In days gone by, privately-managed rentals were a rarity, with most Australians opting to use real estate agents to manage their properties. However, the Australian rental property is undergoing a shift, with roughly a third of Australians and over two million property investors choose to manage their properties themselves.
This is an attractive option for landlords looking to keep more of their weekly rent in their pockets, not in the bank accounts of property managers. While this is one way to increase the amount of money your rental property generates for you on a weekly basis, there are several factors to consider. Self-management isn’t right for everyone, so read on to discover what you need to consider if you take this path.
Prepare your property for the rental market
Step one? Make sure your home is ready for tenants.
There are several basics that need to be considered on this front. Spare keys, the installation of blinds or curtains for privacy, standard water pressure, compliance across required smoke detectors - all of these factors must be considered before a property can be tenanted. Your home must meet all safety guidelines and regulations; otherwise, any home insurance will be void, and you stand at risk of being liable for any injuries to your tenants (or damage to their belongings).
Once you’re certain your property meets industry regulations, it’s time to make it sparkle. Giving the property a thorough pre-lease clean ensures it’s in the best shape possible when your new tenants arrive. This may include steam cleaning any carpets, polishing floors, making sure windows are clean, and being mindful of any dirt that may have accumulated on the property’s exterior.
You’ll also need to carry out a check of anything that may need repairing. Whether it’s a leaky tap or a broken light bulb, you’ll need to ensure the property is in working condition once your tenants arrive.
This can also be a good time to invest in some small, beneficial updates. These measured improvements can significantly contribute to the value of the property in terms of the weekly rent at comparable market rates. Installing new carpet, reverse cycle air-conditioning or a dishwasher in an older kitchen can help your property to stand out when it’s listed for rent.
Finding the appropriate amount of rent to charge
How do you know how much rent to charge for your property? If you’re charging too little, you stand to miss out on weekly returns. If you’re looking for too much per week, your property may be passed over for competitors at a lower weekly rental fee.
You can analyse the appropriate amount of rent payable by doing your research. Start by reviewing the market, looking at the median rental price of the area and assessing comparable properties against your own. Take a look at the property’s features, such as the number of bedrooms, type of parking spaces, access to local amenities, and any features, such as pools, sheds or spas. You’ll also need to consider your expenses, looking at how much the property is costing you on a weekly basis against how much the market can bear. You can also call in the professionals at this point. Property managers offer independent rental assessments, and financial planners can be of use in ensuring the amount of rent matches your overall investment strategy.
You may find a surge or drop in rental prices in your area within relatively short time frames. If this is the case, you may need to adjust your price to suit to remain competitive or to make sure you’re not leaving cash on the table.
Set up your property listing
Tenants are most likely to find their rental properties online, so this is the best place to advertise your property’s availability. Make sure your listing is thorough, providing useful details about the property while making the most of photos that show off your property’s features in an attractive manner. Great photos can attract interest, broadening your pool of potential tenants and giving you the best chance possible to find a fit.
Schedule inspections
Inspections allow prospective tenants to view the property in person while also giving you the chance to meet them in person. This will give you a sense of their personality, character and whether or not they’ll be easy to deal with across the course of a long-term tenancy. This can also help to weed out any prospective tenants who you feel won’t be a fit in terms of the property’s suitability or their communication style.
Gather necessary information
There are several key details you need to assess whether or not an application should be approved. This is one of the most time-consuming parts of being a private landlord, as you don’t have the same access to tenant databases as agents or property managers. You can access Naborly or FinRet for a small fee, which gives you basic tenant and credit check information.
Tenants will most likely be able to submit an online application via the site the listing is located on. Within this, applicants should include:
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Their personal details and photo ID
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Three references from previous landlords/employers
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Their employment and credit history
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Details as to why they’re leaving their previous property (or previous two properties, if they’ve been in their last home for less than two years)
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Notes on any eviction notices or a history of rent arrears
Make an informed decision
If you’re looking to protect your investment, you want to ensure a suitable tenant is secured for the rental period. There are some simple red flags you can keep an eye out for when it comes to assessing incoming applications.
Take a look at the tenant’s income-to-rent ratio. If this is low, this is a sign they may struggle to pay rent on time. If their references are solely from friends and family members, this could also be a sign that a previous landlord or agent isn’t willing to supply them with a positive reference.
Tenants may also have a disconnected employment history. This can be of concern if they’re regularly changing jobs, as this could lead to disruptions in their earning capacity.
Finally, income that cannot be proved is a major red flag. Make sure all sources of income can be verified, so you can ensure the tenant is able to meet future rent commitments.
Complete necessary paperwork
Secured the perfect tenant? Great job! To finalise the arrangement, both the tenant and landlord must sign a tenancy agreement, and the tenant needs to ensure their bond is lodged.
Relevant state government websites have tenancy agreements that can be downloaded for free. These will include details as to the bond amount, the account rent needs to be paid, how many people are approved to live at the property, and any specific property conditions.
You’ll also need to complete a property condition report within seven days of the start of the tenancy. This needs to be provided to the tenant.
Once you’ve collected the rental bond and this has been lodged, you’re all set. Congratulations! You’ve just become your own property manager!