What happens if I catch a professional tenant?

We answer these and many other questions in our video blog episodes.

Here is the transcript of episode 7 to read:

What happens if you catch a professional tenant? First of all, you should know: we have over 40 million tenants in Germany. 40 million people reliably pay their rent every month. Because in Germany it gets cold in winter and there are many rainy days. Before a tenant is unable to pay, they will consider how they can keep their rented apartment so as not to end up on the streets.

So the tenant will be the absolute last person to stop paying the rent. Thus, you already have a good probability in 40 million cases every month that the tenant really pays their rent. And yet one can have the worry: What if it does happen to me? What if a professional squatter moves into my property?

The fact is that we have about 3,000 to 4,000 potential professional tenants in Germany. But the fact is also that, with 40 million tenants and 3,000 to 4,000 potential professional tenants, the probability of you specifically catching one is rather low to begin with. Focus on the 40 million paying tenants and less on the very unlikely cases where things might turn out differently.

We always hand over the letting to a professional management company. They run a credit check, they check the tenant's payslips, they check that there is proof from the previous landlord that they always paid their rent on time. The management ensures that a deposit is paid. They request a reasonable tenant questionnaire. And once all of that has been checked, you have a high probability that the tenant will pay their rent on time.

If you then also look for quality properties and buy the best of the best and make no compromises, then you will also have tenants who want to rent the best of the best. If you buy quality, you will also get very good tenants. And with that you have yet another reason why you can be sure that your tenant will pay the rent on time.

What if all that is of no use, though? Imagine you catch one of those rare professional tenants who trashes your property and doesn't pay the rent either. Then notice is served immediately and they have to move out straight away. However, we haven't had a case like that yet. Now a clearance company would be hired, which clears out all the rubbish with 2 to 3 employees, strips off the old wallpaper and takes away the floor covering. In the worst case, that costs €4,000 – €5,000. And that would be the worst case to make everything nice again. However, you could then deduct that approximately €4,500 from your taxes and it would cost you around €2,500 or €2,700 net.

So if you're asking about the worst-case scenario of "professional tenants", then remember: if you do it professionally, if you buy the right property and have good management, it's very unlikely you'll end up with a professional tenant!

Keywords:
professional management, tenant default nomads, credit check, tenant's payslip, previous landlord's certificate of good standing, self-disclosure, letting, tax savings, inflation protection, capital investment, real estate market, location