How to choose the right tenant for your rental property

Choosing the right tenant is the most important decision you’ll make as a landlord, and you don’t have to do it alone. With expert support from a property manager, you can minimise risk and secure steady, stress-free rental income.

Your property manager plays a key role in finding the right tenant, carefully screening applicants to help you avoid issues like missed payments or maintenance problems. Having a property manager with a strong screening process gives you peace of mind knowing your property is in good hands.

We all know that good tenants are worth their weight in gold. So, to make the process easier, here’s a simple step-by-step guide to the process your property manager will follow, and how you can make the final call once you’re presented with a shortlist.

How do property managers find the right tenants?

Choosing the right tenant is one of the most important steps in protecting and managing a successful rental property.

A good tenant will look after your investment, pay rent on time, and inform you of any issues relating to routine or more serious maintenance.

Your property manager will handle the entire screening process on your behalf, carefully narrowing down applicants to a shortlist of well-qualified candidates. Here are five key steps they take before presenting you with that shortlist.

Step 1: Understand your rights and responsibilities

The first step your property manager will take is to ensure the tenant selection process complies with all relevant legislation, protecting both you and your future tenant.

Under NSW law, property managers must not discriminate against potential tenants based on race, gender, age, disability, or family status. Instead, every applicant is evaluated using consistent, lawful criteria such as their ability to pay rent and take care of the property.

Here’s how your property manager ensures the process is fair and compliant:

• They only request relevant information that directly relates to the tenancy
• The same application form and screening process is used for all applicants
• No assumptions are made based on a person’s appearance or personal characteristics

For a full overview of property management rules, check out the NSW Fair Trading guide.

Step 2: Gather and organise key information

When looking for a tenant, a good starting point is to collect information from every applicant. Your property manager will typically request:

• Valid photo identification
• Proof of income (recent payslips, bank statements)
• Employment details
• Rental history with previous addresses

They’ll also keep all records well-organised to fairly compare applicants and ensure compliance with privacy laws, which protects you if a dispute arises down the track.

Step 3: Conduct a comprehensive tenant screening

When renting your investment property to someone new, your property manager will carry out thorough screening on your behalf.

This includes contacting previous landlords or property managers to gain insights into their history as a tenant.

An important part of the screening process is verifying their finances. As a general rule, the cost of rent should not exceed 30%–35% of a tenant’s gross income. To ensure they can afford it, your property manager will typically request at least three recent pay slips and may also verify their employment status directly with their employer.

Aside from finances, your property manager may run credit and background checks. Tenancy databases like TICA can alert them to any blacklisting or payment issues. However, tenants must always be informed if these checks are being conducted, and they have the right to dispute incorrect listings.

Lastly, good references can reveal a lot about a person’s reliability, demeanour, and responsibility. Most property managers ask for at least two references. Ideally, including one from a current or previous employer.

Step 4: Evaluate applications carefully and objectively

Once all applications have been reviewed and screened, your property manager will present you with a shortlist of qualified candidates and offer their professional recommendations.

To help you make the final decision, you can use a simple checklist or even a points system to compare applicants objectively.

Some key checklist items might include:

• Meets income requirements
• Positive rental history
• Strong references
• Clean credit and background checks
• References (both personal and professional) checked

The ultimate goal is to select the tenant who is the best fit for your property.

Step 5: Finalise the agreement properly

Once you’ve chosen your tenant, your property manager will formalise the arrangement with a lease agreement.

The lease will clearly outline rent amounts, bond requirements, landlord and tenant responsibilities, legal rights, and notice periods.

Your property manager will also ensure all documents are legally compliant and provide ongoing support to help your tenancy run smoothly.

Special considerations when selecting a tenant for your rental property

While most applications follow a standard process, your property manager is equipped to handle applicants who need extra consideration.

First-time renters or those new to Australia may not have a local rental history. In these cases, your property manager may request proof of savings or local employment to help assess their suitability.

For applicants with pets, they’ll follow relevant legislation. In most states, blanket ‘no pets’ clauses aren’t permitted, and landlords must provide a valid reason to decline a pet. Only in Western Australia can a separate pet bond be requested.

Applicants who are self-employed or receiving government support may be asked for additional documents, such as tax returns, Centrelink statements, or landlord references. Your property manager will manage this for you.

Your property manager will handle the tricky applications

Not every application runs smoothly. Some may be missing key information, while others may come across as overly persistent or challenging, which can be a clear sign for property managers to proceed with care.

Your property manager will manage all of this on your behalf, requesting missing documents in writing and handling any concerns calmly and professionally.

If an applicant isn’t successful, they’ll respond politely and clearly, stating that a more suitable candidate has been selected based on the rental criteria.

They’ll also keep records of the process and communications to ensure everything stays fair and compliant.

Your role as a landlord: Making the final decision

Once your property manager has screened and shortlisted prospective tenants, it’s time to decide who’s the best fit. While your property manager will handle all the checks and compliance, here are some best practices to guide your final decision.

• Stay consistent: Rely on the standardised screening process your property manager uses to ensure each applicant has been assessed fairly and legally.
• Look for income stability: Your property manager will provide verified income details. Aim for a rent-to-income ratio of around 30%–35% to help ensure affordability.
• Review the verification process: Check that employment, rental history, and references have been thoroughly cross-checked by your property manager.
• Use tenancy databases: Confirm that applicants will have been screened through tenancy databases like TICA, with the appropriate disclosures handled on your behalf. Ask to see these results.
• Stick to the criteria: Your property manager will have already worked with you to define clear selection criteria. Let this guide your decision rather than personal preference alone. This helps keep the process fair and unbiased.
• Ask for documentation: Your property manager will maintain records of all applications and communications, so everything is transparent and compliant.
• Set expectations early: Once you’ve chosen a tenant, let your property manager know how you’d like them to communicate the terms around rent, maintenance, and expectations. This will set the relationship up for success from day one.

Summing up

Choosing the right tenant is one of the most important parts of managing a successful rental property.

By working with an experienced property manager, you can rely on a clear, consistent screening process designed to minimise risk and find a renter who will treat your property with care. Taking the time to get it right now can save you stress and costs down the line.

Need expert help finding the perfect tenant? The property managers at DiJones are here to guide you through every step of the tenant finding process. Contact us today to get started.

FAQs

How important is tenant screening?

Tenant screening is a key part of any successful residential tenancy. It helps you verify tenant information, assess rental history, and minimise the risk of rent arrears or property damage. It’s also a vital step in protecting your investment and avoiding potential legal action down the track.

Can I use a tenant database like TICA?

Yes, a national database like TICA can be a helpful tool for landlords and property managers. Running a database check allows you to see if a prospective tenant has had issues in previous rentals. Just remember to inform applicants before doing so, as outlined in standard tenancy agreements.

What should be included in a rental application form?

A strong application should gather all relevant tenant information, including ID, rental history, income verification, and at least one professional reference. These details help you choose suitable tenants and are particularly important when renting privately.

Is a background check different from a credit check?

Yes. A background check looks at rental history and tenancy behaviour, while a credit check focuses on financial reliability. Both provide valuable market insights when reviewing applicants and preparing your property to lease.

What’s the biggest mistake landlords make during tenant selection?

Skipping reference checks, rushing the process, or failing to properly prepare your property are common mistakes. If you're unsure, working with one of our expert property managers will help you rent your property confidently.

What should my property manager do before offering a lease to potential tenants?

Before any tenancy agreement is finalised, your property manager should thoroughly screen and shortlist tenants. This includes checking references, verifying income, and running a national tenancy database check.

They’ll typically request proof of income, a professional reference, and details of previous rentals to ensure the tenant can pay rent on time and look after your property.