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Real Estate Matters: Good Tenants are Like Gold
Getting a good tenant into your investment property is just as important as buying the right property in the first place. Whilst periods of vacancy and associated loss of revenue make for anxious times for landlords, the most important factor of all in the smooth operation of rental properties is securing good tenants. The ideal landlord and tenant relationship is a two-way relationship on an equal playing field. This tends to be forgotten, particularly at times when the leasing market pendulum starts to swing towards a landlord’s market.
Having secured good tenants, keeping them is another challenge altogether. Tenants should be recognised for the value that they provide, and that is supporting their landlord’s investment returns and financing of their property. It is unlikely that the “treat them mean, keep them keen” approach is going to provide a basis for an enduring, long-term relationship and evicting bad tenants can be a long and drawn out process which will undoubtedly cost you a great deal of stress and money.
The Tenant Selection Procedure:
• Set your leasing criteria
• Pre - qualify the prospects
• Check references and qualify
• Create an apartment inventory
• Sign Tenancy Agreement and take a security bond
Be reasonable when determining the list, it has to be achievable otherwise you’ll end up with an empty property. Having said that, being discriminatory is okay, as you need to make sure that the tenant not only has the ability to pay but has willingness and demonstrated past record of paying. So the list might look something like this;
Gross income – four times rent
Income stability – verified via employment contract
Established banking – Macau bank account, preferably with internet banking
Rent punctuality – prompt, never late
Number of tenants – all tenants names must be on the rental agreement, no sub-leasing allowed
Pre- Qualify the prospects
Showing the property, whilst not requiring any great talent, is a time consuming business, we try to minimise the number of initial showings by pre-qualifying the tenants when they first make contact. Suitable questions might be:
• When are they ready to move in?
• Whether the number of people who intend to live there meet with my requirements
• Are they employed in Macau now and do they have a contract?
• Do they hold a residents (“white”) or non resident workers (“blue”) card?
• Do they have available funds now to pay rent in advance, the month’s rent and the security bond?
Check references and qualify
Previous tenancy references as well as employment references should be checked. We take a copy of the applicant’s passport, their blue/white card and ask for a copy of their contract quoting their monthly salary. If the prospective tenant doesn’t feel comfortable providing this information, perhaps their employer will provide a written guarantee of payment of the rental monies. Remember that rentals in Macau are paid in Hong Kong dollars, establish that the tenant is aware, capable and has the means to pay in this currency. If they travel regularly, ask them how they intend to pay their rent in a timely manner. Being away on business travel is one of the most common excuses given for late payment of rental.
Take an apartment inventory checklist
Even if you are leasing out a property that is not fully furnished, it is important to have an inventory of all soft and hard furnishings. We have a standard list we use which can be customized. Backing this up with a pictorial inventory allows for recording the condition of the property at time of rental and can assist if there are any disputes at the end of the rental period.
Agreement and take a security bond
A standard tenancy agreement should be sufficient to cover most circumstances. Meters of all utilities need to be recorded, the tenant needs to sign their agreement to the readings. It mightn’t also be a bad idea to ask for a refundable bond for utilities as these can add up if not paid and unless the tenant has changed the utility bills into their name, the landlord will be liable for payment.
A security bond of two month’s rental needs to be made.
So with a signed rental agreement, inventory checklist and monies in hand the tenant needs to be supplied with two sets of keys (not forgetting the building access card) and importantly the method and details of how to pay the rent. Last but not least, look after your good tenants and don’t give them a reason to move.
For further information please call me or visit our website Www.RLLMacau.Com, or visit us on
Www.Facebook.Com/JMLRealEstate we are always happy to give you our opinion and expertise whenever we can help.
Any comments or feedback on this column are welcome, and if you have a property related question
please e mail it us at: info@JMLMacau.com and we will respond to you in this column or by return E mail.
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