Renting out your investment property comes with a range of legal and financial responsibilities so it’s important you’re clear on how much work you want to put in to being a rental provider and what elements of renting out your property might be better outsourced.
This essential preliminary research is often overlooked, and novice rental providers inevitably make mistakes.
Inadequate selection and screening of potential tenants
Selecting a Renter
In an effort to save money on advertising, self-managed rental providers will often use their own networks to find a renter for their rental property. This may be a cousin’s husband’s mate or a friend of a friend from social media.
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It may seem like a good idea, however, someone your mate says is a great laugh at the pub doesn’t necessarily make a great renter. This personal connection can also influence rental providers into thinking they don’t need to do a background check on their prospective renter and their rental history.
References
A verbal real estate reference in a social setting is not the same as a qualified reference from someone who has dealt with the renter in the same capacity – such as their previous rental provider.
These kinds of oversights can be disastrous. Overlooking information such as:
- Why did their last tenancy end?
- Were they evicted from their rental property?
- What is their current employment situation?
- Can they pay their rent?
- Why they’re currently between residences?
A reference check is also important when it comes to unpaid rent or rental property expenses. Without that history, there may be no way of chasing a renter who has disappeared.
Neglecting to tick all the boxes
Finding a residential lease and condition report template online is fine, but is it customised to your property, or to the specifics of the arrangement with your new renter?
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Damage that occurs during their tenancy can only be evidenced by a report that states the condition of the property before the renter moved in. Their word or your word will not stand up.
A customised lease agreement and condition report that is signed by everyone and agreed upon as the status quo at the time of the tenancy commencing is your only security when it comes to property damage at your investment property, maintenance, and care.
Insufficient processes around bond and rental income
Bond
First and foremost, before a renter moves in, a bond must be secured.
In the event of the tenancy ending, any miscellaneous damages can be dealt with using the bond as collateral.
Rental Income
Another hidden loss that self-managed rental providers unknowingly implement comes from not accurately calculating their rental income.
A full calendar year is not evenly distributed across 12 months exactly so monthly rent should be calculated annually as a calendar month amount rather than simply billed as a monthly amount.
Rental providers that keep effective rental records will learn this quickly enough, while those who don’t follow accurate record-keeping procedures will usually find out far too late about all the income they’ve missed out on.
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Switching to a professional service is easier than you may think, and First National Neilson Partners Property Management can help you through the process with minimum fuss and stress.
Don’t leave yourself out of pocket, speak to our friendly team about our tailored approach and professional service today.