Pre-screen your tenant with these questions

If you have chosen to go it alone and find your own tenant, you might find that you have several prospective tenants wishing to rent your property. But how do you choose one over the others? Maybe some insight into how we vet tenants will help you.

We look at three main areas when vetting a tenant:

The tenant’s credit & payment history

We draw a TPN RentCheck credit report to give us an idea of how well the tenant has paid their rent and other credit accounts in the past. It also tells us if they have had any defaults or judgements listed. You are welcome to draw this report yourself (with the tenant’s permission of course). It costs about R105. This report gives a credit score of A to F (there is no D). In most instances we would decline a tenant with an E or F, but we also look at the payment trend. In some instances, a person may have run into trouble – whether due to their own wrong-doing or circumstances beyond their control – but we can see a steady improvement in their payment behaviour.
Questions to ask: 
Do you have any judgements against you? If yes, for what amount and why?
Do I have permission to draw a TPN credit report? (if they refuse, they are a non-starter) 

Source & security of income 

Here we are looking for stability. First prize is someone with permanent employment who has been at the same company for several years.
Sources of income that are more risky include:

  • self-employment (some months are good, some are bad); 
  • commission (ditto); 
  • maintenance (ex-spouses can be fickle);
  • investments (interest rates & share values fluctuate) and 
  • rental income (tenants can be unreliable payers). 

In the case of less secure income sources, we might ask for a larger security deposit, or to see the self-employed tenant’s company financials.

Questions to ask: 
Are you employed?
For how long have you been with the company?
Can I have the contact details of your employer?
If self-employed: Can you provide audited accounts, failing which management accounts and bank statements of your company?

Affordability

As a rule of thumb, a tenant’s take home pay should not be less than three times the rent. Besides the rent, he might have also entered into many commitments that are a drain on his income: mobile phones, insurance, medical, security, credit card repayments, other debt repayments. To draw a realistic image of affordability, you should ideally have a good picture of these monthly commitments. Many landlords are impressed by a potential tenant with a fancy watch, clothes or car, but you always need to do thorough research.

Questions to ask:
Besides the rent, what are your monthly commitments?

Final thoughts

As the landlord ask for the contact details of previous landlords – preferably two or more – who will hopefully be able shed light on the tenant’s behaviour, for example did they respect the rules as laid out in the rental agreement or body corporate and did they look after the property. One word of caution, though, if a landlord is desperate to get rid of an unruly tenant, they might sing his praises.

And lastly, remember that it is against the constitution of South Africa to discriminate against a potential tenant in terms of race, religion, gender, sexuality, disability or age.