How to do credit check?

[Bongi]

Hi

I am quite new to property investing and have just bought a rental. I am looking at managing it myself to start off just to keep the costs down as the property is only 20km from my own home (of course experience the LL side of things at the same time). I have got really fantastic ideas from the forum as to how to advertise and manage tenants but still am not quite sure as to how to do credit checks on prospective tenants!
Can someone please advise the steps involved? Much appreciated for any replies.

[essence]

Hi Bongi

Welcome to PT!! Lots of information here, so be prepared to be over-whelmed.

Go here and have a big read. Make sure you use the Pre-Tenancy Application form - it screens out a lot of no-hopers. It's amazing how many prospective tenants turn up and then when you show them this form, they suddenly "Don't have my licence, had my wallet stolen etc etc".

Hint - if a prospective tenant doesn't have photo ID be warned!! How many honest people do you know, not have photo ID on themselves???

Be careful of tenants who want to move in immediately "I'll pay my Bond with my rent each week". No. If they can't pay their Bond up-front, do you think they'll be reliable enough to pay their rent??

"I'll get my last LL to transfer the Bond to you". No. What if the last LL has cleaning costs, overdue rent etc to claim. Means the Bond to you will be short of $'s.

DO NOT HAND OVER KEYS UNTIL YOU HAVE HAD THE BOND PAID either in cash into your hot little hand, or from WINZ.

Ask for at least two references. If they can't provide them, don't take them on.

Once you have their name, DOB, Photo ID, say thanks very much but I'll get back to you. Then go to your computer and check here to see if they have any adjudications against them. I just screened a prospective tenant out using this website. Very handy.

Always ask for four weeks rent as Bond and rent in advance (you're allowed to ask for two weeks). If they can't pay that, again don't take them on as tenants.

Bad tenants are finding it very hard to get properties now and will promise you the earth. It doesn't matter, they still lie and if you let them into your property, they will damage it, not pay rent, do a runner leaving clothes/food etc and then you've got to go through the Tenancy Tribunal (TT) to try and reclaim your money.

That is a long and involved process, so it's much easier to get good tenants first than solving the problem later.

Use CIA for credit checks. You will have to pay a subscription fee, but in the big scheme of things, it's small change.

Good luck with your search and if you've got any more problems or questions, just ask.

[Keithw]

Good summary E
one or 2 things I can add-
try to get an address other than your property as their address for service. its one more bit of info if you need to track them down later.

make sure you get their cell phone numbers and email addresses.

put their email address into a google search, it can turn up their facebook/ bebo pages from which you can get an idea of their character & associates.
Sometimes it will also turn up other things like their questions in trademe auctions, newspaper or web articles etc
It can be very interesting

[essence]

Hey KeithW

Didn't know about the email addresses to TradeMe etc. Thanks for another hint!!

[Keithw]

I try different variants as well
like k dot willams @ gmail kwilliams at gmail etc
as many people try to disguise the address so that trademe nazis don't pick up on it.

[PC]

It's far cheaper to have a vacant house than to let it to a dodgy tenant.
Especially when things are tight - always get the tenants to fill out an application form, phone their references and run them through Baycorp.
I also found it quite enlightening to visit their current place of residence.
The state of it will give some indication of how they will treat your property.
Also check out the state of their car and record the details.

Solo Mums have been my worst tenants.
They don't stay solo for long and the little darling kids love rennovating.
Families with a dog have been better tenants.

If they start waving cash under your nose to get the tenancy - be extra careful!

[Bongi]

Thank you very much for all the wonderful hints and advise. very much appreciated.

[tallica1]

Hi Bongi,

If you are wanting to carry out checks on your prospective tenants, which you should be doing for each adult tenant, then www.tinz.net.nz is the place to do it.

TINZ is New Zealand's nationwide tenant register which was set up 10 years ago for specifically tenant checking and lodgements of good and bad tenants online.

Hope this helps!

[revdev]

Bongi, just be aware that Tallica1 has a financial interest in the product he is promoting (which she/he should have had the courtesy to say in the first place!)

Cheers,
G

[tallica1]

Bongi, just be aware that Tallica1 has a financial interest in the product he is promoting (which she/he should have had the courtesy to say in the first place!)

Cheers,
G

Indeed! No secret there revdev. I am the 'systems administrator' for TINZ - New Zealand's largest online national tenant register.

My comments of TINZ on this forum are not for financial gain, rather to improve the awareness of TINZ amoungst private landlords especially to newbies. We usually get landlords who did not do their homework, then found out about TINZ after they've had a bad tenant, then say they wish they'd have known about the system earlier. So again, we are answering the industry's calls.

Our main customer base are the property franchises such as LJ Hooker, Harcourts, Ray White etc etc who we hold private seminar's for around the country to promote the system. It is them that do hundreds of checks per month on TINZ and grow it.

I too am a landlord, and because I have a very thorough knowledge of this system, I choose to use it for my own tenant checking.
I believe it is a useful system and offers best bang for your buck because membership gives acess to search multiple databases including Veda Advantage.

I'll be happy to answer any querries about TINZ and/or tenant checking.

[Green Fish]

Bongi: Congratulations for not involving a "property manager". They still charge on a commission basis, so are still incentivised to do as little as possible - and most of them do exactly that. It's your property, so you have to do the work, and you have to meet the person who is going to live in your property. That is worth far more than any credit check.

[Aurora]

Credit checks can be worth their weight in gold. I'm not sure where you live but if you become a member of a local PIA, you automatically become a member of Veda advantage at no extra cost. You can then do your own searches for very little cost.

[Glenn]

Credit checks can be worth their weight in gold. I'm not sure where you live but if you become a member of a local PIA, you automatically become a member of Veda advantage at no extra cost. You can then do your own searches for very little cost.

Veda have recently ramped up the cost for PIA members but it is still good value.
I found it really difficult getting off the free annual rate and onto the subscription rate to return our per check fee back down to the old rate.

[Glenn]

make sure you get their cell phone numbers and email addresses.

put their email address into a google search, it can turn up their facebook/ bebo pages from which you can get an idea of their character & associates.
Sometimes it will also turn up other things like their questions in trademe auctions, newspaper or web articles etc
It can be very interesting

I had this problem last year.
Someone put some nasty comments about me onto Sella.
I did not know who the person was and what they were on about.
The only way I could get rid of it was to re register with a slightly different business name. Then they did it again. Goodness some people have a burning desire to wreck their toys. I was really annoyed with Sella permitting this sort of flaming without at least making the poster come out from under the blankets.
So I did a search of all sorts of variables of the email address. I eventually found the slob. Thank goodness they kept her under the blanket. She lives with stinking dogs in her house. She did not like me telling the owner about the dogs and the state of the property. Too bad for me they are related so the only answer was to get rid of me. I drove past the house last week. What a tip site it has become.

[duck]

I've heard that picking tenants from trademe can be great, as you can check out their profile etc before you even reply to them. Check out what they buy and sell... Can tell quite a bit from what people move. I haven't had experience here yet, but plan too. I have a friend that only ever takes tenants from trademe and has had good success in screening