Owning an investment property can be frustrating at times but it doesn’t need to be. A successful landlord is one who doesn’t feel like pulling their hair out every time the phone rings. We’ve compiled a list of our “Top 7 Tips for Landlords” here to help you navigate your way through the investor process:
#1: Find good tenants
This can be easier said than done. Some people think that an advertisement on a local Facebook “Property to Rent” group, or a listing on Gumtree will do the trick.
Although good tenants can be found on these sites, more often than not prospective tenants who are hiding something will trawl these sites and approach private landlords directly, knowing that the probity checks may not be as carefully carried out as when renting through a Professional Property Management company.
Licensed Real Estate Agents have contractural commitments with the expensive but dedicated real estate web-sites such as realestate.com.au and domain.com.au. These sites are where serious renters look first when seeking out a new home as it is here where they will find the majority of available listings.
#2: Secure the prospective tenancy by taking a deposit – don’t delay.
Once you’ve found well referenced tenants and are satisfied (after conducting thorough reference checks) that they’ll be a good fit for your valuable investment, it’s important to seek payment of a holding deposit from them. This deposit is non-refundable and becomes the first weeks’ rent. Once a landlord receives such a deposit from a prospective tenant however, this signals acceptance of the tenancy and the landlord cannot promise the home to someone else.
It’s important to get the prospective tenant to secure the home with a deposit as soon as practicable. In our experience, tenants lodge a number of applications for tenancy with varying numbers of people and if a landlord doesn’t strike quickly to secure their interest, they will take another property in favour of someone who has.
#3: Prepare a thorough Ingoing Premises Condition Report
The preparation of a comprehensive premises condition report before the tenancy commences is vital. This important document sets out the way the home presents prior to the tenants moving in and is the go- to guide when the tenants move out. Ensure that there are photos of absolutely everything, from the kickboards in the kitchen to the linoleum in the laundry. Also take care to be very descriptive so that there’s no room for misinterpretation at a later date. The preparation of a thorough condition report should take about one-and a half hours to prepare and every single minute spent is worth it.
#4: Retain good tenants – treat your tenants with respect.
Once your tenants have settled into their new home as a landlord, you must respect that it is indeed their home, for all intents and purposes. Don’t hover around the property or turn up to the property unannounced. Owners can be fined for infringing on a tenants right to quiet enjoyment of their rental home, but even if a tenant doesn’t want to report a landlord for such a breach, they can feel unsettled and as a result look to moving out sooner than they would have if they felt they had their privacy.
Of course, this doesn’t mean you should be too nice. You shouldn’t feel that you’re being taken advantage of. Determine the liability of repairs and maintenance fairly. For example, the shower was blocked, the plumber attended and determined the blockage was caused by a build-up of hair. Pay the bill, give the tenants the benefit of the doubt regarding liability for the damage the first time, but warn them that the next time there is such a blockage they will be required to pay for the cost of the plumber. The right tenants will show diligence in ensuring it doesn’t become a recurring issue.
#5: Know your rights and your tenants’ rights
Familiarise yourself with the NSW Tenancy Act. When there is an issue you will know how to resolve it within the legislative requirements. When you know the law, you can confidently act when making decisions.
The NSW Tenancy Act can impose hefty penalties against landlords who take matters into their own hands should they become frustrated with a tenancy matter. Something that may seem as simple as knocking on the tenant’s door to collect the rent (for example) can be seen as harassment. It is important to know your rights as well as the tenants’ rights so that you can safely navigate the intricacies of tenancy law.
#6: Be aware of tax benefits to which you are entitled
Owning an investment property can come with some sizable tax advantages. Become familiar with rules regarding depreciation, negative gearing and tax write offs.
Keep copies of all receipts for expenses related to the property and maintain a correct tenancy ledger to record the tenant’s rental payments.
Track your income and expenditure from the get go and prepare a Summary of Annual Income and Expenditure at the end of each financial year for easy tax accounting as well as to see how your investment is tracking.
#7: Protect yourself with Insurance Cover
Be sure to take out insurance cover and encourage your tenants to do the same.
It goes without saying that your property should always be covered by Building Insurance, and where there is a tenancy in place we strongly recommend taking out additional cover via a Landlord’s Insurance Policy.
Whilst a great Property Manager can generally protect you from bad tenants, they can’t pay your rent should your property become uninhabitable should it be damaged by storm or fire. That’s where the benefits of Landlord Insurance are immeasurable.
Landlord’s Insurance covers loss of rent in several circumstances, it also covers for malicious damage caused by tenants, and some policies even cover the cost of damage caused by the tenants keeping of pets.
A Professional Property Manager attends to the above and more, on behalf of an Investor.
The cost of a Property Manager’s service is tax deductible and worth untold thousands when protecting a landlord’s property interests.
Don’t risk your very valuable investment by trying to save the cost of what often amounts to just a daily cup of coffee, and keep in mind that, the cheapest Property Manager is not the one with the lowest fees but rather the one who puts most money in your bank account every year.
With over 27 years experience as a career Property Manager, Sally Shields-Gillman is well qualified to assist with your investment and it’s what she loves to do.
Give Sally a call on 0414 339 299- and see how much Sally knows real estate!