Which Offer Should I Accept on My Rental Property?
Letting your rental property is the name of the game, and accepting an offer that you’re happy with kickstarts the whole process. But should you take the highest offer, or is it worth exploring other factors like the calibre of the tenant?
If you’re thinking about which offer to accept, you’ve come to the right place. In this guide, we’re bringing you the lowdown on everything that relates to making an offer on a rental property. So, read on and find out which factors you should consider, including the length of the contract and the type of person making the offer.
Does the calibre of tenant matter?
Accepting the highest offer is the most appealing option, but it doesn’t necessarily equate to the best one. Someone will be living in your property, and you want to feel confident they will treat it like their home and keep it in good condition.
Look at the profile of the person making the offer. Tenant referencing is the best way to establish whether or not a renter is suitable for a property, but that part of the process comes once you’ve accepted an offer.
In the meantime, think about the following traits:
What is their Income?
A renters’ overall income should be 2.5x the annual rent. If your property is on the rental market for £15,000 a year, the tenants moving in should make £37,500 per year, either individually or collectively if more than one person wants to rent your place.
Don’t be afraid to ask questions about their profession and be open from the get-go: ask how much they earn, as this will help you establish if they are suitable. Once you accept an offer, the reference and credit check will confirm the details they have provided.
Do they have previous renting experience?
Previous renting experience can be tricky, especially as some people will be renting for the first time. Yet, it’s still worth enquiring to see if the person interested in moving in has references from their last landlord.
A landlord reference letter will tell you more about that person’s ability to take care of your rental property while they live there. That doesn’t mean you should shy away from first-time renters altogether, but you should definitely get a landlord reference if they did previously rent.
Will they use a guarantor?
Even if the renter’s income isn’t 2.5x the annual rent, or they’re a first-time renter (maybe they’re both?), it doesn’t mean you should reject their offer. Guarantors can prove to be a handy back-up option who guarantee the rent on the renters’ behalf.
If the renter can provide a watertight guarantor, you should still think about renting to them. Sometimes they’re even willing to pay six-months rent in advance, or they will pay the entire sum in one go that equates to the contract’s duration upfront.
Should you think about the length of the contract?
Getting the highest offer is all well and good, but sometimes looking at the long-term picture is more beneficial. A renter paying the asking price for six months will amount to less than someone paying a marginally less monthly rent but staying for 12 months.
Landlords are often willing to negotiate on the rental price if the potential tenant wants to stay longer. Void periods are somewhat of a bugbear, so you should look at the renter’s longer-term intentions before deciding on the person who rents your property.
Should you accept the highest offer?
It’s easy to see why you might accept the highest offer on your rental property. You want to earn passive income, and accepting the largest amount offered means that you’re maximising your asset – at least from a short-term financial point of view.
In an ideal world, the highest offer equals the best one. And in most cases, that’s usually an accurate statement. However, other elements come into play, and you shouldn’t blindly accept an offer just because it’s the financially-best one on the table.
Accepting the right offer for you
Explore all the aspects involved by looking at the bigger picture. If you think it’s the best offer after you’ve evaluated everything, then, by all means, give the go-ahead on the rental safe in the knowledge that you’re letting to the most suitable tenant.