5 Key Steps to Successful Property Management for New landlords
An investment property is a business, so it is important to manage it properly in order to achieve financial success. One of the first decisions you'll need to make is whether to manage it yourself or hire a property manager.
If you're the hands-on type of business owner, managing the investment property yourself may work best for you. But whether you decide to go DIY or hire a property manager, it helps to know the ins and outs of this kind of business. So, here are five tips to help you understand what's involved.
1. Be familiar with the law
Each state and territory have laws in place to protect both tenants and landlords. It's important that you are familiar with these laws and have a solid grasp of your and your tenant's rights and responsibilities. Knowing the law is also helpful even if you decide to hire a property manager.
2. Prepare the necessary documentation
Before looking for tenants, organise all the required documentation, which will include:
- The lease: usually a fixed-term for 6 or 12 months. Once the initial lease expires, you can use a periodic lease, which is a monthly agreement.
- The bond: an upfront payment by the tenant (often one month's rent) as security for rent owed or damage. This is usually paid in advance and held by the governing authority in your state or territory.
- The condition report: a document that notes the condition of the property before the tenant moves in. This is an important document that can serve as evidence if the tenant damages the property. Your tenant may also submit a condition report once they get the keys. Taking photos is usually a good idea.
3. Attract and secure quality tenants
What do you look for in a tenant? Create a list of qualities you need your prospective tenant to have. You may also include this list in the advertisement to let prospects know they may qualify to rent your property. You'll also need to research the appropriate rent you will charge for your property. You can check out reliable websites like www.realestate.com.au and www.domain.com.au or ask a local real estate agent for advice. Remember that you can always ask me, your Credit Advisor, for information and referrals. I have access to up-to-date property market data that will provide average rental rates in the area. Once you've set your rental price, you can then advertise the property. Be sure to use quality photos.
The list of qualities you've made earlier can also help you create relevant questions to ask your prospective tenants. Remember to mention body corporate restrictions, such as whether or not pets are allowed. It is also a good idea to request references as a requirement, such as their employer and previous landlords. Tenant databases are also available per state and territory you can check if the prospective tenant has been blacklisted by previous landlords or real estate agents.
4. Fill out the documentation, lodge the bond, and collect the rent
Once you find a tenant, file all the necessary paperwork. Keep in mind that each state or territory may have different requirements, so do your research and consult your Credit Advisor for help on where to start looking for legal advice. There are also landlord software platforms and apps that can help with rent tracking and expense management to EOFY tax reports and documentation.
5. Retain and maintain
When you have secured a tenant, it's now your responsibility to uphold your end of the rental contract agreement.. Providing an excellent property and meeting your tenant's requests are crucial in maintaining them as tenants. Make sure to respond to requests for repairs and maintenance quickly and efficiently. If you look after your tenants, they will be more likely to take better care of your property.
It's also recommended to organise inspections to keep tabs on the condition of your property. State or territory rules may differ in terms of how often you should do the inspections, as well as how you notify the tenant and entry procedures, so research these as well. It also pays to be meticulous about your record-keeping and documentation. Keep a record of phone calls and messages, as these can help protect you should issues arise.
Ready to become a landlord?
FinancePath are here for you every step of your property journey, making sure your investment loan is right for you and offering referrals to reliable professionals if you need them, including real estate agents, conveyancers or solicitors, and contractors. If you're thinking of becoming a landlord or have just purchased your first investment property, get in touch today!