Top 5 agent inside secrets on how to ensure your rent is paid – Guaranteed!

There really isn’t anything worse than a property you classed as a good investment sitting there empty costing you money is there??

Oh wait…. Actually there is and that would be a tenant living in that property Rent Free whilst you pick up the tab.

Don’t worry, it happens to the best of us at times and even the most experienced landlords come a cropper to this. This is why we have come up with the top 5 ways to minimise this risk and as long as you stick to the process you will be guaranteed never to be out of pocket again.

What it covers……

● Setting foundations & expectations
● Homeowner V company guarantor
● Ways tenants pay
● Go with your gut

Plus your 5th guaranteed golden nugget tip below…..


1) Setting the foundations & expectation

You must vet your tenants 110% by having an in-depth application process, making sure you collect as much information as you legally and ethically can about them and their rental history.

Some of the personal types of questions you can’t really have in black and white, you can still find out by just having a general chit chat conversation with them to find out more on who this stranger really is. Ideally face to face you can gauge their body language. Unconsciously they will tell you much of their life story without even knowing it and this is a great help for you to get a full picture of the type of person they are.

{ Tip – Ask a question and if they glimpse up and to the right this shows deception }

Other ways you can find out more about a person using the tools you have is to Google their names, check their facebook, linked in accounts. If they have open accounts this leads to a nice transparent picture of said tenant.

We once had a lady who applied for a property and stated she didn’t have any pets, loan and behold her social media account profile pictures where she is cuddled up to 2 large breed and extremely hairy dogs who she referred to as ‘Her babies’ Now if they can lie about that then it doesn’t set her up on the best foot does it?

Be very upfront about your expectation, explain to the tenants the importance of paying rent and the implications on late payments for example that if rent goes unpaid after 14 days you will be charging interest on and or late payment of rent will affect any future references you are asked to give.

How many times have you had a tenant miss a payment in December?
Are they treating this month’s rental as an interest free loan to use towards buying
Christmas gifts?
My polite reaction to that would be that Christmas happens on the same day every year
so they have 52 weeks of planning! They are just taking the Michael out of you!

2) Homeowner or company guarantor

Some people take working guarantors however what happens when that person loses their job? = No guarantee!

With a homeowner you can apply for a charge on the home, ok so you may not get the money straight away but eventually you will as you have a right to that money.

Company guarantors are also very good however please ensure you read the ‘small print’ and you follow their company process.
For example : They may need alerting if the tenant has failed to pay within one week of it being due, or the tenant on application must not have a CCJ. The negatives of this will be the insurance policy is null and void.

Some of these company insurance type policies can really help if you need to take further as many will cover the cost of the missing rent, evictions and x amount of days until you re rent the property.

● Ways tenants pay
How do your tenants pay? Cash, standing order or direct debit? Which are the most cost effective and preferred ways?….

– Cash – Not too sure about you but the sight of a tenant paying their rent in cash makes me cringe! Why? Because you don’t know what hands it’s passed through nor the source of this ‘income’. It’s also a massive burden to check, register and bank and it’s really not a good use of my time.
– Direct Debit – Ok so there is a small charge with a DD and if a tenant pleases they can cancel the DD at any time BUT you will be notified at this point which would ring alarm bells and you would them contact the tenant to see whats going on. More often then not they are set up and it runs seamlessly.
– Standing orders – If you are going to choose this option ensure the tenant sets up the standing order with you on signing up if they have online / telephone banking. If not, ask them to complete a standing order form and they sign it then you send it to the bank. If you choose this way, call the tenant a week before it’s due to ask them to check with their bank that it’s been set up. If a tenant cancels this you will not be made aware until you do not receive a payment so it’s important you check the day after its due.

● Go With Your Gut!
Ever heard the saying ‘If it feels right, it usually is’ – Well the same goes for if it feels
wrong then it’s totally wrong!
If at any point the potential tenant has ticked all the boxes but something in your gut is telling you it just doesn’t feel right. Then 100% please trust your own instinct!

Golden nugget bonus tip.…

● Bank statements – We have seen many applicants which on the surface tick all the boxes yet when we take a look at the bank statements it’s very clear that their budgeting skills are non existent. So this is seriously the MOST important part of an application you must obtain.

But what do you look for?…..
Comfortable money in the bank before the next pay date
Regular rental payments in line with their current tenancy
Payments to utilities and council tax
Regular payments to online gamberlin sites
Large deposits to them from overseas (watching for money laundering)
Declining to give you this information

 

Need assistance getting on top of tenants arrears?
Call : 01482 351351
Email : Joni@HigsonHomes.co.uk
Whatsapp : +447940067511