DIY landlord: your guide to managing your rental

We discuss the benefits and drawbacks of managing your own property as well as practical advice for doing it successfully.

A property manager's job can be challenging at times because they must balance the interests of both tenants and landlords. There are benefits and drawbacks to choosing to manage your own rental property, which many Australian landlords do. Here are some things to think about if you're thinking about running your own rental property.

1.  Personality and professional distance

Do you have the personality type that can maintain a business-like connection with your tenant? That is the first thing you need to ask yourself. Can you exercise your legal rights in an emotion-free manner if the renter is late paying the rent, the damage is discovered during an inspection, or a tenant wishes to break their lease without providing the appropriate notice?

Being a DIY landlord entails handling challenging situations including demanding rent, evicting tenants, and recovering bond money. They are regrettably inevitable when dealing with rental homes. As a do-it-yourself landlord, you must be sure that you can handle these situations without becoming emotionally invested in them.

2.  Legal and legislation

Australia has a wide range of judicial and statutory frameworks in place to safeguard both tenants and landlords. These differ in every state.

If you are a do-it-yourself landlord, you should familiarise yourself with the pertinent Acts and laws. You are advised to finish a brief property management course offered by the Real Estate Institute in the state where your property is located or that it recommends.

As a do-it-yourself landlord, you'll also need to get access to common contracts and papers, like lease agreements and bond deposit forms.

Rental payment, lease condition, and bond claim disagreements frequently lead to tribunal hearings. The judge will take into account whether the landlord has taken the proper actions and is able to present the proper records as proof of this has occurred.

Consider the scenario where you want to evict the tenant. If so, you must show that you made the necessary reminders, notices, and applications at the appropriate times in order to obtain the demand you need. If you are unable to do this, the judge might not grant the order you want and the tenant will be permitted to remain in the home.

3.  Rent collection

Rent collection is a vital component of property management. It is crucial that a straightforward procedure be followed in this regard and that the entire rent amount be paid on the designated date. If you are unclear about this, you might discover that your tenant is always late or that payments are sent to you gradually over the course of the monthly period.

Professional property managers now manage rent payments using direct debit. Given that the property manager retains control, this is the ideal method of payment. The tenant authorises the debiting of the rent from the tenant's account on the due date when the tenancy first begins. One of the best things about this method of payment is that you are immediately informed if the tenant's account is empty. Before you become aware of a problem with other modes of payment, it could take 3–7 days.

Make it known that the rent must be paid in whole and on time if you are a DIY landlord. Avoid half-payments, avoid dropping by to collect rent, and make sure one person is in charge of communicating any problems with rent payments.

I would advise you to start sending formal reminders that payment is due if your tenant does not pay their entire rent by the deadline.

Depending on the state, you can begin official proceedings anywhere between days 10 and 14. Make sure to follow the correct sequence for each step, maintain track of everything, and avoid bothering the tenant. For instance, there may be a restriction on the number of reminders you can send in some states.

4.  Leasing your property

Your house will occasionally go empty, and you'll need to locate a new renter - ideally someone who will look after it and pay their rent on time!

Your tenant must give you between two and four weeks' notice before moving out, depending on the state you are in. Leasing your property involves a lot of work. There are certain crucial measures you must take in the leasing process if you plan to rent out your own property:

5.  Advertising

The goal of advertising is to increase competition for your business. You want as many people to want to live there as you can. The amount of applications you receive for your property will increase as a result. The more applications you have, the greater your selection of the ideal tenant will be!

You should create a marketing strategy that details your advertising strategy and the kind of tenants you hope to attract.

It's crucial to be a part of www.domain.com.au and www.realestate.com.au in Australia.

Your advertisement's writing style is crucial. Check out what others are doing online to get some terrific ideas for the format and language of your ad.

Make sure to include the location, any significant amenities in the area, such as schools and transportation, as well as all the characteristics and advantages of your property. Don't be shy about going into great detail. Include as many photos of your property as you can to showcase it.

6. Receiving enquiries

This is a crucial step in the leasing procedure. You must make sure you are approachable and professional in how you handle this situation. If you don't know what to do and don't behave professionally, tenants might not feel comfortable renting from a do-it-yourself landlord.

7. Tenant screening

Having a rigorous tenant screening procedure is crucial. It is simple to get a tenant for your property, but it may be challenging to get rid of a problematic tenant. Don't be hesitant to ask the same question in different ways to see if there is a conflict between what the tenant has previously said. Make sure you have a list of questions to ask and don't be afraid to ask them more than once.

You should conduct a phone screening when the tenant fills out a tenancy application, followed by an in-person interview. This is crucial since it will affect how you decide to proceed. Make sure you have a complete understanding of the applicant, including their identity, the reason they left their previous rental, whether they have pets, when they want to move in, whether they live alone, what they do for a living, their income, and any references they can offer.

Make sure to independently confirm all of these facts by contacting any prior landlords or rental brokers. To make sure they haven't been labelled as poor tenants, you can also check the tenant registration in your state.

You could be amazed by what information about the potential tenant you can get if you Google them. Of course, be careful not to violate any applicable privacy regulations by making sure you have the necessary authorisation.

8. Application acceptance

As soon as you feel confident in your selection of a tenant, give your approval before another landlord does. Schedule a time to sign a lease with them, and take the necessary bond and deposit payments. It is essential that bond funds be kept with the proper state bond authority.

9.  Move-in day

Here, the tenant who has been there since the beginning is given the keys and the continuous property inspection is agreed upon.

10.  Inspections

As a property investor, it's crucial to take care of your property assets in addition to obtaining a good yield. Each state has regulations governing how frequently you can check a property each year as well as how the inspection procedure should be carried out. An inspection typically takes place three months after initial occupancy and then every six to twelve months after that.

If you are a DIY landlord, you must make sure that you follow the inspection laws in your state, particularly those pertaining to frequency, notification, and entry procedures.

It is highly advised to keep detailed documents and photos.

11.  Rental appraisal and rent increases

You must make the commitment to ensure that you will stay current on local events if you plan to become a DIY landlord. Additionally, you must make sure that any rent increases adhere to the lease's terms and local laws.

Finding the market rent for your home independently is one of the most important services property management offers. They ought to have a thorough understanding of the potential rental income your property might generate given the volume of property they manage in a given location. Different property kinds may experience stronger or weaker market conditions at different times.

Because they are knowledgeable about the market, a skilled agent can frequently get your property rented for thousands of dollars more every year.

12.  Repairs and maintenance

Understanding tenant rights regarding repairs and maintenance, and in particular, repairs deemed urgent as defined by the applicable legislation, is one of the most common pitfalls for do-it-yourself landlords. For instance, if the toilets or hot water aren't working, renters have the right to demand that these problems be fixed immediately. In most situations, they also have the right to pay for the repairs themselves and receive a refund from the landlord.

A variety of tradespeople who can respond to your calls swiftly and affordably are necessary if you are a DIY landlord. Because they work with so many different crafts, property managers have better access to and control over skilled and reasonably priced tradespeople. These connections can result in savings of hundreds to thousands of dollars for you.

13.  Availability and time

If you're thinking about becoming a DIY landlord, make sure you're always reachable and have the time to handle issues as they come up. When a property needs to be rented out, a renter doesn't pay their rent, or essential repairs needs to be done while you are at work or on vacation, it may be expensive and stressful. Be mindful that some of these tasks take time, especially if you are unsure of what you are doing.

DIY landlords would be good to take into account a relative or close friend who can help in case you are unavailable.

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A property might take time to manage. One full-time employee can typically oversee 90–100 properties. To make sure they are not overworked, ask property managers during interviews what their personnel-to-property ratio is.

14.  Technology, tax and record-keeping

It's critical to have the right processes and technology to help you if you plan to become a DIY landlord. For all of your record-keeping, you will require access to the internet, e-mail, a mobile phone, a financial reporting system, and electronic files.

The fact that a property manager would receive, examine, and pay all of your bills is one benefit of hiring one. You will receive a statement of all transactions at the end of each month, and you will receive an End of Financial Year statement at the end of each year that includes a breakdown of all income and outgoings.

Some cutting-edge agencies allow landlords to log in online and view the information of the property. Landlords can examine anything related to their property, for instance, tenant information, copies of crucial documents, images from inspections, and copies of all financial statements and payments, at RUN Property.

15. Costs

Saving money is one of the main factors a landlord could take the DIY route. Remember that these expenses are deductible from your income, therefore you should claim them to lower your taxable income.

When you consider the expense of hiring a qualified property manager, it is unquestionably a worthwhile investment. These prices are quite affordable when compared to those of other professions, such as accountants. The increased rent, better maintenance prices, and, of course, the cost of your expenses and time that an expert manager can secure for you frequently more than offset these charges.

What you need to know about being a landlord

Being a landlord can first seem intimidating, but since many Australians consider property to be one of the best investment options, it makes sense that more of us are making the switch.

Getting on the property ladder and becoming a landlord is a great accomplishment, but whether you choose to privately rent out your home or hire a property manager, the responsibility doesn't end there. There is more to being a landlord than simply setting up shop, relaxing, collecting rent, and watching your investment increase.

Here are seven things you should understand about being a landlord, ranging from hiring the right property manager to documenting your obligations and understanding your legal obligations:

1. Consider whether to employ a property manager

As a landlord, you have the option of managing your properties independently. However, using a professional property manager—typically a real estate agent—as a middleman could ultimately save you a tonne of time and hassle.

While a professional property manager will charge a percentage of your rent, they can actually increase your rental returns, reduce your workload, organise all the paperwork, maintenance, and inspections, find tenants and communicate with them, and use their expertise to minimise any potential issues.

Make sure the property manager you select is knowledgeable about their duties and has a good reputation with both landlords and tenants. Reach out to acquaintances who might be local property owners as part of your study to find out who is satisfied with their property management.

2. Be aware of your legal responsibilities

All landlords should make sure they are aware of their legal rights and obligations in Australia. The Residential Tenancy Act of each Australian state and territory governs the landlord-tenant relationship.

Landlords are required to ensure the safety of any rented property and its fixed equipment and contents, which extends to areas like maintenance and even health. This need is shared by all states and territories. If you cut corners on safety, you can end up in court.

3. Document and communicate

It's ideal to make sure that any tenant agreements are recorded in writing as a lease agreement, whether or not you choose to engage a property manager so that everyone is on the same page.

Additionally, effective communication is essential for a successful lease. Inform your tenants or your property manager in advance if you have any expectations regarding how the property should be maintained.

4. Administer the bond correctly

It is advisable to demand a bond up front from potential tenants as insurance against any future damage or loss of rent.

The appropriate state or territory residential tenancies bond authority must receive this bond; they will hold it throughout the tenancy. A landlord cannot, however, hold this bond on their own.

Although "reasonable wear and tear" is not covered by a bond, it might be held against any damage to the property.

5. Look after your tenants

Every landlord's goal is to find nice renters who treat their rental home like their own. You can accomplish two things in particular:

Learn about the local laws that govern when rental inspections are allowed and how they should be conducted.

Once you've found decent tenants, try your best to keep them by keeping the place in good shape, being flexible with rent increases, and seeing to it that any issues are resolved quickly.

6. Consider landlord insurance

Unlike landlord insurance, which protects against hazards that aren't covered by standard home and contents or strata title insurance policies, a bond only covers small amounts of damage or lost rent.

Determine which landlord insurance plan can be the best for your specific circumstances because not all policies are created equal.

7. Maximise your earnings

Most landlords seek to maximise their rental income because they are investing in rental properties.

To invest, pick a good location, keep an eye on market rents, and make sure your property is well-maintained. But you should also get professional guidance on potential ATO claims you could be eligible for. For instance, you might be entitled to deduct costs like council rates, water bills, or capital upgrades from your taxes.

Summary

Many Australian landlords manage their own rental properties. Being a DIY landlord entails handling challenging situations such as demanding rent, evicting tenants, and recovering bond money. Here are some things to think about if you're thinking about running your own rental property. Do you have the personality type that can maintain a business-like connection with your tenant? Rent collection is a vital component of property management.

Professional property managers manage rent payments using direct debit. Avoid half-payments, avoid dropping by to collect rent and make sure one person is in charge of communicating any problems. Leasing your property involves a lot of work. There are certain crucial measures you must take in the leasing process. You should create a marketing strategy that details your advertising strategy and the kind of tenants you hope to attract.

Your advertisement's writing style is crucial. Tenants might not feel comfortable renting from a do-it-yourself landlord, so make sure you behave professionally. If you are a DIY landlord, you must make sure that you follow the inspection laws in your state. Inspections typically take place three months after initial occupancy and then every six to twelve months after that. A skilled agent can frequently get your property rented for thousands of dollars more every year.

DIY landlords would be good to take into account a relative or close friend who can help in case you are unavailable. One full-time employee can typically oversee 90–100 properties. Technology, tax and record-keeping are critical if you plan to become a DIY landlord. Landlords are required to ensure the safety of any rented property and its fixed equipment and contents. If you cut corners on safety, you can end up in court.

Each state and territory's Residential Tenancy Act governs the landlord-tenant relationship. Landlords should be aware of their legal rights and obligations in Australia. Landlords seek to maximise their rental income by investing in rental properties. Inform your tenants or property manager in advance if you have expectations regarding how the property should be maintained. Consider landlord insurance, which protects against hazards that aren't covered by standard home and contents policies.