When we are homeowners who want to rent our property, we must seek to minimize the chances of default by our future tenant.
It is impossible to have zero risk, although following some recommendations that I once received from a successful real estate entrepreneur we can reduce the chances that a problem will ever hit us on the head.
- Identify the source of income
It is extremely important that we can identify the source of income for the person who will be responsible for paying the rent. By requesting a copy of the last 6 salary receipts, we will not only be able to know the average income of this person but also shed light on the place where he is employed, and see if he has job stability. For a candidate who works independently, it is important to request the registration date as a worker in this category, the last 6 self-employed payments and also to have copies of the invoices that he has issued to his clients in this same period.
- Rent should not exceed 30% of income
Just as banks around the world do so that their delinquency rates don’t bleed, we should also check that the rent of our future tenant, including the expenses related to the rent that are under their responsibility, does not exceed 30% of the monthly income he has submitted.
- Hire non-payment rental insurance
Insurance companies and banks usually offer insurance for non-payment of rent that usually costs between 3% and 5% of the annual rent. The insurance company carries out a feasibility study of the candidate, protects us against certain real estate deteriorations, covers the payment of the rents due in the event of this situation and also offers legal advice.
- Meet the future tenant
If we are going to allow a person to live in our property in exchange for an income, let us not have a meeting to meet the candidate. Invite him for a coffee somewhere and talk informally with him to get to know him more. Moments like these allow us to see the punctuality of the person and also feel if we are comfortable with someone who will be a long time in our environment.
- Write a good contract
It is important to have the advice of a professional who knows the law and who is capable of defending the interests of both parties involved. It will help you to know what procedures are necessary and what steps to take to deliver the keys. It is essential that you take an inventory of the house to be signed if it is not completely empty. Take photos of the appliances, and of everything that belongs to you and you want to keep.
These are simple, although important steps that we recommend taking forward if we plan to rent a property we own.
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