Ask any property investor, big or small, and they’ll quickly reveal just how important tenants are to their business.
You can have the most desirable, or cash flow positive, property in the world but if you have problem tenants (for any number of reasons) then your business model will be in danger from day one.
As a result, we wanted to distill our experience, and the experiences of our colleagues and Belfast Property Meet attendees, into a short guide to finding the best tenants in Northern Ireland.
Don’t worry if you’re not local to Northern Ireland as many of the notes and lessons below can be applied to any region or country.
What Makes a Good Tenant?
In this case “good” is subjective and relative to what you personally want but in our experience good tenants are reliable, pay their rents on time, have steady and stable employment and have capable incomes relative to their monthly rent payments.
To get this person we generally vet them both on and offline, in person and via the information they’ve provided during the application phase. This information usually includes their job, and place of work, their income, previous addresses, and if possible previous landlord testimonials.
Please be aware, regarding that last point, that previous landlords could be giving falsely positive reviews to move a bad tenant from their problem to yours. It has happened before and could happen to you so don’t rule it out.
Finally, in our experience it’s probably best to avoiding renting to friends or family. We’ll leave you to make the judgment call on this…
How to Find Tenants in Northern Ireland
To do this we’d generally recommend using a mix of the tools available and this would include the use of local property portals, websites like Gumtree, Facebook and last but not least, ugly boards.
You’ve read that correctly. One of the most effective ways to advertise for new tenants, even in 2017 and beyond, is to stick up an “ugly” board outside the property asking for tenant contact or applications. Try it and be very surprised…
Regarding local property portals here in Northern Ireland we’d recommend using Property Pal and Property News.
We’ve listed the pros and cons of each below:
- You retain complete control over every aspect of your property and business
- You have zero expenses (apart from usual maintenance, advertising etc.)
- Time consuming
- Added stresses (e.g. Hassle from tenants, collecting payments, dealing with tradesmen, maintenance issues etc.)
- Estate agents handle most issues
- Letting agency fees are a tax deductible expense*
*You will pay more tax if you manage your own properties. Letting agency fees are a tax deductible expense. In effect if you were paying £50 per month to your letting agent to manage your property you would pay £10 less tax as a 20% tax payer and £20 less tax if you were a 40% tax payer. It could be argued therefore, that the management fee would cost you £40 or £30 depending on which rate of tax you pay.
- Eats into profits
- Might still have to handle major issues
How do you maintain good landlord tenant relationships? First, we would highly recommend that you focus on keeping rents at an acceptable rate year on year. To do this you should be aware of the local markets surrounding your property and weigh-up what losing your current tenants could mean to your business if you do raise rents to an unaffordable level for them.
After that we would recommend that you focus on securing long-term tenants as they generally build a home and look after the property in question.
Finally always try to keep open lines of communication throughout the relationship and deal with maintenance issues as promptly as possible.