Qualifying Exceptional Tenants In the Czech Republic

Czech Point 101 July 22, 2014 @ 2:48PM

You’ve spent time picking the best apartment in the complex. Southern exposure and a huge balcony will be a pleasure for any tenant. Hey, this is a place you would love to live in. Instead of installing the standard kitchen you splurged on some extras, upgrading to better quality appliances and a dishwasher (not common in Czech Republic). Everything is ready for your first rental.

You show the flat to the first viewer. She is well dressed and seems pleasant. She says she works on her own trade license and is quite successful at it. Yes, she is interested in the flat. It seems too easy! Do you sign the contract and hand them the keys?

Stop for a second and take a breather!

You have put down of your own money, perhaps 400 000 CZK, perhaps much more, on this Prague property. In fact, including the money you have borrowed, it most likely is worth 2 500 000 CZK +.

If you had a Ferrari worth this much would you lend it to just anyone to drive or would you be pretty particular about who you let take the steering wheel? You can bet that you would be incredibly particular about who took your car for a spin and it is the same about how you should proceed with your property. Of course, the amount of damage that can be done to a Ferrari in a short time as compared to a property is a little bit more but the value is the same. It really doesn’t take long to damage a flat way beyond the damage deposit.

As described in our recent article on the Czech landlord and tenant laws (to read this article please go to the following URL: https://www.czechpoint101.com/newsletter/?p=123), using a direct contract puts an owner at a real disadvantage in case of dealing with non-paying or destructive tenants. Because of this and even with CZECH POINT 101’s unique contract system, it is incredibly critical to have a very good system of sourcing quality tenants.

The fundamental step to this is collecting and checking, yes really phoning, the references. Just trusting your gut feelings has gotten many people into problems before. Your guts do play a part but don’t play a Russian roulette game with your investment. In some countries, relying only on your guts can get you into legal problems as you can be sued for discrimination. I have never heard of a case like this in Czech Republic but it is really important to have a system for screening tenants.

Let me warn you first that screening of tenants is not common in Czech Republic. Most tenants are used to the process where the only screening done is if you put the money on the table. So it is important to explain to them why you need to do this. As a company, we have maybe 1 out of 50 who walk away because of it but probably we wouldn’t have wanted them as renters anyway. A good renter has nothing to hide.

First, you should have a rental application which the prospective tenant needs to fill in to its entirety. The good tenants are the ones who can fill it in on the spot. The bad ones will start going through and you will hear excuse after excuse about why you can’t contact their boss because they haven’t actually signed the contract yet, how they’ve lived at home before this so there is no rental reference and oh, sorry but they don’t have any backup references because their mobile got stolen and they lost all the numbers. Good-bye!

You should have the policy – no references, no rental.

When checking references it is also important to be clever in the way you do it so that you can be confident that you are really speaking with their previous landlord and not a friend posing as such.

One very good method I learned for doing this is that when you first phone do not state the exact reason for your call. Start off by saying that they were listed as a reference for so-and-so (no clue as to whether it is for rental or potential employer, etc.) and then ask the first question: ‘Can you please tell me how you got to know them’ or ‘Can you please describe your relationship with this individual’. With no clue, the phony previous landlord will have a hard time knowing what to answer.

Interestingly, when I used the above approach checking references recently for one prospective tenant, the ‘former landlord’ said that the prospective tenant was his girlfriend. The method works and you should use it.

When you do contact a valid former landlord, there are many questions which are good to ask such as how long they have lived in their property, whether they paid on time, etc. but a critical one which will tell all is the question of whether they would rent to these tenants again if they had the opportunity.

Sourcing good tenants in Czech Republic takes time, but the careful landlord will be paid back for these efforts many times over.

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