Common Landlord Mistakes You Need to Avoid

Like a lot of things in the business world, being a good landlord both for your tenants and in terms of managing your own investment, is something that you often learn with experience. First-time landlords will often make simple mistakes and in some regards, this is to be expected given that this can be a demanding role to take on in many cases. In your position as a landlord, you are essentially managing people, risk and finances too, so it can certainly be a challenge for a lot of people. This article goes through a few of the common errors that landlords can make, with some suggestions on how to avoid them.

Not Understanding Your Insurance Policy

Taking out landlord insurance is an absolute must whether you’re renting out your property, flat or holiday home, and a general knowledge of what you’re covered for is essential.

Working with an insurance company that explains things clearly and works closely with you is always a big help. They can present you with your options and make a suggestion or recommendation that best suits your financial situation, the size of your investment and other factors. But it’s also up to you to make sure you read the fine print and know exactly what it is your covered for; do your homework, understand your policy and you’re in a better position to keep yourself protected and understand your rights as a landlord too.

Not Giving Proper Consideration to the Circumstances of Tenants

More often than not, having to deal with and manage an unreliable tenant or someone with money issues can be a massive headache. Without the proper insurance, this situation can be a strain on your finances and cause a great deal of stress.

It’s mandatory to check your tenant’s ability to pay; just make sure you don’t overlook this and write it off as nothing to worry about. If you see any red flags, it’s important to think carefully about your decision. Ask previous landlords how they were to deal with and check out all the references provided - in short, do your homework. Choosing the right tenant can make all the difference so take the process of selecting your tenant seriously.

Underestimating the Effect of Maintenance Expenses to Profitability

If you want to be successful in this, renting out property should be approached as you would approach the running of a business, rather than a side project. Figuring your expected revenue and costs etc. is very important if you want to be profitable in the long run. There is a tendency on the part of first-time landlords - and often inexperienced business managers in a number of industries - to underestimate how costly maintenance can be over the years.

When it comes to your property, failing to properly predict this can be an unexpected and unwelcome strain on your finances; getting it right can help you make better investment decisions in the future. Whether it be damage from water, pests or general wear and tear, the costs can be quite high, so make sure you account for them.

Also, remember that it’s very important to be prompt of any repairs that are required. Failing to do so and neglecting things that need to be done can result in big problems if the tenant is put at risk as a result.

Not Having a Lawyer

Quality landlord home insurance for your rental property can help protect your interests and ensures that you have professionals in your corner. However, it makes sense to have an ongoing relationship with a lawyer to ensure that you're looking after if things between you and your tenant do happen to take a bad turn. Have a lawyer draft up the legal contract from the outset so they are aware of the circumstances and have some idea of the case if problems do arise down the track. It can save you a lot of stress, time and money if you already are prepared from a legal standpoint and have protected your legal interests with the help of an attorney.

If you are a new landlord, keep these considerations in mind. Ultimately being a good landlord comes down to preparation and organisation, doing what’s necessary not only to protect your interests but to ensure you are profiting in the long term. For more information in regards to the best landlord insurance in Australia, speak to the team at St. George Underwriting Agency today for a discussion about your needs.

How To Avoid The Loss Of Rental Income

One of the most important factors in being a landlord is doing everything possible to ensure that your tenants do not fall behind on their rent. For many new landlords, losing rental income can mean the loss of mortgage payments and possibly more. Luckily, there are ways you can protect yourself and ensure that your chance of having to deal with the loss of rental income is kept at a minimum. 

Ensuring that your tenants are financially sound is a great place to start, and there are a few ways to confirm that the people renting your property to are able to keep up with payments. First, as a private landlord, you can try a credit check with your tenants’ permission to see how well a possible tenant deals with repayments over long periods of time. While a credit check may not tell you the whole story, it will alert you to any unusual activity that you can talk over with your tenant which may also give an idea about what type of landlord insurance policy you require for your safety.

Knowing If Your tenants Can Afford The Rent

Asking for proof of income is the first step in seeing if the tenant can afford to rent the property. Requesting the tenant to note down their regular payments and bills will give you an insight into how well the landlord and tenant relationship will span out financially.

Always check the day that your rent payment is due on your bank account, and set up an alert with your bank to notify you of any payments being made on that day. Check throughout the day to ensure that a payment hasn’t simply just been delayed due to unforeseen circumstances, and allow the tenant the full business day to make the payment. 

If a payment hasn’t been made, first check with your bank that there are no delays for payments, or that the payment is currently processing, and simply notify your tenant that the rent due date has passed. A simple text might be all it takes to alert the tenant of the due date. 

If this is a regular occurrence, where your tenant is often late with a payment, talk to the tenant about arranging with their bank an automatic payment to leave their bank on a specified date.

Employ A Property Manager To Engage With Your Tenants

 

If you own a number of properties, it may be worth your while to hire a property manager who specialises in tenant liaison and will deal directly with the tenants and notify you of any issues that need to be dealt with.

If a tenant has not made payment by an agreed time frame then as a landlord you have a number of options to speed up the process and mitigate any losses you may encounter if the tenant refuses or is unable to pay. 

You should issue a notice of non-payment of rent and rent arrears if the tenant has not paid rent after 7 days (or 5 days for a caravan property). This notice is a “Notice to remedy breach” which gives the tenants 7 days to pay the arrears (or 5 days in a caravan park). If the tenant pays the arrears within this time frame, the tenant is able to continue the original tenancy agreement as normal.

Issuing Official Notices

If the tenant doesn’t pay the due monies within the allotted time frame, the landlord can then send the tenant a “Notice to leave”, which gives the tenant a minimum of 7 days to vacate the property (or 5 days in a caravan park).

If the tenant then pays the arrears within this 7 day period, the tenant can apply in writing and request that they remain at the property, which is up to the discretion of the landlord to allow the tenancy to continue, and accept in writing.

Get Help From Your Local Authority

If the tenant doesn’t pay the monies due and doesn’t leave the property, then the landlord can lodge an “urgent application” with the local authority, such as VCAT in Victoria, for a warrant of possession to enforce the tenant to vacate the property. Similarly, you can also opt for rental property insurance to protect yourself from tenant’s arrears.

Staying on good terms with your tenant is the best way to ensure rent is paid in full and on time, but if things go wrong, and rent arrears start to accrue, following these steps will allow you to deal professionally with your tenants, whilst keeping you on the right side of the law, and hopefully recuperating your rental income in full with minimal losses.

Speak to the expert team at SGUA for more information.