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11 Ways to Avoid a Nightmare Tenant or Even Worse - a Squatter

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Please Note: We are happy to share our knowledge with you, please know that you MAY share, or send this report (as a complete report) to anyone you think will benefit from it!!! Disclaimer and Legal Notices: The views contained in this report are the views of the author. The author reserves the right to alter or change this report without notice to reflect changes within the industry. While the author has made every effort to maintain accuracy, any errors or omissions are not his responsibility. The advice contained herein is not meant to replace legal, financial or other professional counsel, and should be used in conjunction with governing laws and regulations.

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If you have a buy-to-let property investment then this report is a MUST READ!
There is a huge amount of information on the Internet about selecting tenants and advice in regards with lease agreements and many other pertinent subjects. This report is not there to replace all that, you must still read all the legalities related to lease agreements and procedures. This report was written to warn property investors with buy-to-let properties of the pitfalls associated with tenant screening and selection process. These are a few points that other investors have been faced with in real life and have learnt from them. Now you will also have this additional information in your arsenal to make educated decisions in your selection process and avoid a lot of heartache.

Why is this Information FREE?
This report is not FREE, it is just FREE of charge. What this means is that we ask you in return for the knowledge that we are sharing, to join in the Property Investor Network forum ask questions and share your experiences. Whenever you can, forward this report to whom ever it can help. Feel free to invite as many people to the website as you want. We want to create a true community with great value for investors. That will be your small contribution to benefit the community in return for free knowledge. Above all if you know people that are renting any property to tenants, forward them this report, it might just help them in time of need. Let us know or your comments and whether you found this information helpful. Writing to me at: Sean@propertyinvestornetwork.co.za

Happy Investing!

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Lets get started…
While trying to qualify the best tenants, under the stress of having to pay a mortgage bond every month, a lot of small issues of high importance can be overlooked. Often unscrupulous tenants take advantage of situations. Some are very good at doing this, and you must know what to watch out for. The next 11 points are taken from real life experience of investors. They had to face these situations, more than once. In each case they had to make clear-headed decisions, on the spot, without risking their investment or turning away good tenants due to excessive worry and stress.

1.

Identify the Potential Tenant on the First Call
When talking to a potential tenant on the first telephonic interaction, ensure that you ask all the necessary details that identify the person. Their full name, telephone number and maybe email address. If you can’t call them back or the email is not valid and bouncing, the red light should go on already. Furthermore, it will also help you identify if the full name, initially given, if it is the same name written in the ID book. Some people walk around with many identities and false IDs, for reasons that you do NOT ever want to find out. Double identities have been found in two ID books, for example a representation of one married name and one unmarried has been also encountered. You don’t want to rent your property, which is one of your biggest assets, to anyone that can’t be identified and verified to be the legitimate identity of the person. If a person is hesitant about their marital status, can't decide if they are married or not, it would be very wise to reject their application. If you can’t identify and verify the person, you should immediately reject the application.

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2.

I Need the Keys by Tomorrow!
This is a very known exercise to get occupation of a property without the proper process and checks. Be aware of the last hour, immediate occupation requests. Some investors have been faced with a situation where a potential tenant calls to rent a property in the condition that they must take occupation within the next day or two, sometimes even the same day. Often they say that the deposit is not a problem they have cash with them, and will pay in cash as long as they get the flat the same day or next day. The excuses are usually that they lived with family and had a fight, came over from another city and have nowhere to stay for some reason or another, and so on. The reasons are not important, the situation you are faced with is. If this is the case, you will be stressed to fit in all the required procedures quickly. You will have only a couple of hours to do ITC and TPN checks, get the copies of IDs of tenants and the pay slips for proof of income and sign on lease agreements and give them the keys, all in a couple of hours. Though stressed, it can be done and it has been done successfully. But in cases where the tenant is not a good one and is just trying to get the property, they will trip you in these couple of hours. They will tell you that this is urgent and don’t have the ID with them, that their pay slips are at work and many other excuses. If you are furthermore stressed to pay the bond at the end of the month and they show you the cash, you can make some big mistakes in these couple of hours. Such as: don’t complete your process, don’t call a reference, don’t have time to verify information on the application forms, and then you can end up with a non-paying tenant and worse a squatter. In this case, take your time, do everything with a clear mind, even if you do give them the keys to the property in 24 hours or less, ensure that in those 24 hours you have done all the necessary checks, without leaving anything out. Ensure that, they filled in correctly and fully the Tenant Application Form, you checked references, did ITC

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www.PropertyInvestorNetwork.co.za - Investor Knowledge, Community Forum and Portal and TPN checks, and that you received copies of IDs of ALL occupants and proof of income, and that you signed them on the lease agreement. The main things you should never leave out of the process, is the references, check place of work, identification and pay slips. If you do encounter a bad tenant, funny enough they won’t mind signing the lease agreement immediately, often without even reading it, or the patience for you to explain it to them. All they care about is that you do not find out too much about them. If they intend to be bad tenants, lease agreement or not, they won’t mind either way, but to put you at ease, they will be very willing to sign anything. Investors are often fooled by a willing tenant that only wants to do sign the lease agreement and give you the money. That does not mean that he also wants obey the lease agreement, just because he is so willing to sign it. If you encounter honest tenants in distress for some real reasons, they will do everything possible to provide you with all the necessary documentation quickly and help you do anything necessary to complete the process correctly. If you can’t complete the full process in the required time, you need to make a harsh decision: either take the risk that you could be entertaining squatters, or just tell them they either give you time to complete the process of you move on to the next potential tenant that has the time. Even if you won’t find another tenant as fast and you will end up paying the shortfall that month, it would be far cheaper than ending up with bad tenants and evictions costs. Remember, you have no obligation to play the good Samaritan.

3.

Missing Information
Check that the information on the application form is completed fully. Often applicants do not put their income on the application form, or leave one applicants information totally blank (the spouse information for example) or other vital information. Many don’t do this intentionally. Some don’t feel comfortable and others just rush when filling out the form. 5

www.PropertyInvestorNetwork.co.za - Investor Knowledge, Community Forum and Portal If they leave the application form blank for one applicant, often it is found that the main applicant (for example the husband) is clear with ITC and everything is fine, but the spouse isn’t. Now, you may say that this is fine, as the main applicant pays the rent. But what happens if the couple splits up and you are left with the other person to pay the rent and they can’t, but you never checked, so you couldn’t possibly know. In this case, you will be left chasing the main applicant for the money (or even both) while the other is living rent free for as long as they can. It is your responsibility to check on the spot that all the information is there. The reason you should check on the spot is very significant. If you see a missing piece of information and ask the applicant to fill in please, you will get a response that should tell you immediately if they are trying to hide something, or just unintentionally missed it. This is crucial as you won’t be able to get a good reaction over the phone or later if you ask for the information. You can make decisions about the person on their reactions to your kind request. If they missed filling the telephone of the employer, they might not be working there anymore. If they missed filling in the telephone number of their previous landlord they might not want you to call that landlord. By their reaction you will often notice if they are doing this with reluctance or not. When in doubt – kick out.

4.

No References
Some people won’t put any reference in the application form. However, this is not necessarily a bad thing. Maybe they just don’t know anyone and have no family in this country. Then you must be able to get reference from the work place and you should inquire with them why they have no references to give. Listen carefully to their answer to determine if this is legitimate, or they just don’t want you to call anyone and check on them.

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www.PropertyInvestorNetwork.co.za - Investor Knowledge, Community Forum and Portal Either way, check if references and last landlords telephone number is filled in. If such information is missing, it should be checked and discussed with the applicant at time of filling in the form and face to face with the applicant.

5.

Does Your Potential Tenant Have a Job?
Ask for reference from place of employment or telephone number of employer, and then check that they still work there or ever have. It was found that people that were fired, made redundant or just left the job, a few days or weeks ago, still put the employers name without contact details. If either of the above happened recently they may need to downsize, but in the mean time they don’t necessarily have a job or money to pay the rent. If this has happened very recently they can still provide you with a pay slip from the same employer from last month, but you don’t know that they no longer work there. It is your responsibility to check all the facts, if you don’t want problem tenants and also your decision if you are willing to rent them the property under the circumstances. If the application is not open and transparent, don't take the tenant.

6.

Your Self-Employed Tenant
Self-employed people and small businesses build economies and can contribute enormously to the growth of any country, but with self-employed people, one needs to check the correct documentation to ensure that they will be paying tenants. Self-employed people often have no proof of consistent income to start with. One day they have work and the other they don’t. A pay slip from a self-employed person is not very useful as they write their own checks and pay slips to whatever suits them. In this case, you should ask just like the bank does when giving credit, for at least 3 months of bank statements. You will find that some will offer to provide you with their invoice books to see their income. That is a very nice gesture, and you should 7

www.PropertyInvestorNetwork.co.za - Investor Knowledge, Community Forum and Portal look at the invoice books if they are willing to present it. However, the invoice book does not tell you if their customers are paying them, only that they have been invoiced. You need to know the persons cash flow. That will prove affordability. The banks do this all the time, why shouldn’t you? After all, the bank asked the same of you when they granted you a bond, now it is your responsibility to do the same if the tenant is to pay the bond or part of it through his rental. In summary, check if self-employed people have sustainability and cash flow to pay you the rent. If you are not happy with the proofs that the person provides, but you think the applicant could be a very good tenant, ask them to provide surety from someone else for the rent. And don’t forget to get the guarantor to fill in the application form if they sign surety, as you will need to do ITC checks. You need to check if the person signing surety is not already in a lot of trouble and not likely to be a good guarantor. Read more about this on point number 9 Non-Earning Tenants.

7.

Good Impressions Can Fool You
Remember that good tenants try to make a good impression, but bad ones will do the same. There are a lot of articles emphasizing the impressions you get from the applicants that want to rent your property. What these articles don’t emphasize is that often con men make a better impression than any honest and sincere tenant. That is why checking and verifying that the information given is correct is far more important than impressions.

8.

All Must Sign – No Exceptions!
Beware of couples that only one of the two applicants is willing to sign on the lease agreement. You may end up with the tenant who signed leaving and the remaining tenant left in the property with no signed lease agreement. This is known to have happened.

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www.PropertyInvestorNetwork.co.za - Investor Knowledge, Community Forum and Portal The other thing is a single parent with minors that are aged 18 or over. Legally a person under the age of 21 needs consent from guardian/parent to sign a lease agreement. Lets say you rent your property to a single mother with an 18-year-old son. The child did not sign the lease agreement, as he is minor. All of the sudden the mother decides to move to another city and the child is not willing to go because he has a girl friend and a job in this city. The mother leaves, the child does not follow and you have the child and his girl friend as tenants with no lease agreements. That could pose a problem if the child doesn’t pay the rent, not to mention that the minor doesn’t have a lease agreement in place at all. In these cases, it is wise to sign the parent on a separate consent form that allows the child to lease your property. Then sign them both on the lease agreement. Version 2.0 Note: As of late 2007 the legal age in South Africa to become a major changed from age of 21 to 18. This means: 1. You can sign tenants from the age of 18 on lease agreement without parents consent. 2. If an 18 year-old person moves in with their parents they can sign on the lease agreement. However, that said all appropriate verifications to sign a good tenant must be applied to all ages.

9.

Guarantees for Non-Earning Tenants
One would think that renting to a person that is not earning income is not a good thing. It may be so, but there are people that are supported by parents and spouses that live in other cities and counties.

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www.PropertyInvestorNetwork.co.za - Investor Knowledge, Community Forum and Portal Such non-earning tenants can be students that are supported by a spouse or a parent residing in another city or overseas. They should be given the opportunity to have a place to live, as much as you have the right to protect your asset. If you come across such a situation, it is suggested that you sign the supporting party to guarantee the full amount of rent in the agreement. The tenant still has to sign on the lease agreement as the tenant is living in the property. In these cases often 2 things go wrong. 1. The guarantor is not signed on guarantees for the rent and the landlord just takes the tenants word that the parent or spouse will be paying the rent (as this is often done). 2. The guarantor is not signed on the applications form and no ITC check are done. In both cases the consequences are pretty obvious. The guarantor may not have affordability to pay or has a bad ITC record and may not pay the rent, or they are not signed on any guarantee and if they decide not to support the other party anymore, you are left with a tenant with no ability to pay the rent chasing the money in vain. Extreme caution should be applied when the guarantor is not a South African citizen with a South Africa ID book. If you need to get the money legally from a guarantor that can’t be taken to court in South Africa, it can extremely costly and maybe not even possible.

10. The Rental Foreign Affairs Department
People with passports and visas, such as foreign students and foreign manpower living here for a defined period of time, you must ensure that their visas are valid for the duration of the lease agreement otherwise you may end up with an illegal immigrant in your property. Another occurrence in the foreign department section was found when students want to rent a place but their visa has not been renewed yet. This could take a couple of 10

www.PropertyInvestorNetwork.co.za - Investor Knowledge, Community Forum and Portal months, but that is the least of the problem, the main problem is that their visa may not be renewed at all. If that happens they are also not allowed to work in this country and then how will they pay their rent? Avoid having this become your problem. As a learned teacher of mine, many times he said: HP, which stands for His or Her Problem. Do not make this problem yours.

11. Learn to Listen
Pay attention to detail. Often landlords want to “sell” the wonderful property to the potential client, which is the rental. While this is very good, there should be a high importance on listening to the potential client – the tenant. Listen more and talk less. Pay attention to what they are saying. You will learn much from the conversation you are having with the potential tenant, in particular their character. This will help you determine, if they are easy to deal with, have many problems, keep tidy, have respect for neighbors and many other things which are crucial to selecting a good tenant. After you have presented the property, make a habit of asking questions, listening to details while talking less. Listening does not mean hearing the words, but actually absorbing what is said, so that you can make educated judgments. This will enable you to determine if this is the type of person you want renting your property. It's your property – you are under no obligation to rent it to anyone.

Follow the Process
In summary, after all said and done, you must set yourself up with a system to qualify tenants. Whatever system you have, in times of stress FOLLOW IT. No excuses, if the systems worked in the past and proved to be good for you, do not make exceptions, exceptions can be the mother of all mistakes. Stick to your systems, if potential tenants are trying seemingly force you to do things fast and therefore skip some steps in the process or avoid your own rules and your system, rather move on and avoid the tenant instead of making a major mistake. One month of shortfall is far better than the costs of an eviction no matter how you want to look at it.

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If you are a registered user please go to the documents section and download the Tenant Application Form for your use. Some of the issues discussed in this report you will find covered by the application form. If you received this document from someone else, you can go to www.PropertyInvestorNetwork.co.za to register for FREE and download the Tenant Application Form for your use.

IMPORTANT -----------------------------------------------------------------------------------If you have tenants and need: 1. a good lease agreement free (sent to you immediately) 2. knowledge to work with that lease agreement 3. instant access to support to ask any letting questions you may have 4. letting legal updates and other letting documents
Join us at the Investor Letting Workshop Book your seat from the Shop click here: http://www.propertyinvestornetwork.co.za/component/option,com_virtuemart/page,sho p.browse/category_id,10/Itemid,141/ See how the Investor Letting Workshop helped others, click here: http://www.propertyinvestornetwork.co.za/component/option,com_smf/Itemid,28/topic, 279.0/

Happy Investing!

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