It's an attractive option to many landlords: being a private landlord, or DIY Property Manager.  It enables you to deal directly with the tenant, choose the tenant, keep all of the rent and be the first to know of - and fix - any problems.

It can certainly be a rewarding experience - but you need to know a lot about the law and stay abreast of changes and developments.

Step 1: Understanding the relevant laws

Each State has different laws for tenants and landlords.  You need to have a very thorough understanding of those laws as they relate to you, your property an the tenant.  This book will summarise all of those laws for you.

You need to be aware of what tenants are entitled to have and what you're obligated to provide, while also understanding where you can draw the line.  For example, does the tenant have the right to demand a washing machine?

There are laws for all aspects of property management from advertising the property, conducting open homes, screening tenants, collecting a holding deposit (if this is allowed), receiving rent, terminating a lease, conducting inspections (including the frequency of them), bond, rent increases, access to the property and so much more.  For many new owners, getting their heads around all of the laws can be quite overwhelming - if so, it's best to get a professional Property Manager. 

Step 2: Advertising the property and showing it

Choosing the wrong tenant can be your worst (and a very costly) nightmare. 

I can't over-state it: you must prioritise choosing a great tenant.  Conduct the open homes yourself.  Meet all of the potential tenants.  Ensure that the property is advertised with professional photos and a well-written ad to attract good quality tenants.  Find out what the tenant is looking for in their home - and ensure that yours will be suitable for them - you want a long-term tenant after all. 

If you don't find a great tenant, keep searching.  Don't settle. 

Screening tenants begins with the way that you advertise your property.  Write your ad and present your home for the tenant you want.  Treat your potential tenants well and talk with them.  You'll get a great sense of those who are suitable for your home and who you would like to look after your investment for you.

Step 3: Choosing a tenant

Hopefully, you've marketed your property so well that you've had busy open homes and a few applications to choose from.  Begin screening the applications and the supporting documents.  Ensure that everything "checks out".  Tat is things like name, place of employment, current address etc.  You might like to cross-reference information to ensure it is accurate and current.  What you're trying to ascertain is that they'll pay the rent on time and look after your home.  If they've always paid their rent on time, chances are they will with you, too.  If they've looked after their previous homes, chances are that yours will be looked after too.

A thorough application form is your best ally here. 

Step 4: Preparing the correct documents for the lease

It's vital to have a residential tenancy agreement.  It protects you and it protects the tenant.  As well as this, you'll need to register the bond.  Always have a residential tenancy agreement and always collect the full bond.  Again, each State does it slightly differently, so you'll need to become familiar with the appropriate documents for your State.  Consider any additional terms you may wish to add to the lease - but also ensure that it's legal for you to add those additional terms.  If it's a unit in a Strata block, you might also need to add a copy of the Strata By-Laws and any Special By-Laws.

You'll also need to complete a condition report and have your new tenants complete their copies and return one to you.

Step 5: Conducting your first inspection

I suggest doing your first inspection around 6 weeks after the tenants have moved in.  It's enough time for them to have settled in a bit, and long enough for them to have lived in your home for you to tell that it is being looked after.  Ensure that correct notice is given and try to have the tenants home when you inspect the property.

Ensure you follow the correct procedures for property inspections - failure to implement these (eg providing correct notice) can lead to legal action. 

Step 6: Keeping records

There are various records you'll need to maintain throughout the tenancy, such as a rental ledger, reports of inspections carried out, the residential tenancy agreement, bond documents, the tenancy application form, copies of any correspondence or notes of communication with the tenants and so on.  It's best to keep all of this together in a file, so that if for any reason you need to go to Tribunal, all that you need is right in front of you.

If all of this sounds too tricky, a Property Manager is the answer.