What you need to know about being a landlord
Becoming a landlord can seem overwhelming at first but with property a top investment choice for many Australians it makes sense that more of us are taking the leap.
It’s a great achievement to get on the property ladder and become a landlord but whether you’re going to rent out your property privately or hire a property manager, the responsibility doesn’t end there; there is more to it than setting the place up, sitting back, collecting rent and watching your investment grow.
From finding the right property manager to documentation and knowing your legal responsibilities, here are seven things you should know about being a landlord:
1. Consider whether to employ a property manager
It’s possible to go it alone as a landlord and manage your properties yourself. But employing an expert property manager (usually a licensed real estate agent) as a middle man could save you a lot of headaches and time in the long run.
While it will cost a percentage of your rent, a specialist property manager can actually maximise your rental returns, simplify your responsibilities, organise all the paperwork, maintenance and inspections, find tenants and liaise with them and use their experience to minimise any potential problems.
Ensure the property manager you choose has a good reputation with other landlords and tenants and is up to date on their own responsibilities. As part of you research, reach out to friends who might own in the area and find out who is happy with their property management.
2. Be aware of your legal responsibilities
All landlords should ensure they are familiar with their rights and responsibilities under Australian law. The landlord tenant relationship is governed by the Residential Tenancy Act of each state and territory in Australia.
Common to all states and territories is the fact that landlords need to guarantee the safety of any rented property and its fixed appliances and contents, which extends to areas like maintenance and even health. Skimp on safety and you could find yourself in court.
3. Document and communicate
Whether or not you decide to use a property manager, it’s best to ensure all tenant agreements are documented in writing as a lease agreement so all parties are on the same page.
And good, efficient communication is key to a successful tenancy. If you have expectations about how the property should be kept, communicate them to your tenants or your property manager in advance.
4. Administer the bond correctly
It’s advisable to collect a bond up front against any future damage or loss of rent from prospective tenants.
But a landlord cannot hold this bond themselves – it must be lodged with the appropriate state or territory residential tenancies bond authority who will hold the bond during throughout tenancy.
A bond can be held against any damage to the property, but cannot be held against “fair wear and tear”.
5. Look after your tenants
Attracting good tenants who treat your property as if it was their own is every landlord’s dream. There are two key things you can do:
- Make sure your property is well presented and desirable
- Don’t skip on reference checks when assessing prospective tenants.
Get to know the local legislation around when rental inspections are permitted and the proper process to go through.
And, once you have good tenants, do your best to keep them by ensuring the property is well maintained, being reasonable about any rent increases and making sure any queries are addressed promptly.
6. Consider landlord insurance
While a bond may cover small amounts of damage or loss of rent, landlord insurance covers other risks that can be associated with renting out a property and that don’t fall under a normal home and contents or strata title insurance policy.
Not all landlord insurance policies are the same so work out which one might suit your particular situation best.
7. Maximise your earnings
Rental properties are an investment so most landlords want to maximise their rental earnings.
You should keep an eye on market rents, choose a desirable area in which to invest and make sure your property is well maintained. But you should also seek expert advice about what you might be able to claim through the ATO – for instance, you may be able to claim back expenses like council rates, water bills or capital improvements against tax.
SOURCE: www.realestate.com.au
