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  • Tenant Referencing

    The ULTIMATE way to vet a tenant?

    With the news that County Court closures are lengthening the time it takes to get a court date to evict a non-paying tenant, it seems that tenant vetting & referencing is more important than ever before.

    What do you consider to be the ultimate way to vet a prospective tenant? What information do you ask for and what checks do you do? The best way to never get a bad tenant is ... to never let one into your property in the first place!

    But how do you ensure that you don't? 
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    The common route is to simply 'credit check' - which we do.

    However, this is heavily reliant on computer scoring and not intelligence. For example, we see lots of tenants with good credit scores, but from our insight information on their credit files, we can see that they have had Payday loans - for us, that suggests an alarm bell down the road.

    Because we have our own in-house credit check system, we have access to this information.

    Also, our best check is visiting a tenants home - I've got a great example tonight on one of my properties. We have a process whereby any tenants who pass credit scoring are approved in principle, subject to home vetting. Here we'll meet the tenant and their home owner guarantor (we check land registry to confirm ownership). 

    We use our Imfuna app to photo tenant/guarantor. This is date and geo-tag stamped. We then take photo and address ID. We then photo tenants existing lounge, kitchen and garden recording notes whether clean, tidy and house proud.

    So, back to my house tonight. A tenant applied with cats - We were warned that she'd been evicted for having '10 cats' at her last house. Unhappy landlord. Our chap visited - the house was spotless. Cats yes, but house trained. For me that is perfect. Also, imagine how hard it is for this tenant to find a house? How likely is it that she'll be moving from my house now? Now of course if our landlord had a stipulation of no pets, we could also discover this on the home visit.

    Home visits are vital to secure the best tenants and to deter the bad ones from applying. It's our best filter.

    The fact that we have a guarantor means that in the event of default, we can proceed against somebody with something to lose. We also carry out landlord checks and employer checks.
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    Thanks Glenn, that is great input.

    Visiting the tenant in their previous house is genius! I have 3 cats myself and know that they are very clean animals as a rule and we have some special foam that you can put on cat wee or doo doo that has enzymes in it that gets rid of the smell.

    Tenants can always be supplied with a can of this on moving in as a hint ... !

    I think I am also correct in saying that Experian now has some record of missed rental payments?Do you also use Landlord Referencing Services at all as part of the tenant referencing mix? 
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    Hi V,

    Could you tell me the name of the product you use to get rid of the smell of cat pee?

    Oh and going back to the question, i would take out insurance against non payment of rent and that buys me some time.
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    I remember watching a TV program around 2008 on a Blackpool property investor. She was an ex Nurse and I believe she had around 200 properties and had never had to evict anyone.

    The reason was if she had anyone missing a payment she went to their home and sat down with them to understand why and to see if she could help them. One way of helping them was she ensured they applied for any benefits they were entitled to.

    We have followed this principal ever since and it has been helpful in keeping any late payers in check.

    We have found credit check companies do not ask for bank statements. We always ask for the last three months statements. The account must be the one they have their wages paid into and their rent from. This proved useful recently when an applicant informed us they paid their rent on time and interestingly the Landlord confirmed it during the reference check. We noticed their rent wasn't paid on set days and were in part payments. This highlighted they had both lied. We refused their application on this basis.
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    I don't understand why a homeowning guarantor gives you any guarantee at all.

    What if they have lots of debts and are in negative equity, what does owning home do for paying anybody elses debt off

    Now if you obtained a RGI policy on homeowning guarantor, that would be a different thing.

    That would be worthwhile.

    If you don't have a RGI policy in place on the homeowning guarantor you would have all the time and expense of couts costs etc.

    Say they still don't pay you, what are you going to do.

    Ok say you manage to put a charge on the property, so what if it has negative equity.

    Ok what about an AOE, well if they are in a low wage job or have nothing left after all normal bills are paid, what are you going to get, nothing.

    In 6 years the debt would be statute barred.

    No having a homeowning guarantor would NOT satisfy me unless I could obtain a RGI policy on them.

    All your other methods though are brilliant.

    You clearly dedicate some time to these home visits which most LL wouldn't bother with.

    Though I can see the full efficacy of what you do.

    I have NEVER done this as I can't be bothered due to time and expense involved. Glenn Ackroyd said:

    Hi V,

    The common route is to simply 'credit check' - which we do. However, this is heavily reliant on computer scoring and not intelligence. For example, we see lots of tenants with good credit scores, but from our insight information on their credit files, we can see that they have had Payday loans - for us, that suggests an alarm bell down the road.

    Because we have our own in-house credit check system, we have access to this information.

    Also, our best check is visiting a tenants home - I've got a great example tonight on one of my properties. We have a process whereby any tenants who pass credit scoring are approved in principle, subject to home vetting. Here we'll meet the tenant and their home owner guarantor (we check land registry to confirm ownership). 

    We use our Imfuna app to photo tenant/guarantor. This is date and geotag stamped. We then take photo and address ID. We then photo tenants existing lounge, kitchen and garden recording notes whether clean, tidy and house proud.

    So, back to my house tonight. A tenant applied with cats - We were warned that she'd been evicted for having '10 cats' at her last house. Unhappy landlord. Our chap visited - the house was spotless. Cats yes, but house trained. For me that is perfect. Also, imagine how hard it is for this tenant to find a house? How likely is it that she'll be moving from my house now? Now of course if our landlord had a stipulation of no pets, we could also discover this on the home visit.

    Home visits are vital to secure the best tenants and to deter the bad ones from applying. It's our best filter.

    The fact that we have a guarantor means that in the event of default, we can proceed against somebody with something to lose. We also carry out landlord checks and employer checks.


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    Hi Paul

    I think we discussed the RGI v guarnator situation on a recent thread.

    My findings have been that by using home owning guarantors as a part of my strategy in finding the best possible tenants at the time,. I have a virtually nil arrears situation and a tenant base where I would class my worst quality tenant as 'ok'.

    This means that I am effectively insuring myself and am happy to do so as the RGI costs over the years would have been eye-watering (and a complete waste of money for me too).

    Youre right that a home owning guarantor does not give a 100% guarantee, but for me thats not the whole point anyway. As Glenn and Manc say, the notion of operating as they do means that you get closer to the family, and as a result, this allows common sense to operate in your decision making.

    For me a very typical situation is to meet the guarantor at the potential new tenants existing home. As Glenn says, this covers many aspects of 'common-sense' vetting. By definition the guarantors tend to be 40+ (I would say the average is around 55). Now, I have always found that as a general rule, and I will choose my words carefully here, older people tend to be less feckless generally than younger ones. They seem to understand the old-fashioned notion of 'paying your debts off' etc

    So, when I purposely and bluntly tell the guarantor that what they are agreeing to is to underwrite and guarantee payment of the rent for the total time that x and y are lgoing to be living there, and if they dont pay then we will simply send you a demand.

    I then explain that why the guarantor must be a home owner - so that if they dont pay the demand we can sue them with ultimate confidence - they are in no uncertainty as to the situation they are considering entering into after that!

    I makle no bones that I am giving them a total reality check - through fear.

    The next bit is crucial - their reaction!

    95% of the time, unsurprising to me, they are totally fine about it - because they are expecting me to say that to them - they have discussed it prior as a family. It is at this point they ususally make the very predictable jokey comment along the lines of 'Don't worry - there's no way that will happen - I'll see to that!' whilst casting a threatening eye, in a joking manner, to the potential new tenants.

    I could write the script.

    To conclude, to me situations like this, if a landlord can be 'bothered' to do the physical visit/meet are far more important than RGIs.

    In my opinion, RGIs can make some landlords a bit lazy as towards who they take on. Im sure I have many great tenants who wouldnt have passed and RGI check - yet they pay on the dot each month and care for the house. Ive also turned down many people who would have probably passed the RGI criteria too - because Id sussed out they were bad news from the start.

    Just my thoughts based on long-term experience.

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    Hi All

    We have found speaking to the previous landlord, ie not the current one, is very useful.

    The current landlord is often keen to, er, manage the reference to get rid of an annoying tenant.  However the previous landlord will tell it as it is, warts and all.

    That said, this is not always available as a check, and I appreciate that this is only one of several checks a landlord should consider.

    A letting agent I have used insists on seeing original payslips and bank statements.  So far this has given me a decent tenant every time, but for the properties in question we tend to be able to attract fairly good quality tenants, which makes their job easier.  Seeing original bank statements enables the agent to check their account conduct and confirms rent has been paid, and they can also tie up salary declared with the payslips.

    Tony

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    Paul - In addition to getting a Home Owner guarantor, we credit check them as well. This tells us last 6 years addresses, who they have applied to for credit, how much credit, of what term etc etc. If somebody took out a £400 payday loan on the 7th June last year, we would know about it. Oh - and we can take out Rent Guarantee Insurance as well if the landlord wants it.

    We used to get Mother Teresa as an additional guarantor to complete our belt and braces approach, but sadly she's passed.

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