It is crucial that you provide your tenant with a safe property. Find out your…
By Simon Webster
As seen on SMH.com.au
Being a landlord can be a bit of a scary prospect for first-timers. Where do you start? Do you need an agent? What do you need to put in place before you find tenants? And what do you need to do during the tenancy?
Fear not. All shall be revealed, with our first-time landlord checklist.
1. Consider how you are going to manage the property
So, do you need a property manager, or can you handle it yourself? When things are ticking along quietly you might wonder what exactly your agent is doing to earn their cut of the rent each month. But a good agent will do lots of jobs that you might struggle with, and will have the expertise to manage any issues that arise.
“Many people think it’s easy to manage a property and that they can save a lot of money by not appointing an agent,” says Carolyn Parrella, Head of Niche Distribution at Terri Scheer Insurance. “But there is a lot to understand around tenancy legislation and property management.”
Agents will be able to set a realistic rent, advertise and show the property to potential tenants, screen tenants who have applied for the property, arrange the lease and collect the bond and ongoing inspections and maintenance, all while liaising with you on any decisions.
That takes away lots of headaches – especially for first-time landlords. And if you live a long way from your rental property, that’s another good reason to delegate responsibilities.
2. Get landlord insurance
Being a landlord comes with risks – some of which can be reduced with landlord insurance.
“Among other things, landlord insurance can provide cover for loss of rent if your tenant defaults on the rent and is evicted from the property, or if they break their lease and leave owing rent,” Parrella says. “You may also be covered if your tenant damages your property and it’s untenantable while it’s being repaired.”
Landlord insurance might also protect you from loss if your tenant is injured on your property and you are liable for the injury – something that can be particularly relevant to landlords in a body corporate situation, where you may have legal liability cover in common areas, but not in your unit.
“It’s important for first-time landlords to understand there are risks, but that insurance is a way of transferring the risk,” Parrella says. “I strongly recommend first-time landlords compare policies to really understand what they are being covered for – all policies are not the same.”
3. Make regular inspections
“Whether you are managing the property yourself or have a property manager it’s important to regularly inspect the property to check that the tenant is looking after the property and to allow any maintenance issues to be identified,” Parrella says.
There are guidelines around the notice period you must give the tenant before entering the property as well as the frequency of inspections. It’s important to understand the Tenancy Act in your state..
4. Stay on top of maintenance
“Acting quickly when you are advised of an issue helps protect the value of the property, prevents minor issues becoming major and shows the tenant that you care about the property you own,” Parrella says.
“Letting minor issues wait until they become large and need urgent major repairs may impact your ability to claim on an insurance policy too, as you were aware of the issue but ignored it, thereby contributing to the loss.”
5. Follow up on late rental payments
If your tenants go into arrears on their rent payments, don’t let it slide.
If you have an agent, they will be on top of this. And if you’re self-managing the property, get to know the tenancy laws of your state so you can manage the rental arrears in a timely manner.
“Again, letting rental arrears build up without taking any action to remedy the default may impact your ability to claim on your insurance for loss of rent,” Parrella says.
6. Know the rules about rent reviews
You’ll no doubt want to increase the rent at some point. But you can’t just do it whenever you fancy. State tenancy acts have guidelines on when and how often you can review rent.
If you’ve got an agent, they should be able to advise you. If you’re self-managing, make sure you’re playing by the rules.
Insurance issued by AAI Limited ABN 48 005 297 807 AFSL 230859 trading as Vero Insurance. In arranging your insurance, Terri Scheer Insurance Pty Ltd ABN 76 070 874 798 AFSL 218585 acts under authority given to it by Vero Insurance. Read the Product Disclosure Statement before buying this insurance and consider whether it is right for you. Contact Terri Scheer on 1800 804 016 or visit our website at www.terrischeer.com.au for a copy.
The information contained in this article is intended to be of a general nature only. Terri Scheer does not accept any legal responsibility for any loss incurred as a result of reliance upon it. This article has been prepared without taking into account your particular objectives, financial situation or needs, so you should consider whether it is appropriate for you before acting on it. The Target Market Determination is also available.
For further information, call 1800 804 016.