10 Landlord leasing mistakes

If you’ve been con­sid­er­ing rent­ing out a house you own, or buy­ing a house to rent out, you have things to think about.

Although a rental house can be a good way to earn some extra money, it’s not always the easi­est. If you want to rent it out, it has to be man­aged cor­rectly, mis­takes can cost you dearly.

The truth is, there is no sure fire way to elim­in­ate all the risks, but you can improve the odds of suc­cess by educating yourself. Learn­ing about the most com­mon mis­takes will help you avoid a lot of head and heart aches.

1) MAKE SURE TO DOCUMENT EVERYTHING

A writ­ten lease is very import­ant. You need the right rental agree­ment for your situ­ation and state not only to enforce the rules, but it should include and cover things like repairs, pets, deposits, late payment charges and utilities.  You also need to record the con­di­tion of the home before the ten­ant moves in (include photographs) and list any­thing that 

can be moved, broken or dug up. Hand­shakes And Verbal Contracts/Leases will not stand up in court, espe­cially if you have to claim dam­ages to the prop­erty.

2) NEVER FALL INTO THE DISCRIMINATION TRAP

It’s extremely import­ant that you know the Anti-Discrimination Act. When show­ing the house to any pro­spect­ive ten­ants, ques­tions about an applicant’s mar­ital status, dis­ab­il­it­ies or social beha­viour could be seen as dis­crim­in­a­tion. Make sure you provide solid sup­port for any decision you make when reject­ing an applic­ant, based on a back­ground check and rental history.

3) INSURE YOURSELF PROPERLY

You have land­lord insur­ance and you think you’re ok? Check again!  Look closely into your land­lords insur­ance policy and find out what you are really covered for – mali­cious dam­age and pub­lic liab­il­ity – these are not stand­ard fea­tures of an insur­ance policy, crazy isn’t it!

4) BE TRUTHFUL ABOUT IMPORTANT INFORMATION

If you know of prob­lems like lead paint, asbes­tos or mould, you may be required by the res­id­en­tial ten­an­cies act 2010 to tell ten­ants about these haz­ards. Fail­ing to do so can expose you to fines and loss of rent. Any­thing that is a health and/or safety risk that the owner is aware of has to be dis­closed to the tenant. 

5) FAILING TO SCREEN YOUR TENANTS CAREFULLY

If you think you are a good judge of char­ac­ter, you’re wrong. You really can’t judge a book by its cover. Screen ten­ants thoroughly. Keep in mind prop­erty man­agers have access to ten­ancy ref­er­en­cing software/data (TICA & NTD) that is not avail­able to the pub­lic. Prop­erty man­agers know the res­id­en­tial ten­an­cies act when it comes to search­ing an applicant’s back­ground. Your gut feel­ing still mat­ters, but it goes along with this type of tool. It doesn’t replace it.

6) TAKE YOUR RENTAL BUSINESS SERIOUSLY

One of the biggest mis­takes you can make as a land­lord is to treat your rental with a cas­ual atti­tude. Rent­ing out your real estate is a serious busi­ness, the ATO, your insurance company and the law certainly thinks so. Fail­ure to com­mu­nic­ate with your ten­ant or the author­it­ies can lead to stiff fines or massive penalties. You should take it at least as ser­i­ous as they do. Follow the law and know your legal responsibilities.

7) IT’S NOT A ONE MAN SHOW YOU NEED A TEAM

With many details to keep track of, hir­ing a team to help you manage your rental investment is a good idea. A good property manager can do the heavy lifting and manage your investment; an accountant can advise you about all of the fantastic deduc­tions and how you can off­set your tax from 

your income and a qual­i­fied fin­an­cial advisor or your accountant can show you the details of how cash flow works and how to max­im­ise your cur­rent situation. All of these people can be worth far more than they cost.

8) HOW MUCH RENT TO CHARGE

To fig­ure out how much to charge, com­pare rent val­ues for houses like yours on the local mar­ket, or hire a prop­erty man­ager to do a CMA (com­par­at­ive mar­ket ana­lysis) and advise you on how to get more money for your rental prop­erty.

9) POCKETING THE BOND AND CHARGING MORE THAN 4 WEEKS RENT

All bonds must be lodged imme­di­ately with the RTBA and you will need to keep a copy of the receipt/record of the pay­ment. If needed, you can make a claim against the bond for cer­tain reas­ons after the ten­ancy ends. All too often it may not be enough to cover really bad ten­ants, but if you are dis­turbed about this risk we would strongly recom­mend tak­ing out land­lord insur­ance, and hiring a top notch prop­erty man­ager to reduce the risk.

10) UPGRADE YOUR PROPERTY AND ATTEND TO URGENT REPAIRS

A good prop­erty man­ager can show you what ten­ants will pay for and what they will not.

It’s a simple fact of life: the nicer the prop­erty, the nicer the ten­ants. We see it all the time when a prop­erty is run down, the only ten­ants it will attract, will be people who don’t care about the prop­erty, and they are the type of ten­ants that take up most of our time want­ing things fixed.  A sat­is­fied, respons­ible ten­ant will have no reason to move out, and will pay rent for years to come (as long as you keep up with repairs). Any­body who lives in a home they love and are proud of will nat­ur­ally take care of the prop­erty as if it were his own.

All property owners should make note of the above, whether they are new to the industry or seasoned property owners. One of the best ways to avoid these critical mistakes is to employ an experienced and reputable property manager. From tenant screening to lease drafting, routine inspections to maintenance requests, a good property manager can tend to all things property related on a daily basis so you don’t have to. Plus, with their knowledge about the industry, you effectively avoid making any mistakes on your own because your property manager has everything handled for you. Their fee is also tax deductible – win/win.

                              email: kooweerup@oneagency.com.au                    web: oneagencykooweerup.com.au

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10 Landlord leasing mistakes