Have you bought an apartment as an investment and now want to rent it out? Choosing quality tenant is key for success. Let’s see how you can screen tenants.
The activities of many real estate investors end in a fiasco, mainly because they cannot select quality tenants.
What problems can occur?
The worst tenants can give you sleepless nights and cause significant damage. For example, this might happen:
- They stop paying you rent, but at the same time they refuse to move out of the apartment. Moving out a non-paying tenant is not as easy as it may seem at first glance. The tenant is protected by the Czech Civil Code.
- They may damage your apartment and refuse to compensate you. Proving that your tenant caused the damage is often difficult and sometimes you have no choice but to write it off.
- Some tenants do not know how to behave as residents, which can lead to complaints from the neighbours. Most often, these are problems associated with being too loud at night, too much clutter in communal spaces, or problems caused by pets, such as excrement or constant barking.
That’s why it’s important to learn to how prevent problems from starting, as you don’t have to face them if you choose your tenants carefully.
You can do this by following my advice.
Don’t underestimate your choices
The biggest problems with tenants start when you choose the wrong ones.
Preventing problems is much easier than solving them.
I dare say that 80-90% of issues with tenants occur because property owners have chosen the wrong people.
Therefore, conduct thorough checks on all potential rentors.
Most landlords do not do this at all. They often choose tenants only according to gut instinct, perhaps asking some passing questions about their occupation, family circumstances, and the reason they are looking to rent. The examination typically ends there.
How to check a tenant’s quality
Even the most problematic tenants try to appear in the best light before signing the lease and many owners are deceived by these first impressions. But what you should check for?
1. Look in the various state registers
The Insolvency Register
Check if the candidates are insolvent. You can find out from the insolvency register at Justice.cz. The information here is free.
The Register of Bankruptcy
You can find out whether the applicant has declared bankruptcy from the central register of the Executors’ Chamber at Ceecr.cz. One extract from the register will cost you 60 Czk.
The Solus Registry
Solus is an association of legal entities, which brings together major service providers such as telephone companies, banking and financial institutions, insurance companies, energy providers, etc. Solus.cz operates the Nejsemdluznik.cz service, through which those interested in renting can request an extract from the register. Thanks to this, you will find out if your potential tenant has any outstanding debts. The applicant must apply for the statement themselves, you as a landlord cannot do it for them. However, you can write a statement request together. For the price of 200 Czk, the applicant will receive not only an extract from the register, but also an extract from the central register of executions and the insolvency register.
2. Check their online footprint
See what digital trail the applicant is leaving behind. Enter their name in Google, Facebook, and Linkedin and you may learn something interesting.
If the applicant is a company representative, such as an executive, see if their company publishes financial statements.
Once, a company executive wanted to rent an apartment from me, and I found out that his company had not published financial statements for several years, while the old financial statements that were available showed losses of hundreds of thousands. Publishing financial statements is a legal obligation and non-compliance should be a warning to you. The applicant was disqualified by both facts. In the case of companies, also look at their websites, business pages on Facebook, etc. It will also tell you a lot about how the company works. An entrepreneur from a non-functioning company may have trouble paying the rent.
3. Trust your instincts
Many people suppress their intuition and rely only on facts. However, this means ignoring valuable signals. How do prospective tenants come across to you? Do you like them? Are they pleasant or do you get a negative vibe from their company? Listen to your inner voice, it will tell you whether to continue with the interested party or to end the meeting. Unfortunately, in our Western civilization, we do not learn to develop our intuition as much as we should. Although it is a skill that can be developed through training.
4. Ask questions and read between the lines
This is the hardest part. While the first two points can be done by anyone who can use the Internet and the third point by anyone with a slightly developed instincts, the fourth point of examination requires greater attention, observation, and even ingenuity.
The goal of asking questions is to reveal insincere actions and concealed facts. Those who tell you the truth will pass this test, but if they hide something from you or make answers up, sooner or later they will start to get tangled up in their lies.
You might think that asking questions is not difficult. This is true, asking the questions alone is not difficult, but asking questions to reveal insincere behavior or lies is not easy. It means that you must read between the lines and observe any discrepancies between oral expression and body language. Most people can’t do it.
Ask candidates why they are looking to rent, ask for references from employers or former landlords and then watch their reactions. Always ask for this information in person or at least by phone. Never through emails or forms. Written answers give bad tenants time to prepare their answers, so you cannot judge their reactions to know the truth.
During interviews, pay attention to what the candidates think of the law, following rules, interpersonal and neighbourly relations, etc. You can’t usually find this information by asking questions, but only by carefully reading between the lines.
What to do if in doubt?
It’s better to reject an applicant who, at the outset, you have doubts about than to try and solve subsequent problems once they have moved in.
The Czech Civil Code protects tenants more than landlords, so once they are in you are at a disadvantage. Evicting problematic tenants may not be at all easy.
If you have any doubts about the trustworthiness of the applicant, but still decide to rent the apartment to them, at least ask for a higher security deposit (you can request a deposit of up to three months rent) or rent the apartment for less than a year with the possibility of extending.
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Leave the worries about choosing tenants to us.
Article prepared by: Bc. Petr Podlešák, manager at RE/MAX Alfa
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