“Although the idea of becoming a landlord and earning some extra money can be an alluring endeavour, it is vital that the owner of the property be fully prepared for what being a landlord entails. Doing some research and understanding what is required as a landlord, will put the owner of the rental property in the best position to handle whatever may come their way and make for a successful venture,” says Goslett.
He provides first-time and potential landlords with five key elements to consider when entering the property rental business:
The reality is that while a rental property may pay for itself over the long term, initially the landlord will probably have to put in money to cover all the costs of owning the property. “While it does happen, it is rare that the rent amount will cover all of the costs involved in owning the property from day one. Whether it is a section of the bond repayment that is not covered by the rent amount or maintenance costs, a landlord will more than likely have to put money into the property each month,” says Goslett.
When it comes to owning a property - the bond repayment is not the only expense. Potential landlords need to consider aspects such as general maintenance, insurance, rates and taxes and possibly the services of an attorney or a professional rental agent. An attorney is a valuable asset to a landlord when it comes to drawing up lease agreements, giving sound advice regarding the landlord’s legal rights and responsibilities, and dealing with defaulting tenants. A rental agent will take care of screening and vetting tenants, collecting the monthly rental and general management of the property.
The checklist will be used when a tenant moves in and when they move out. It will include all items that the landlord will need to go over carefully with the tenant when handing over the keys. A checklist will ensure that nothing is overlooked and that all important aspects that need to be addressed are seen to. It is also far easier to check the property for any potential hazards or things that need to be fixed before the tenant moves in, rather than when they are already there and settled.
To avoid any future complications or misunderstandings, all stipulations should be clearly stated upfront in a detailed contract. The more detailed the contract and the more issues that it deals with, the smoother the rental will be. According to Goslett, if all the important elements are included in the document there will be no areas that are left open for interpretation. Aspects such as acceptable tenant behaviour, breakage costs, preferred method of payment and date that the rental is payable by should be all included.
Tenant selection will have a massive impact on the financial success of the property rental. For this reason, each tenant should be carefully vetted before they rent out the property. The landlord should enquire about details of the tenant’s previous rental history, reasons they are moving, their place of employment and income. Landlords should contact the given references in order to verify as much of the information as possible.
“The tenant selection process is where the services of a rental agent will come in handy, as they will be able to professionally vet all possible tenants. While it is not legal to discriminate against any tenant, it is also not wise to simply accept tenants on a first-come-first-serve basis,” advises Goslett.
