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Now that you hopefully are thinking in a balanced way and want to let your property successfully and avoid potentially bad tenants, you need to go out and let your property. Here is the first step to consider.....
The first thing you need to do, is research your market. You may ask, how does this avoid eliminating bad tenants?
Simple, once you know your market you will also know more about the
type of tenants that are attracted to that market and so have a better
understanding of what you are dealing with. This is very important to
keep in mind when you start getting to the applications.
If you are letting out a property in a very up-market area, it makes
sense that you will need a person with a certain income level capable
of paying that kind of rent and in your checks you will identify if you
are dealing with the right person or maybe just a person that may end
up as a bad client in the long run, leaving you with debts.
In a different market, such as low-income areas, you will take a very different view of applications.
So, second step is to know your area. I’m assuming that if you bought
in an area, you more or less know something about it.
Now it is
time to do rental research and if you are in a complex even ask a few
of the other owners that are letting. Ask of their experiences – you will
learn a lot just from this simple exercise. It costs nothing to ask a
few owners, who have been letting for a while, what kind of tenants
they got over the years and what they learnt from that experience. You
can do the same research with a few local letting agents.
Second reason to know your area is because of a simple rule that the
rent has to be market related. In the Letting Workshop we teach about
market related prices and why a tenant can take an investor to the
rental tribunal if the rent is not market related, as it may be too
high. The tribunal can actually force an investor to reduce rent, if
the rent is not market related. This is to be avoided of course.
Third reason why you need to know your market is in the event that you
want to, or will need to, outsource to a letting agent. That is a more
advanced step for some, but knowing your market is essential for many
more reasons other than just those issues.
In summary, your second step to successful and profitable letting,
while avoiding bad potential customers, in this case tenants - is to
learn about your market. This could be more than one market if you have
more than one property.
In the next post we will be talking about the MOST IMPORTANT step in
this process, the Third Step in Eliminating Potential Bad Tenants.
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