The question is redundant, you cannot control another person, so you cannot ‘know’ that they will pay the rent. The best you can do is get a professional agent so that all of you documents are in order right from the start and when they do stop paying do this one thing.
The truth of the matter is that you rarely have problems, Arlene my wife has her business Ezytrac Property Management (https://www.ezytrac.co.uk) that manages over 1250 properties UK wide and across the portfolio things go wrong all the time but as a percentage of the total is less than 3% have any problems whatsoever, and the real problems are less than 1%. Of course, when they do go wrong it’s painful, and that’s why you need to know this one thing.
Hey, guys. Property Search… Think Gladfish. I’m Brett Alegre-Wood and this is Property Rant.
So, how do we know that a tenant’s going to pay the rent?
And this is actually probably for beginner investors because once you’ve had a few properties and you’ve had them for a period of time and you’ve got… everything’s settled down, you realize that actually, it’s very rare that things do go wrong. And when they do, if you’ve got a good agent, you address them, it’s not an issue. So, how do we know they’re not going to pay the rent?
The reality is we don’t. We don’t control them, we don’t control their lives, we don’t control their circumstances. The best we can do is provide a property that has good, solid fundamentals. Shops, schools, transport links, major employers and major investments, you know, that’s attractive to the tenant, that’s well up kept, that any problems are sorted out, and if we actually sort that out and we deal with that stuff, then we’re more likely to put ourselves in the best position possible.
But that doesn’t mean that they’re not going to lose their job, they’re not going to get pregnant, fall in love, break up, you know, like all the normal life things that happen that can cause financial strain. So yes, we can do tenant referencing and we can do all that sort of stuff, but at the end of the day, you cannot control another person. And you can do the best you possibly can by getting a…you know, the real key is getting a really good managing agent because the reality is in my experience of over 20 years is, when something’s going wrong, it’s often not just an isolated incident. If they don’t pay their rent on time, you know, once, you might let them get away with. The second time, you know what? You better be ready to move them out because the reality very rarely does they come back and they pay up and do all that sort of stuff.
What you’ll tend to find is lots of excuses and things like that. And you can say, “Well, hold on. But mine’s an expensive property in a great area and all that sort of stuff.” Things still go wrong for people that live in those houses. You know, we have just as many things go for expensive properties as we do for cheap properties. Sure, cheap properties, you know, you can get into the housing association and things like that and they present their own issues. But if we’re talking about vanilla lettings deals, if you like, which are normal mom and dads, families, that sort of stuff, stuff happens.
You can only put yourself in the best position. You cannot control the other person. The important bit is when something does happen like they pay the rent late or they, you know, short pay it or whatever it is, that you have a managing agent that gets on top of them, gets on top of it quickly and really manages that well. And that is often the determination between having a real pain in the arse, excuse the French, or just having a seamless, effortless thing where yes, you may have to eject them, but you’ve got everything sorted, you’ve got everything in order and it just happens and it’s in process. And yeah, you may have to try and collect some money off of them and you may lose some money, that does happen.
So, you can’t control them, you know, but you’ve got to get over that and the reality is we’re talking less than 3% of the entire lettings. And we’ve got over 1,250 properties that have problems. And that’s any sort of problems from late payments through to actually delinquents through to major damage and things like that. It’s less than 3% of the time of the properties.
And obviously, some properties in more lower areas, yeah, that’s when you have a lot more problems in those areas when you’re dealing with a really low…low tenants, that’s not right. The low rental figures and low property prices because oftentimes, the spec of the property isn’t as good and things like that.
So, it’s not that the people are worse, it’s oftentimes that the properties aren’t up to the same spec, you know? But also, it can be that people down there struggle with money a lot more and they’re living on a more, you know, less than the margin.
Okay, guys, have a great day. Live with passion.