Rental Properties – Tips for Landlords
Owning an investment property and managing the property as a landlord can be very rewarding.
As a landlord it’s important to secure a lease that will not just maximise the return but also underpin the security of the investment. A good lease is typically made up of three elements:
The first element is the quality of the tenant. To ensure you find a good tenant who will pay the rent on time and look after your property, it’s critical for the managing agent to thoroughly check references. Ideally the tenant will have written references as well as verbal ones and checking the tenant against tenancy databases will verify their rental history is clean.
If the prospective tenants are young or don’t have a rental history, a guarantor (like a parent) adds to the security of the lease. Corporate leases from reputable companies generally make for a good choice too.
The second element to consider is the length of the lease. Twenty years ago, six-month leases were common. A decade ago, twelve-month leases became the normal standard but today, tenants are often looking for longer term leases of two years or more.
Longer term tenants make for a solid lease, as much of the wear and tear on a property comes during the process of moving in and out. You’ll also avoid the changeover costs of new tenancies like the letting fee, advertising costs, lease preparation fees and the loss of rent that can occur between the end date of the old tenant and the start date of the new one.
Lastly, but perhaps most importantly, is the amount of rent. While every landlord wants to get the most rent possible, it’s important to understand that sometimes, setting the highest rent is not the best tactic. Ideally, you want to attract the largest number of applicants to choose from so you can find the best possible tenant with a solid lease term. Advertising the property at even $10 below the maximum may mean the difference between only a couple of applicants and a much larger tenant pool.
Remember, you can always write an increase into the lease after a reasonable period.
Considering each of the three elements before the letting process begins should ensure a positive outcome.