landlords

Tips for new private landlords

So you’ve just bought an invest property and you want to rent it out yourself. Or perhaps you’ve been using a real estate agent to manage your property and have decided to take over the management yourself. Here are 8 important points to keep in mind to help you avoid some of the common pitfalls first time private landlords can sometimes come up against.

1. Advertise first through social networks

The best tenants are going to be ones who you know through personal networks. They will always have good social reasons to do the right thing by you.

To start with we would advise you to advertise through your family, social and work networks. This could be done through Facebook or perhaps Twitter or you could send out an email to your contacts asking if anyone is looking for a rental property in your area. You may even have a job board at work that you can use or an internal messaging system.

2. Get thorough rental applications

Once you’ve advertised your property in all the right places and held an open inspection of your property you will start to get applications from prospective tenants. It’s important to know have a procedure for how your tenants will apply to make your job easier.

I cannot recommend enough having a thorough rental application. This will accomplish two things.

Firstly it will separate the wheat from the chaff. If tenants are serious about wanting your property they will be happy to fill out a detailed questionnaire for you, tenants who aren’t so serious won’t waste their time – or yours.

Secondly it gives you a great deal of information to start to create your short list of potential candidates. Information such as employment and rental history, how many people will be living in the house, whether or not they have pets and who their references are.

I have created a PDF rental application form that you can download and print out here.

3. Check your tenants rental history

Some private landlords will assess their tenants based on their intuition but it’s important to go that extra step to avoid trouble further down the road.

This is the best time to identify potentially troublesome tenants and avoid them. It will save you money and heartache so it’s worth doing right.

Once you’ve got a shortlist of three potential renters start to call their references, paying particular attention to the property manager of the houses they are vacating and ensuring that their employment history is correct.

You may also ask your tenant to provide you with a report from the National Tenancy Database. They will have to contact the NTD themselves but can ask that you be notified of the outcome of the check. For more details visit the National Tenancy Database website.

4. Get a lease. Get a lease. Get a lease.

A lease will lay out for both you and your tenant your rights and responsibilities. A well written lease will ensure that you both know where you stand on issues such as water rates, property inspections and little things like when the rent is due.

What can and can’t be in a lease agreement differs from state to state which is why I’ve created a short summary of free Australian lease agreements by state here on page for private landlords.

5. Get (and submit) a bond

The rules for bonds vary a little from state to state but the basic premise is that you should collect 4 weeks rent as a bond for your property. The purpose of a bond is to protect you as the landlord in case your tenants cause some kind of damage to the property or do not clean it to a standard when they vacate the premises.

In all states the bond has to be submitted to the relevant government agency where it is held in a trust account. At the end of the tenancy the tenant will apply to have the bond returned to them and the landlord can apply to have any relevant costs incurred be deducted from the bond and paid out to them.

Make sure you get a bond (even if you’re renting to a family member or a friend) and that you submit it to the relevant government agency.

6. Create an initial property condition report – and keep it up to date.

When your tenant signs the lease they are agreeing to keep the property in the condition that it is in. The best way to avoid any trouble in the future is to create a detailed report of the propertys condition, preferably including photos.

To do this simply go from room to room of the property and note any existing marks or damage to the property. Things like scratches in floor boards, chipped tiles, locks or windows which might not work. Once you’ve finished get your tenants to check over and sign off on the property condition report, provided that they haven’t noticed something you might have missed.

At each property inspection you should go over your property condition report and update it, making notes where damage has been created by your tenants and advising them that they will need to make amends. All of this documentation will protect both you and your tenant in the long run.

7. Conduct regular property inspections

A property inspection is a good time to check in on how your tenants – and your property – are going. You can make sure the property and gardens are being well looked after and find out if any preventative maintenance is necessary.

Once every 3 to 6 months is an ideal but you shouldn’t leave it much longer than that.

8. Get landlord / rental insurance

If you follow all of the above steps you will eliminate 99% of the potential problems you might have with your prospective tenants. However it’s still a good idea to get some form of landlord insurance or rent protection insurance. This will give you piece of mind that should there by any major damage to your property or your tenants are unable to pay rent you will not be hit with the bill.

Two providers of landlord insurance around Australia include AAMI and Terri Scheer, or contact your regular home and contents insurer.

Note: I will be doing a post in the not too distant future to compare insurance so signup to our mailing list in the right hand side-bar to find out when I do.

So there are my eight tips for new private landlords. Following these steps will help you to avoid some of the common pitfalls many new private landlords fall into and ensure that you have a positive experience with your new tenants.

What advice would you give to new private landlords?

Tags: bond, inspection, insurance, landlords, lease, private property management, property insurance, rental insurance, tenants