Self-managing your investment property can be a great idea, but there are some things you'll need to do - and do well - to succeed. Here's a few considerations.
Selecting the right tenant for your property
The best way to select the right tenant is to interview the prospective tenant. This can be done informally during open home inspections. It's a good idea to consider ahead of time who you think the best tenant would be for your property, given the property's characteristics, for example if it has a garden, it may be suitable for people with pets; if it is on the top floor without a lift, it might be best for people who do not have any mobility limitations; if it has 2 bedrooms, i is best for no more than four people and so on.
Tenants need to complete a tenancy application after they inspect the property. It is up to you to check references, ensure your prospective tenant is not listed on a tenancy database, check ID and so on.
Landlord insurance is a must when you're self-managing. Tenants can abscond; damage can occur (accidental, malicious, deliberate); there may be legal expenses; there can be rental arrears. Landlord insurance covers all of these situations. In addition, you may need building insurance for a house.
How high to set the rent
The best way to set the rent is to have a good look at what other comparable properties are out there. A comparable property is one that is within 1km of your property, on the market at the same time as yours, and is as similar as possible to yours. Then set your rent 5% below the other properties that are the most similar to yours. If your property has not rented within 2 weeks in a low rental vacancy area, you may consider dropping the rent by between $10 and $50 per week, depending on the starting rent.
There are many documents involved in property leasing:
- Tenancy application
- Residential Tenancy Agreement (lease)
- Condition Report
- Bond Lodgment Form (this may be done electronically)
The path to successful self-management lies with selecting the right tenant, completing the appropriate documents (for your protection and the tenant's protection), being extra careful with Landlord insurance and ensuring along the way that the rent is always paid on time - and following-up promptly if it is not - and then regular property inspections to ensure that your investment is being cared for.