The sayings goes that a real estate investment is probably the most expensive investment 95 per cent of us will ever make in our lives.
The implication thereof is that when you are then giving out your property to a prospective tenant you want to be sure that he/she is the right one. This is more so in a society like ours in Nigeria, where the rent payment default rate easily tops 65per cent and the judicial system is clogged with so many litigations that a simple eviction could take 3-5 years to accomplish.
It is therefore imperative that a proper due diligence is undertaken in tenant selection.
The warning signals to watch out for when selecting a prospective tenant include but are not limited to the following. They also do not necessarily refer to any particular type of tenant(s).
When a background check does not add up, then beware. Most tenants should be able to give their last residential address, landlords name and the reason for their movement must correspond with whatever the previous landlord confirms to you.
A tenant who cannot come up with a referee to attest to his character and suitability to transact business with you should send warning lights. The caliber of the referee in the societal and economic hierarchy is significant.
Vagueness about employment and other relevant personal information is a no-no.
Payment in cash:
Despite the fact that Nigeria is still a basically cash driven society, when a tenant wants to pay rent in cash and gives all manner of excuses about the need for speed and the banking institutions, you want to be careful. There is every likelihood that when the next rent is due the money would have dried up.
We all talk ”big” in Nigeria, so when your tenant meets you for the first time and goes out of his/her way to tell you how all the government officials are his friends and how basically he executes half of the contracts in the country, you need to be careful!
Either way, true or false, best to pass.
Number of prospective occupants for the property:
When a single individual wants to occupy a six bedroom house, be careful. He may just want to subdivide the property into single rooms, re-let to other tenants and disappear. Very common in Abuja.
Difficulty in meeting the first rental obligations:
If a prospective tenant has obvious difficulties in meeting the first year’s rent together with other obligations like security deposits and service charges etc, he should be biting off more than he can chew.
Finally, if it does not feel right, then don’t do it no matter how tempting the money being offered or the pressure being applied.
The foregoing are just a few signs to beware of when choosing a tenant. The only way however to select a perfect tenant is to employ the art of clairvoyance. But then if you as a landlord or estate agent had that power, selecting the right tenant for your property would be the least of your problems. Your services would be in such high demand worldwide that you would most likely be very busy employed in so many other much more hugely financially rewarding activities.