Figures recently released in the Credit Bureau Monitors’ latest report show clearly that buy-to-rent property investors have to be extremely careful in selecting tenants as the risk of ending up with a defaulting rent payer is now very high.
This was said recently by Tony Clarke, Managing Director of Rawson Properties and an ongoing exponent of buy-to-rent investment.
The Credit Bureau Monitor reports that at the end of December 2010 of the 18,51 million “credit-active” consumers, only 53,5% were rated as being in “good standing”. The number of consumers with impaired records increased to 8,61 million, a year on year upswing of 426 000.
“The CBM,” said Clarke, “estimates that 17,8% of creditors at the end of last year were three months or more in arrears, 14,6% had adverse listings and a staggering 14,1% had judgements or administration orders against them.”
In this scenario, said Clarke, the shrewd property investor should employ an experienced agent with access to one or more credit monitoring facilities and with a proven track record of contacting tenants’ banks, employers, major creditors and previous landlords.
Special care, said Clarke, should be taken in discussing a prospective tenant’s reliability with their current landlord because it has happened that that the landlord is so keen to be rid of his tenant that he will fudge his credit report.
“The good news,” said Clarke, “is, firstly, that rental returns are improving month by month because home loans are still so hard to come by and, secondly, that in groups like Rawsons the monitoring of prospective tenants has now been honed to the point where very few bad payers get through the net – so it pays to have such a person on your side.”
For further information contact Tony Clarke on 082 789 2752 or email email@example.com.