Disclaimer: This information is general in nature only. While Budget Direct has endeavoured to ensure the information we’ve relied on is accurate and current, we do not guarantee it. Budget Direct accepts no liability for this information.
So, you’ve decided to become a landlord and make a living off… well, living.
You provide the living space, and people pay you every week, fortnight or month to live in it. Shouldn’t be too difficult, right?
Unfortunately, it takes more than just owning a property to be a successful landlord.
Here are seven things every new landlord should know to increase their chances of success:
Related: Tips for renting out your property
1. Consider what being a landlord involves
If you think landlords just sit around all day while the cash flows in, you might want to think again.
Owning a rental property requires hard work, planning and, above all, patience.
You need to be flexible, and adjust your schedule to accommodate prospective tenants.
You need to know how to deal with different personalities, and be ready to endure confrontation when necessary.
You may need to perform repairs at the drop of a hat, resolve disputes, and even pursue legal action against delinquent renters.
And eviction isn’t as easy as it sounds. With strict legal guidelines to follow, you could be in for quite a fight if you end up with a bad tenant.
(You may want to save yourself all this hassle and hire a property manager.)
2. Make the property secure
Before you can legally lease your property, you must make it safe and secure.
Your property will most likely need working smoke detectors connected to the main power supply with a battery back-up.
Chances are your rental property will need to comply with building regulations relating to cleanliness and security.
For example, it’ll probably need to have working door locks and window latches.
And if your property has a swimming pool, it’ll have to adhere to the pool fencing regulations in your state or territory.
Your local residential or tenancy authority may be able to help you make sense of these regulations.
3. Get the lease agreement checked
Talk to your local residential or tenancy authority about what needs to be included in your lease agreement, and then get it checked by a property lawyer.
This document protects your rights as a landlord, so it needs to be watertight in case a tenant violates any of the terms or conditions.
Paying a lawyer to get your legal documents in order now could potentially save you a lot of money (not to mention stress) later on.
4. Document the condition of the property
Before any tenant moves in, have your property professionally inspected.
Make note of any damage or other important findings, and the repairs necessary to comply with the relevant building code. (It might even be worthwhile taking photos for your records.)
Always have the tenant complete and sign their own inspection report.
Once they’ve noted any additional problems, both parties should sign an agreement stating the condition of the property when the tenant moved in.
It means that, when the tenant vacates the property, you’ll be able to fairly determine what, if any, damage was caused during the lease period.
5. Never take a renter at their word
Trust is a wonderful thing. Unfortunately, it’s a luxury you can’t afford as a landlord.
Always run extensive background checks on any prospective tenants and take the time to contact referees and complete a credit check.
Don’t jump at the chance to rent out your property to the first person who comes along.
Remember, tenants are basically investments, and if they can’t be trusted to treat your property well and pay their rent on time, the investment will be a bad one.
Choose your tenants carefully. A bad tenant is worse than no tenant at all.
Related article: 10 ways to settle in as a new landlord
6. Know and understand the law
The laws that govern interaction between tenants and landlords are generally neutral.
However, in specific situations you may find they favour one party over the other.
Make sure you’re familiar with these laws and keep up to date with any changes.
These laws may vary between different states and territories; if you have any issues, contact a local property lawyer.
7. Do your part (and then some)
If you’re going to be a landlord, do everything in your power to be the best one possible.
Keep up with any maintenance, and handle any repairs or complaints in a timely manner.
Set fair rental prices — don’t charge more than the property is worth.
When the time comes to renew their lease, reward good tenants by maintaining the existing rental amount or offering terms that may suit them better (e.g. a month-to-month or a six-month lease agreement).
Most importantly, make sure you’re always available if they need you for anything.
If you treat your tenants well, chances are they’ll stay longer in your property — and keep that rent coming in.