Property management is an important part of your investment. If done correctly, it will ensure that your property is maintained to a high standard with minimal costs to you. Wouldn’t you hate to fork out such a large sum of money on my dream investment, only for it to be worth less in 5 years time instead of more, due to a series of bad tenants and poor treatment of the property?!
It’s important to note that if you do decide to manage your property yourself, there is a significant time commitment that comes along with it! It requires high organisation, as well as all sorts of knowledge concerning tenancy laws and procedures. It’s definitely not something you can just wing!
For anyone who is game to take on the task, I’ve put together a step by step guide on how to attract the best tenants, score the best rental figure, and ensure that the property is always in great condition.
Believe it or not, a lot more goes into marketing your property other than simply listing it on a few sits. First impressions are everything! If you aren’t putting your best foot forward, you’ll find it hard to find a good, reliable tenant.
What To Charge
When figuring out what to charge for your property, you need to find a happy medium between getting as much rental return as possible, while still being reasonable and realistic. It’s easy to get this price point wrong if you haven’t done your homework. A good way to ensure you are charging realistically is to check out what other similar properties in the area are renting for.
How much you charge also needs to reflect the level of demand in your area. This is where rental vacancy rates will become your best friend! Vacancy rates show what proportion of rental properties in a specific area are currently unoccupied. If there is higher than 4% vacancies, then it’s likely there is going to be a lot of competition amongst landlords to get tenants. On the other hand, in a tight rental market with a vacancy less than 1.5%, landlords have more freedom to set their rates higher. It’s as simple as supply and demand!
Advertising Your Property
Once you’ve formulated your ideal pricing, you need to start looking for tenants! Did you know that sites such as realestate.com.au and domain.com.au actually require you to be a licensed agent to advertise? There are a few other avenues you can explore instead, including amazing new online marketing businesses such as Property Now and Buy My Place. They can even help with writing the ad and carrying out residential tenancy checks (which are ESSENTIAL if you want a tenant with a good history!)
Most tenants will judge your property based on the pictures they see before they continue on and read what you’ve written, so be aware of this and take pictures that show your property at its most flattering! When writing the ad, think about all of the things that a tenant would ideally want access to in a property, including access to transport, schooling etc.
PICKING THE BEST TENANT
If you’ve successfully nailed your marketing strategy, you should now have a healthy pool of potential tenants to choose from. There are two key things to look for in a good tenant:
1. They Have Good Finances
- Ask for copies of their payslips
- Call their employer to confirm their employment
- Check if they can realistically afford the rent, ideally their income should be at least 3 times the monthly rent
2. They Have A Good Track Record
- Firstly, you need to get a Tenancy Check (available at tenancycheck.com.au). These are reasonably priced at around $40 and they tell if there are any hidden nasties that you need to know about in their history.
- Always ask for a rental reference (at least two, including their current landlord), and ask things such as if they paid rent on time, why they vacated, the condition of the property, complaints etc.
The Tenancy Agreement
To make it official, you need to obtain or draw up a tenancy agreement and have the tenant sign it (and you too!) This agreement will clearly lay out the tenant’s obligations while residing in the property. I personally think the safest way to approach this is by using the standard tenancy agreements that have been prepared for your use courtesy of your state government. This will ensure that all legal requirements are met. You’ll also need to undertake an ingoing inspection to determine the state of the property prior to their occupying it, and arrange for a lodgement of bond to be made.
Inspecting The Property
Love it or loathe it, if you’re managing a property you need to understand that there will be maintenance and repairs that need to be carried out. The best way to keep up to date with the state of your property is by conducting routine inspections! In the event that parts of the property have been damaged or not maintained to a certain standard, you will be required to send the tenant a breach notice outlining a reasonable time frame in which they have to fix the problem. If they fail to do so, you will need to contact your state government authority about the next course of action. It may lead to the termination of the tenancy agreement.
When Tenants Vacate
The first step is to confirm with the tenant the date in which they will be departing, and ensure that it meets the minimum period of notice. You should also settle any outstanding rent payments. Some tenants may ask you take the outstanding amount out of their bond. This is a BIG no-no! All tenants must pay until their vacation date, and messing around with the bond can cause you unnecessary stress and problems. You should always carry out a final inspection to ensure the property is being left in an acceptable condition as well.
And there you have it! As you can tell, property management isn’t for the faint-hearted. For the uninitiated or time-pressed, mastering the art of effective property management can be truly challenging. It’s not surprising that many investors simply wash their hands of it altogether and outsource their management to an agency. The positive of doing it yourself? You don’t have to pay monthly property management fees!
The question now is; are you up for the challenge? Let me know down below if you have any questions!
Until next time,
*This article was first published on The Property Investor – http://www.tpimag.com/the_property_investor_thought_leaders/flying-solo-how-to-manage-your-own-property/