May 24, 2013

7 Skills You Will Need if You Are Managing Your Own Investment Property

The purpose of this article is to assess whether or not you have the skills necessary to be a property manager or if you need to call in the professionals to handle the property management of your rental property.
Some new owners relish in the role of landlord and never have an issue with the DIY tasks it
requires, while others see their hope to save 5-8% on property management fees backfire on them considerably.

1) Market the property

Make sure you know what similar properties are renting for and consider going to other open homes to see what else is on offer in the area and to pick up some tips on how to show people around your property.

There are many websites where you can advertise your property for rent and there is no reason why you can't get a good supply of potential tenants viewing your property.

If you can't afford to make larger value improvements, consider how the little things can count. A few days spent landscaping or clearing up the yard, repainting the facade or the fence can make all of the difference when it comes to impressing potential tenants.

2) Setting the rent

Be prepared to make minor adjustments to your asking rent depending on size and feature differences between your property and the others in which you are making a comparison.

3) Tenant selection process

Being the property manager means a rigorous process to select tenants for your property to ensure they are reliable and can be trusted to live in the property and pay rent on time.

The process includes:
  • Gathering references from previous landlords of these tenant.
  • Checking employment status.
  • Checking criminal history.
  • Checking their ability to pay their rent. 
Don't skip any steps, the last thing you need as a landlord is a bad tenant. A messy dispute, tenants who don't pay their rent or damage your property will soon put a hole in your pocket that will probably outweigh any saving you will have made from not paying a property manager.

4) Follow correct procedures

  • Tenant should be signed up using a standard residential tenancy agreement, and you should put a property condition report together that you both sign off. Digital photos of every room are a good idea.
  • When you receive a bond, it should be lodged with the local authority, and you should write and keep receipts for all rent in case there are any disputes.
  • If the rent is late, an immediate firm, but friendly reminder is essential. Don't harass your tenants or get into personal conflicts/insults with them, keep it professional.
  • If the rent is not paid on time or damage occurs, consult your State’s Residential Tenancy Authority for advice on demand notices and support from your local tenancy tribunal to seek termination of the residential tenancy agreement and repossession of the property if the problem is not rectified.
  • If the tenant does not leave at the end of their contract, you will need an order from the tribunal terminating the tenancy agreement, and a warrant from the State Sheriff to evict the tenant. Do not try and evict the tenant yourself, as large penalties apply.

5) Basic accounting

You must be comfortable with numbers and paperwork to even consider taking on your own property management. You will be required to keep track of rental payments, fill out receipts and keep track of other receipts, costs and payments.  

Keep up to date throughout the year. Make sure you claim depreciation on your investment property using a depreciation schedule from a qualified quantity surveyor. Always consult your accountant for more information when unsure.

6) Rental increases

Be sure you are happy with the weekly rent you ask for the property at the outset, most states and territories stipulate that you cannot increase the rent until the tenancy agreement comes up for renewal after six or twelve months.

All rental increases must be reasonable, so you will need to keep an eye on the local market and inform your tenant in a timely manner of any increases in writing.

Usually rental increases can only occur every six months, and if the tenants believe the increase to be excessive, they can make a complaint to the tenancy tribunal for a ruling to have the rent maintained at its current level.

The tribunal take each case on an individual basis, and if they rule the increase is excessive the landlord cannot increase the rent.

If the tribunal rules that the increase is within the market increases and is not excessive the tenant must pay at the new rate from the agreed date.

7) Inspections

You can make an inspection up to 4 times a year, by giving your tenant seven days written notice. It is the tenant’s responsibility to maintain the home on a day-to-day basis, and report any damage to you, so you can fix it.

Extracted from http://blog.realestateinvestar.com.au.

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