Being a landlord is not just about collecting monthly rent. Rental properties can be a lucrative source of passive income to investors, however, turning landlord is not a cakewalk. Renting out a property could be tedious, especially if you are a first-time landlord. So, here are some tips to successfully rent your property:
Try to find good tenants – It is always worth the time to do a background check on potential tenants to avoid bad ones. Has your tenant been evicted before? What do their previous landlords and other references have to say about them? We agree that it is hard to find a perfect tenant, but positive references can help sieve out the good ones. Besides, you must try to meet your future tenants in person or at least speak to them on the phone to ensure you can interact with them comfortably.
Put down everything in ink – It is essential to sign proper legal documentation while renting out a property. Most landlords prefer a lease agreement that lays down all the important facts of the tenancy, starting from the rent to the procedure for handling tenant complaints to whether pets are allowed on the property or not.
While you can find a standard form lease agreement online that you can tweak to fit your situation, it is advisable to hire an attorney and have the document drafted properly to protect yourself in case of any tenant breach.
Hire a property manager – The job of a landlord is multifaceted. When you rent out your house, you don several hats, managing several things at once including rent collection, repairs and negotiations. As a landlord, you must also be prepared to receive calls from your tenants at any time of the day or night for issues as trivial as a noisy neighbour or a leaking faucet. Unless you stay nearby, it can be difficult to service such complaints at short notice.
It could, therefore, be quite handy to hire professional property management services. Especially if you stay at a distance from your investment property, your property manager will ably slip into your boots, taking care of everything from finding tenants to collecting the rent to managing the tenants and tending to their complaints. Besides, the fees you pay to your property manager are tax deductible. (Read here for what you can claim as an investor.)
Take out a landlord insurance policy – If you are unlucky, your tenants might leave your house in a state of utter disrepair, and a landlord insurance policy can take care of events like that. A landlord insurance policy covers several risks such as theft and burglary by tenants, vandalism and loss of rent due to tenant default.
Landlord’s insurance is not compulsory by law, and it can cost you over 4 percent of your rental income – however, if you happen to be stuck in an unpleasant situation, it could prove to be a small cost as compared to the benefits. It is advisable to compare insurance rates from several providers for a competitive cover.
Be aware of the law – Many regulations in Australia govern your relationship with your tenant. For example, your tenants have the right to ‘quiet enjoyment’, which means you cannot land at the property unexpectedly for inspections and the notice requirement varies in different states. These requirements may differ from state to state, and it is pertinent to be aware of your rights and responsibilities as a landlord in your state.
Being a landlord is a full-time job!
And if you do it well, an investment property could be a great way to grow your wealth through rentals as well as capital appreciation. Here’s a handy guide to get you started with your first property investment.
Whether you are a seasoned investor or a first-time investor, you could benefit from speaking with a mortgage broker who can find you a competitive deal amidst increasing restrictions on investor lending. Contact a broker online.
By Vidhu Bajaj,
HashChing Content Writer