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Everything Landlords Need To Know About Finding Good Tenants

Finding Good Tenants

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Tenant Referencing

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If you’ve found yourself here, it probably means you’re trying to find good tenants without the help of a traditional high-street letting agent. Wise decision, and you’ve come to the right place.

In this section, I discuss all the steps required to find quality tenants quickly, including how to reference tenants, and how to advertise on the UK’s biggest property portals like Rightmove (in order to maximise your chances of generating enquiries from prospective tenants)!

You don’t need a high-street letting agent or their extortionate fees!

A common misconception is that letting agents provide us with a skill set which can’t be duplicated by the average person/landlord. We assume that they have an advantage over us by having all the trade tools and resources. It’s all nonsense.

All agents provide us with is a service which most landlords don’t know enough about to confidently duplicate. But when you break it down, it’s not really that difficult or time-consuming to learn the essentials and more, which will enable us to find and manage tenants ourselves… for a fraction of the cost!! In fact, the methods I discuss in this guide won’t cost you more than £60. Now let’s compare that to prices the average high-street agent charges.

How cheap finding tenants can be

I’ve seen agents charge between 8%-15% of the rental income for their services (depending on the type of service). The most basic service agents’ offer is typically a “tenant-only” service, which is where an agent will find a tenant and leave the management role up to the landlord.

Let me show you how the figures stack up with a real example:

Let’s assume an agent has found me a tenant willing to sign a 12 month agreement. The rent is £1000 per month. Based on the lower end 8% fee, an agent would charge £960 as a fixed annual fee for their service. On top of the regular service charge, most agents charge a renewal fee, which means I would need to pay an additional annual fee if I wish to keep the same tenant after the 12 months expires. As you can see, the cost can easily escalate, and it usually does.

Over the past 5 years I haven’t used a single high-street agent, and my cost for finding tenants has been between £0 – £100.

The reality is, the internet has made it incredibly easy (and cheap) for landlords to find and market their own properties without the use of traditional high-street letting agents. One of the biggest enquiry generators for letting agents are UK property portals like Rightmove & Zoopla, but we don’t an agent in order to get our property on there, we can do it ourselves through self-service Online Letting Agents, the biggest being OpenRent.

Believe me, long gone are those days where we need to walk into a letting agents office and rely on their notably poor service and unjustified pricing structure (which are famous for being riddled with hidden fees). And that’s because we now have resources available at our disposal – the same resources professional letting agents use – to do the job ourselves, only with more care. Bear in mind, agents do get it wrong. Frequently. So why pay them to find a tenant when there are no guarantees they’ll be any good (after all, that’s all landlords really want, good tenants)?

So, it’s your call, you can either spend £1000 on an agent, or learn how to do it for £0 – £100. It’s a no-brainer for me. Remember, a buy-to-let investment is a business, so it’s about keeping costs down when and where it makes sense.

How to find tenants… efficiently and cost-effectively!

Here’s a few ways landlords can maximize the chances of finding tenants efficiently and cost-effectively, consequently minimizing void periods and saving a pile of cash!

Do you need to use all the methods listed? Not necessarily. But obviously the more methods you utilise to market your property, the more enquiries you’re likely to receive.

Marketing

Before even starting the finding process, you need a strategy.

Well, not quite a strategy, we’re not invading a county here. But you will need to determine what it is you’re actually offering and how you’re going to deliver it.

It doesn’t matter if you’re leading the search party to find tenants, or whether you’re passing the responsibility onto a letting agent, you still need to ensure any marketing material put out there is appropriate and effective.

Referencing / Viewings

Generating enquiries is only the first step of filling your vacant property, and it’s definitely NOT the most important step.

Finding “good tenants” is key, because bad ones will chew through your time and profits, and quite possibly sink your entire investment. And trust me, there’s no shortage of bad tenants out there.

It doesn’t matter how or where you source a tenant, whether it be through an experienced local high-street letting agent or whether you take matters into your own (un)experienced hands, landlords are ALWAYS prone to falling victim to rogue tenants. Remember, if you’re using an agent, and they get this part wrong, it will cost YOU, not the agent.

The best we can do is minimise the risks, and the best way to accomplish that is by thorough tenant referencing, and that truly begins at the viewing stage.

Lettings agents take viewings on a day-to-day basis, they’re allegedly the professionals.

Many landlords use the services of letting agents purely for the avoidance of not having to deal with viewings, and that’s cool. I totally get it; taking viewings can be a complete pain in the ass. However, in my opinion, you’d be much better served taking your own viewings (if you can).

After years of experience, I’ve come to the realisation that landlords are inherently always going to be better equipped at referencing tenants and finding tenants than an agent, and that’s because we will always naturally care more about our property than anyone else.

So that means, during a viewing, we’re more likely to pick up on signs which make it clear whether or not the applicant is suitable, and these are signs an agent, through no fault of their own, aren’t genetically wired to detect. I’m talking about paying attention to things like mannerisms and hygiene (yes, really), both crucial qualities that we all want in a tenant, agreed? We all want a polite tenant that upholds certain standards of hygiene, right? These are aspects some agents completely ignore, because they’re busy focusing on payslips and employment references. But the reality is, there is so much more to a ‘good tenant’ than simply what’s on their application form, and landlords are generally better at processing and detecting those other attributes that make for a good tenant. But more importantly, recognise when they’re missing.

If you’re not convinced, here’s a more in-depth article on why I believe landlords should take their own viewings.

If you are convinced, and you’re ready for the challenge of taking viewings (wise decision, by the way), here are a few of my top tips:

Don’t accept the first interested tenant just to keep the void period to a minimum: new landlords are often so eager to fill their vacancy ASAP that they end up accepting the first application for the wrong reasons.
Yes, the first application might legitimately be the best applicant, but it’s dangerous and high-risk to accept the first interested applicant just to keep the void period to a minimum!
It’s usually best to take the time to assess all applicants so you get an overall better picture.
Don’t stop taking viewings: so many landlords make this reckless mistake, so I urge you to refrain from falling victim because it may end up costing you.
Do NOT under any circumstances stop looking for tenants until you have completely secured a tenancy, which means someone has 1) paid their deposit 2) paid their first month’s rent 3) signed contracts 4) moved into the property (strictly speaking, point 4 should not even occur unless 1-3 have been completed).
Until all the above is fulfilled, keep on taking viewings and processing applications. Tenants frequently delay move-in dates or pull out of the deal all together, and the majority of the time, there’s little landlords can do to recoup that lost time/money because nothing has been signed.
Don’t take your tenants’ word or allow them to earn your trust at this early stage, regardless of how much interest and intention they show, it means nothing until they actually move in. Absolutely NOTHING!
Be flexible: try to be flexible with you timing and availability. You want as many people through the doors as possible, so if that means you have to postpone meeting your mates down the pub, to squeeze in a viewing, then so be it. Tenants rarely wait around, so if you leave them waiting too long, you’re effectively telling them to go away.
Know your property: you should know the details of your property, which includes: 1) how much the council tax is 2) which utility suppliers are currently connected to each service 3) how the boiler works 4) location of local amenities. The more you know, the better. Be prepared.
Be honest: if you don’t know the answer to a question, be honest. Don’t go down the path of fabricating answers, because it will come back to haunt you. Furthermore, don’t make promises you can’t keep, always be direct and honest.
Cover all the essential details: reconfirm with the tenant what you expect in terms of rent, the length of the tenancy and the conditions you have in place regarding smoking and pets.
Ask questions: don’t be afraid to ask the tenant relevant questions, like why they’re vacating their current premises, how much they’re currently paying etc. Be curious and don’t be shy.
All these questions will help give you a sense of the tenant’s character and intentions, which is extremely important.
Be on time: The only thing worse than knowing little about what you’re selling is turning up late to sell that product you know so little about. Be respectful by being on time. Punctuality goes a long way and starts the process off on a positive note.
Don’t be pushy: if you need to force a hard-sale, then there’s something wrong with the property. If you did your homework and prepared your property appropriately, it should sell itself.