In the perfect world, would a surgeon work in a telephone call centre? Or would a university lecturer be flipping burgers at a fast food joint? Of course they wouldn’t! These people have studied extensively and worked hard to have the right to earn a decent income.
A good tenant knows their value too
Just like the fictitious university lecturer and surgeon know their value, so does a good tenant. A good tenant with impeccable references and a solid work history will know that they’ll be valued. And as they’ve been renting for a while, they know that this means they can rent a quality property – and without having to pay a letting fee.
On the other hand, a not-so-good tenant won’t be quite as savvy. And if they’ve had issues in the past, they might be aware that that’ll cost them in the future.
Which tenant would you prefer: the good tenant, or the troublemaker?
That’s a no brainer, right? You’d want the good tenant with the impeccable references. But if your property manager is charging letting fees, chances are you’re missing out on the top quality tenants.
A true story about tenants and letting fees…
The following is a true story from the files of Barry Bridgman at Bridgman Property Management.
“The landlord had decided to sell a property I was managing for him, and I wanted to help the tenant find an alternative property,” says Barry Bridgman.
“I was aware of a suitable, vacant two-bedroom unit in another complex, and the property manager for that hadn’t yet advertised it. So I contacted her and told her about my great tenant, who had impeccable references. I also told her that my tenant wasn’t prepared to pay a letting fee.”
“Her actual response to me was, ‘my ladies need that letting fee money’. So she lost out on a first rate tenant. You’d think that the property manager would have jumped at the chance to secure a great tenant, without even having the hassle of advertising the property, right? Wrong.”
If you’re not getting first-rate tenants, what are you getting?
In the example above, the property manager missed out on a great tenant. So what kind of tenant did she end up with?
In all likelihood, she ended up with a second-tier tenant. Second-tier tenants are more likely to:
- Cause damage to the property.
- Upset the neighbours.
- Pay their rent late – or default on payments altogether.
- Generally cause a headache for the property manager and property owner.
How to avoid the headaches that come with second-tier tenants
Avoiding the whole hassle of second-tier tenants is easy: just engage a property manager who doesn’t charge letting fees!
A good property manager will also take other measures to ensure you’re getting the best quality tenants, by making rigorous reference checks and credit checks.
Likewise, experienced property investors know that the tenant application process is like a job application where the best applicant gets the job. However, will the best applicant get the tenancy when the property manager is being paid by the tenant?
A good tenant knows their value, and they will work just as hard at looking after your property, as they do in their day job. (Even if they’re not surgeons or university lecturers!)
As well as attracting higher calibre tenants, you can also reduce tenant turnover rates by not charging a letting fee. Read on →