10 must-know tips for new landlords
Managing rental properties as a new private landlord can be overwhelming. Here are ten tips for new landlords to help you get it right. Even if you have decided to let someone else manage your rental, there are things you should know and understand about operating a rental property. Ignorance as a landlord is risky behaviour and risky business!
10 tips for new landlords:
Tip 1: Know your market
Know the market for your private rental property. No matter where your rental is located, it’s important for landlords to understand what is going on in the local rental market. How competitive is the market for your rental property?
Consider the following when you are researching:
- What types of rental properties are available in the market? For example, houses for rent, apartments for rent, granny flats for rent, pet-friendly rentals, etc.
- What is the average rental price for rental properties similar to mine? That means similar size, type, and condition.
- What features differentiate my rental property in the local market? Distinguishing features may be internal or external, including location, room size, appliances, views, facilities, accessibility, affordability, or furnished. Highlight any features or points of difference when advertising and conducting open inspections. Also, consider if tenants are willing to pay more for these features. Alternatively, you might use these features to compete with similar rental properties.
- Who are the renters in this market? Consider the renters’ age, occupations, family size, and needs in a rental home.
Understanding the competitive environment for your rental property will assist you in setting an appropriate price and focusing your property advertisement on the key features. This will help you attract quality tenants. Even if your property is being managed by an agency, understanding the market will help you be more open to the advice of the agency when determining rent and advertising the rental property. Our article, Getting your rental ready for tenants, provides information on comparing rental properties.
Tip 2: Get comfortable with legislation
A rental dispute in 2018, ACT, ACAT awarded the lessor to pay tenants $1,082.50 for issues relating to cleaning, a broken blind, the alarm system, a security key, a ducted vacuum system, the heating system and general inconvenience.
Our second tip is to make sure you understand that, as a landlord, the process of renting properties is controlled by residential tenancy laws. Renting is highly regulated in all states and territories in Australia. Legislation exists at both state/territory and federal levels. Therefore, regardless of whether your property is managed privately or by your agent, you need to be aware of the legislation, changes to the law, and the authorities who regulate residential tenancies.
Tip 3: Heed the warning signs
Heed the warning signs that something may be wrong with the tenancy. Warnings may include:
- Calls or letters from neighbours complaining about your current tenants
- Consistently late rental payments
- Non-payment of rent
- Requests for repairs with suspicious circumstances
- Lack of communication from tenants in response to notices
Take warning signs seriously. If ignored, there may be consequences for you as the owner. Checking rental payments have been received once every month may not be the best strategy.
The key is to take timely action following the correct procedures. You may need to issue a notice requiring renters to correct the late payment of rent or to fix some damage to the property. Each time an issue occurs, you need to ensure you take appropriate action to try and correct it. The documentation will provide evidence should you need to go to a hearing to make a claim against the renters in the future.
Timing is critical. Action needs to be timely, not delayed a few weeks or months. Take the correct steps immediately to ensure situations don’t get out of control!
Tip 4: Show respect
Tip four in our list of must-know tips for new landlords is simple: respect. Today, renters (tenants) are varied and rent for a wide range of reasons. Renters are your clients! The goal is to keep good tenants who enjoy living in your rental property. Loyal tenants offer you stability of income. A key to retaining loyal, good tenants (and by good, we mean tenants who pay the rent on time and maintain the property), is building a respectful relationship.
Respectful relationships are built over time through positive communication. When communicating with renters, ensure you are fair and open. Listen to any concerns. Use the correct documentation, respond promptly, and understand their rights and responsibilities as tenants.
As the landlord, you must be aware of the rights and responsibilities of renters, so you do not intentionally or unintentionally remove or abuse them. Use and follow the correct procedures to manage the rental property with a clear understanding of what you can and cannot expect of renters. Failure to build respect will your renters will lead to a high turnover of tenancies and possibly legal action against you.
Tip 5: Abide obligations & responsibilities
Landlord obligations and responsibilities vary in each state and territory depending on legislation. Generally, a rental provider is required to do the following:
- Provide a rental property that is in a reasonable state of cleanliness and fit for habitation by human beings
- Comply with health and safety legislation relating to residential properties
- Do not interfere with the supply of utilities to the rental premises unless it is for safety reasons (avoiding a dangerous situation)
- Respect the privacy of renters
- Follow legislation requirements to enter the premises
- Carry out repairs and maintenance in a timely manner
- Lodge the bond with the appropriate rental authority
As residential tenancy legislation is in the process of change, the obligations and responsibilities of landlords are something you must clearly understand and ensure you abide by. Failure to meet these obligations and responsibilities may result in costly penalties.
Tip 6: Establish processes
Establish processes to deal with every situation. It’s not about making up your own rules and doing things your way! Setting up procedures for each stage of the tenancy that are in line with residential tenancies legislation (Act and Regulation) will assist you in avoiding incorrect and inappropriate actions when dealing with renters and the management of your rental property.
Establish procedures for the following:
- Advertising your rental
- Conducting open inspections
- Screening renters
- Preparing for new tenants
- Signing new tenancies
- Collecting the bond and implementing condition reports
- Conducting inspections
- Implementing repairs and maintenance
- Dealing with emergency repairs
- Entering premises for other reasons
- Dealing with breaches – late payment of rent, damage to property, etc.
- Extending leases and rent increases
- Terminating tenancy agreements
- Inspecting premises at the end of tenure
- Returning bond payments
- Dealing with disputes
Tip 7: Keep records
Tip seven is to keep records of every date, document, amounts received, repairs completed, and all communication that takes place with renters. Hopefully, you will never have a situation where you find yourself attending a hearing with the tribunal providing evidence to claim money owed or worse to defend against paying compensation. As the saying goes, those who fail to plan, plan to fail! Keep and store meticulous records as evidence for possible legal action. Without documentation, you most likely will not be able to provide the necessary evidence to win your case.
Tip 8: Avoid trespassing
No trespassing. You don’t live in your rental property; your tenants do! Put simply, your renters are entitled to quiet enjoyment. This means owners and their agents are not to intrude on the tenants’ right to live happily and undisturbed in their rental home. Inspections and repairs all must be conducted following appropriate procedures. As an owner, it is not appropriate to do the following:
- Drive past the property on weekends to check on the tenants
- Knock on the front door to see how everything is going
- Text or email tenants to tell them you noticed grease on the driveway and they need to get it removed
- Wait for them to return home to demand they pay last week’s rent
- Spy over the fence or peer in the window to see what’s happening
- Send tradespeople over to knock down the front fence and create a second driveway so you can gain access to the back of the property to start a new building
Following procedures the right way helps to avoid invading the quiet enjoyment of your renters. When you conduct your next inspection, you may notice grease on the driveway and make a note of it on the inspection report. Or you may check the rental payments and see that the rent is behind by two weeks. When that happens, you give the tenant the appropriate notice to remedy the breach. You can’t just do what you want, when you want. You have to play by the rule book. And the rule book is the legislation.
Invading the quiet enjoyment of the tenants living in your rental property is a definite no and it is a quick way to end up at a hearing!
Tip 9: Be a safety champion
Be a safety champion when it comes to your rental properties. Legislation sets standards and expectations for safety in residential homes, including pool safety, safety switches, and fire alarms. Also, laws require landlords to disclose specific information to tenants, such as possible safety risks, for example, asbestos or other information which may influence the renters’ decision to lease the rental home.
A rental dispute in 2015, ACT, ACAT determined the lessor to pay the tenant $8,681 for vet bills incurred as a consequence of a poor fence, broken stove, presence of mould, and for work done by the tenant to rectify property issues.
Tip 10: Get serious
Our final tip for new landlords is to get serious about managing rental properties. With new legislation being introduced starting in 2018 and still being implemented in 2020, there is a lot to know and understand about managing rental properties. Many choose to hire agencies or use strata management services. The benefits of choosing to manage your own properties include the savings in paying fees to agencies and maintaining good tenants through building a good rapport. However, the cons include negligence through ignorance and costly mistakes. If you are going to manage your rental property, make sure you take it seriously.
Need some assistance?
RentEzy offers coaching services for private landlords. Our coaching services aim to help new and existing private landlords in achieving their goals in property management. Our coaching will help you develop the skills, knowledge, and attitude needed to be an efficient and effective landlord in the current rental environment.
Coaching includes one free training needs analysis, flexible delivery, and access to exclusive resources. Maximise your resources and gain confidence in managing your rental properties today.