How to choose a good tenant

When you’ve got an empty rental property and you’re feeling under pressure to make sure that the rent keeps coming in, it’s easy to be complacent and “go with your gut”. While it may work sometimes, the cost of allowing a potential “nightmare tenant” into your property can be far greater than a few weeks missed rent! Firstly, you need to have a pre-prepared application form. Sure, you might be able to remember what questions you need to ask, but at the very least, you should get signed permission to;

get references from current and previous landlords
get references from employers
access their credit history
provide personal information to third party agencies if necessary

And of course you need to know their;

full legal name
phone numbers
email
current and previous addresses
current and previous landlord’s contact details
smoking status
details of any pets
details of all people intending to live at the property

I also require their;

driver’s licence number
contact details of next of kin

The “next of kin” question may sound odd but there’s two very good reasons for asking it. One is that if there is a crisis with the tenant such as a serious illness or injury, you have someone to contact for help. The other is that if there is a crisis with a disappearing tenant, you have somewhere to serve notices and court documents!

Tenant references from previous landlords

Have you ever seen a bad reference? Of course not, so why would you accept a written reference without phoning the person who wrote it?

I once saw an excellent written reference from a landlord but when I phoned them and asked a few leading questions, it turned out that the tenant was unreliable, often behind in rent and was paying less rent than the property they were applying for.

This is why you should not rely solely on references from a current landlord. More than once, I’ve spoken to a prospective tenant’s current landlord who has given an undeservedly-positive reference simply to assist in getting the problem tenant out of their property and into mine!

It’s also a good idea to ask what the referee’s relationship is to the tenant. Sometimes you’ll discover they are relatives, which may change your view of the reference.

Employer references for tenants

Employers can often provide important information about the tenant, such as their reliability, character and attitudes. It’s also a good idea to ask if the applicant is permanently employed and if they work full time. I have been told by an employer that the company was closing down and the prospective tenant was about to lose their job. That saved both the tenant and myself from a difficult situation.

Tenant Credit Checks

A credit check can give a useful insight into how the applicant manages their money. You can see what sort of credit applications they have made and also if there have been any bad debts and collections. This can sometimes be misleading, as not everyone who has had bad debt is a bad tenant. One thing to check is whether or not the debts have been repaid. If not, there may be pressure on the tenant to make payments that will reduce their capacity to pay rent.

Free Tenant Application Forms

There’s a couple of forms I use. One for tenant applicants and one to get further ID details from tenants that I have accepted. You can download them below. Feel free to copy and change them to suit your own purposes.

Tenant Application Form
Tenant Identification Form

In Summary

Even with preparation, things can go wrong. The best advice I can give is to not take short cuts or just rely on your “intuition”. One of the worst tenants I ever had was well spoken, well presented and worked in a professional capacity for Housing NZ. I thought… “Ahh, she seems lovely and a Government employee… no problems here!”. I was stupid and inexperienced! Weeks later, she had taken been fired from her job, fallen way behind in rent and taken off in the dead of night, leaving the house a mess and full of her junk. It was the start a trail of tenancy tribunal hearings for landlords all over the country. I was $2000 out of pocket and it took me four years to get it back at $10 a week garnished from her benefit. WINZ were not helpful and I had to contact them multiple times to ensure the money continued to be deducted. Do not make exceptions for anyone!