For many first time investors, the thought of paying an agent to manage your property might seem unnecessary. Whether or not you choose to make use of this service will depend on your circumstances: do you have time to deal with viewings, background checks, maintenance, or evictions? And, more importantly, do you have the necessary knowledge to do these things in the right way?
For most of us, the answer would be no. This leaves us with the inevitable choice to call in reinforcements in the form of a rental agent. Before you do, there are a few things to look out for.
Know what you’re paying for
There are two types of agents involved in the rental process: letting agents and property managers.
A full property management service will take care of the entire rental process. This includes advertising your property on relevant platforms, screening and selecting a tenant, and setting up the lease agreement. Once the tenant has been placed, the property manager will also be responsible for collecting rent, checking on the property and managing any necessary repairs, and serving any notices.
Letting agents, on the other hand, only take care of the initial process of advertising the property and placing a suitable tenant. The day to day management of the property, including collecting the rent, is the landlord’s responsibility.
David Beattie, author of The Expert Landlord, explains that tenant placement is the first and most crucial step in being a successful landlord. “The success or failure of your property investment begins with the placement of a quality tenant,” he says. The first step in the process is marketing your property at the right price. Aim too high, and you risk having your property sit on the rental market for months.
When it comes to marketing your property, know your target audience. Regardless of your ideal tenant, there are a few simple rules to keep in mind. The first step is taking good photos of the property. Most prospective tenants are looking for their next home on the internet. The goal, here, is to focus their attention on your property. Many agencies offer a professional photography service as part of the rental service. If this isn’t in your budget, at least stick to the simple rule of good lighting and an uncluttered appearance.
The next step is setting up viewings with prospective tenants. This gives you the opportunity to meet someone face to face, which could give provide some helpful insights into whether or not they’ll be a good tenant. Look out for small things like whether or not they were on time for the viewing, were polite and professional, or asked relevant questions about the property. This could show you whether or not the person is serious about the property and will take care of it.
Once you’ve selected a tenant, it’s time to set up the lease agreement. Everyone is in agreement that the lease should be as detailed as possible. This will be your backup should things go wrong in future. Details such as payment date for rent, who’s responsible for different types of repairs and maintenance, and who pays for utilities like water and electricity, should be included in the lease. The golden rule is to make sure that nothing is left open to interpretation.
The final step in the tenant placing process is handing over the keys to the tenant. At the same time, a thorough property inspection should be done. This is done to protect both the landlord and tenant, since it will highlight any existing problems. This will make the process going forward much smoother, since both parties will know what to expect.
Beattie explains: “Once you have placed a quality tenant, your next key to property investment is the consistent management of your tenant and your property.” The process of managing your rental property includes collecting rent and any other monthly fees, as stipulated in the lease. While this is simple enough when you only own one rental property, it can become complicated and labour intensive if you have several tenants to keep track of.
Apart from that, you’ll also need to take care of any maintenance or repairs to the property. This includes emergencies like leaks, as well as possible renovations or upgrades. You’ll need to find a suitable contractor and manage their work. This includes arranging for a suitable time with the tenant, as well as checking the quality of the work once completed.
As the landlord, you’re also the line of communication between a body corporate and your tenant. In the case that you receive a complaint about your tenant, or your tenant is unhappy about something, you’ll need to step in and ensure the right course of action is taken. This is just one of the ways in which an airtight lease can make your job easier.
Towards the end of the tenant’s lease, usually about two months before the lease expires, you’ll need to communicate with the tenant to find out if they’ll be renewing. If not, you’ll need to set up reasonable show dates and times with the tenant. Upon vacating the property, you’ll need to do another walk through with the tenant present. This will allow you to note any damages or areas that need repair or updating. In many cases, landlords will secure a set fee for cleaning when signing the lease. This is then used to restore the property and get it ready for the new tenant. Once again, these are terms you’d need to include in the original lease agreement.
What to consider
As a first time landlord, it can be overwhelming to have to deal with all the day-to-day work that goes into running a property. It’s for this reason that many investors opt to enlist the help of a professional. In some cases, however, you may not need to.
Be honest about the time you have available – and whether or not that time coincides with being able to successfully manage your rental property. Also consider whether or not you want to be involved in the nitty-gritty of being a landlord. If you enjoy doing maintenance and repairs, and don’t mind rushing over if your tenant has an emergency, you might not be in desperate need of a management service.
In practical terms, consider whether or not you have the necessary knowledge of legal and property matters to manage your property in the right way. It could be that you simply need to outsource the technical services like setting up a lease, while opting to deal with the day-to-day matters by yourself. Finally, take into account how many properties you own. If you have several rental properties with several tenants, it’s probably going to be easier to make use of a professional service. Again, this comes back to whether or not you have the time and desire to make this a full-time job.