Risks for private investors
One of the most important decisions a landlord will make is whether to manage their rental property themselves or enlist the services of a professional property manager.
While DIY property management may sound easy enough, it can actually be quite complex and there are potential traps.
One of the biggest issues facing landlords is the legal implications as risk management is now an important part of property management. If you’re going to do it yourself, you’ll need to have a thorough understanding of the tenancy legislation and paper work required.
There are also many day-to-day problems that can arise. Common issues that may need to be dealt with are: tenants failing to mow the lawn and maintain the gardens, having pets without approval and getting behind on rental payments.
As many landlords often develop a personal connection with their tenant, they may feel uncomfortable chasing arrears. Property managers, on the other hand, are removed from those emotions.
If you are considering managing your own rental property, it’s important to be aware of the pitfalls.
Here are five traps to avoid:
Failing to ask for a bond
This is a security deposit which is held in case the tenant doesn’t meet their obligations under the tenancy agreement, such as causing damage to the property or failing to pay the rent by the vacate date.
Not having a lease
This is a legally enforceable contract which usually spells out the length of the rental agreement, the amount of rent that will be paid, and the condition the property must be returned in.
Not filling out a condition report
This document describes the standard of repair for the premises and any items included within the premises, such as furniture. It is designed to protect the interests of both parties.
Not understanding tenancy laws
Property management can be very complex and if landlords don’t comply with the legislation it can lead to fines. There are different Acts legislating tenancies in each state and territory.
Inspecting without correct notice
The tenancy laws in each state stipulate how often inspections can be done and how much notice must be given to tenants. Failing to issue correct notice can be costly as penalties apply.
One of the biggest advantages of enlisting a property manager to look after your rental home is peace of mind. They take the hassle out of every step of the process such as finding a tenant, collecting the rent, attending maintenance issues and conducting routine inspections.
Although there is a cost involved in using an expert, you are paying for a professional service and the fee is tax deductible.
A property manager can also advise you on how to present your property in a way which attracts quality tenants and gets the best rental return.
So, when it comes to property management, think carefully before you decide to do it yourself.