tenants

Meeting the tenant in person or via video call helps you assess their personality and whether they'll be a good fit for your property. During the interview, ask questions like:

• Move-in and length of stay: Confirm their move-in date and how long they intend to rent the property.
• Financial preparedness: Ask if they are ready to pay the deposit and rent immediately.
• Living situation: How many people will be living in the property, and will there be regular visitors?
• Property care: Inquire about how they plan to maintain the property, especially if you are concerned about high maintenance issues.
• Long-term plans: Find out if they foresee any life changes that may affect their tenancy, such as relocating for work.

Under the Rental Housing Act, landlords must provide tenants with a written lease agreement that outlines the tenant’s obligations, including the maintenance of the property and payment of rent. Ensuring tenants understand these responsibilities helps to avoid disputes and ensures compliance with legal standards.

5. Trust your instincts

Even if a tenant seems perfect on paper, trust your instincts. If something feels off, it’s worth considering. However, don't dismiss someone solely based on lifestyle differences, as long as they respect the rules and property.

Attracting and retaining quality tenants

Making small property improvements can increase your property's appeal and value.

- Energy: Install a battery backup or solar system to keep key appliances running during load-shedding.

- Gas Appliances: A gas hob ensures tenants can cook during power outages.

- Security: Adding CCTV cameras enhances tenant safety and property value.

- Smart Geyser: A Wi-Fi-enabled geyser timer helps manage energy use.

- Streamlined Payments: Digital platforms like PayProp simplify rent payments and management.

Ensuring prompt maintenance and including amenities like high-speed internet can further enhance tenant appeal.

Tenant vetting solutions

Landlords have access to several companies that provide tenant vetting services to ensure reliable and trustworthy tenants. Here are three notable companies:

• TPN Credit Bureau: Specializes in tenant screening, helping landlords check rental payment histories and perform credit checks.
• Tenant Profile: Offers detailed reports on creditworthiness, rental history, and background checks.
• PayProp: Provides a Tenant Assessment Report with credit scores and rental payment history from other PayProp agencies.

These companies assist landlords in minimizing risks by thoroughly vetting potential tenants.

Renting to self-employed tenants

When renting to self-employed tenants, it’s essential to focus on their ability to provide consistent proof of income, such as bank statements or tax returns, since they often lack regular payslips. Unlike traditional employees, self-employed tenants may have fluctuating monthly earnings, which requires landlords to review a longer financial history (typically 6 months) to assess stability. Additionally, self-employed individuals may rely more on creditworthiness and responsible debt management, making a thorough credit check crucial in evaluating their reliability compared to salaried tenants.

Rental agent considerations

When real estate agents assess tenants, their approach often differs from that of individual landlords. Agents use more comprehensive tools, such as data-driven tenant referencing and detailed background checks, to evaluate potential tenants' financial stability and rental history. They also ensure that the tenant screening process complies with legal standards, such as the Protection of Personal Information Act (POPIA), to safeguard tenants' personal data. While landlords may rely on references and their instincts, real estate agents often have access to advanced platforms that provide deeper insights, reducing the risk of selecting unreliable tenants.

Conclusion

In South Africa, tenant selection is governed by specific regulations under the Rental Housing Act. It’s crucial to understand that evicting a tenant without following legal procedures can lead to complications, which is why careful tenant vetting is important. According to the law, landlords must provide a tenant lease agreement that clearly outlines responsibilities, including the tenant's obligations for property maintenance and rental payments. South African courts emphasize the protection of tenants' rights, meaning that tenants cannot be evicted without proper cause and court orders. Therefore, it's essential to select a tenant who understands their responsibilities under the lease, adheres to preventative maintenance duties, and can demonstrate long-term financial stability.