5 Things To Know About Being A DIY LandlordFebruary 14 2017
With an array of DIY property management apps and online services easily available nowadays, it has never been more tempting to ditch the experienced Property Manager and to become a DIY landlord. There are, however 5 important things you need to consider before you take the leap.
While being a DIY Landlord might sound easy enough, there are quite a few complexities that many fail to consider before venturing into their new property management endeavor.
From legal implications, risk management, to the day-to-day problems that may arise, there is more to managing your property than just finding tenants and collecting rent. DIY landlords are also often more likely to develop a personal connection with their tenants and may feel uncomfortable performing certain duties such as chasing arrears or dealing with other problem behaviour.
Top 5 things to know about being a DIY landlord
1. Ensure you understand the full legalities around being a landlord
It is important that any DIY landlord is up to date with the complex and often fluid framework around residential tenancy and the rights of their tenants. Being ignorant to the relevant laws can lead to DIY Property Managers finding themselves in breach of one or more of the laws.
Tenancy laws cover a wide range of items including tenancy databases, handling of bonds and rent increases, security requirements, repairs and the time frames for urgent and non-urgent maintenance, frequency of routine inspections and the service of notices (e.g eviction notices).
Breaches (by the tenant or DIY landlord) can be costly and tenants can often take advantage of unwary DIY landlords by flouting their tenant’s rights with a landlord not well versed on their legal standing.
2. Comprehensive screening of your prospective tenants is integral
Selecting the wrong tenant to occupy your rental property can lead to very costly headaches down the track. Many DIY landlords don’t have the experience or tools to know what is required to properly screen a tenant. They tend to rely solely on payslips, CVs and their intuition to screen potential candidates.
As a guide the following items should be used to thoroughly screen prospective tenants:
- Payslips to confirm income and employment status
- References from employer to confirm employment
- Previous landlord or rental agencies details to check for previous evictions and details of how they looked after their previous properties
- Confirmation of how many people will be living in the property
- Any pets have been declared
- The date they want to move in and the length of tenancy agreement they are requesting
3. Make sure you have all the right documentation
Many DIY landlords can put themselves in risky situations by not having the sufficient documentation to support the tenancy or by simply not having a lease agreement in place at all.
It is important that no matter how well you know your future tenants, that a legally enforceable contract is in place to protect you investment and that the lease agreement you have in place is both current and for the correct state.
Along with the signed lease agreement, it is also important that DIY landlords prepare a property condition report and full inventory of their property to assist in future property inspections and any bond claims at the termination of the tenancy.
DIY landlords should also ensure they keep supporting documentation during the tenancy such as inspection reports, sign-out sheets for keys supplied and any requests for repairs.
4. Always take a bond and ensure it is collected correctly
A bond is a security deposit that all landlords should be taking in case the tenant defaults on their obligations or causes damage to the property. All bond money must be lodged with the Bond Administrator (Department of Commerce) until the end of the tenancy. If more than one person has paid the bond, such in the case of a share house, it is important that all names of the parties appear on the lodgement form, to protect everyone’s share.
If you are also permitting your tenant to keep pets capable of carrying parasites that can affect humans (primarily dogs and cats) a pet bond should also be charged. Note that a pet bond cannot be charged for assistance dogs.
5. You need to conduct regular property inspections as per the guidelines
Inspecting your property is a must for DIY property managers, who often fall victim to rogue tenants who cause costly damage to properties. It is important that you keep track of the condition of your property and make note of any maintenance issues or tenant damage that has occurred since the initial inspection in the property condition report.
Sticking to the guidelines set out for rent inspections by the governing bodies is also integral to reduce the risk of costly disputes or penalties. DIY landlords who just turn up are breaking these rules, no matter how well they know their tenant.
The guidelines for inspections in Western Australia are:
- Routine inspections cannot be carried out on the property more than four times a year
- Inspections need to be at a reasonable hour and the tenant should receive seven to 14 days notice of the inspection
- DIY landlords should attempt to negotiate a day and time that does not inconvenience the tenant before sending out the inspection notice
- The notice of inspection must specify the day of entry and whether entry will be before or after 12 noon
- In the case of inspecting necessary repairs, 72 hours written notice is required