Always ask prospective tenants for references and always call the referees. It is not advisable to rely on your own assessment of prospective tenants as this approach can leave you open to problems down the track.
Referees may be reluctant to make negative comments about a colleague or friend, so it is vital that you also perform a credit check on prospective tenants. One-off credit checks can be made by most debt collecting agencies, but you need the tenant’s permission first.
One should undertake the following: Background checks, social media, police, credit, verify their ID, just to name a few. If you are using a professional property management company they will undertake these and more on your behalf. Remember to get the tenants written permission first.
OUTLINE EXPECTATIONS CLEARLY IN THE TENANCY AGREEMENT
The tenancy agreement is the place to outline what you expect from your tenants. The agreement must state clearly if there are to be no pets, parties or smoking, the maximum number of occupants, and so on. Failure to make specific conditions clear can lead to dispute and if the matter goes to the Tenancy Tribunal, an unclear agreement puts you in a precarious position. Also be aware that neither party can sign away their rights under the Residential Tenancies Act. Even if both parties agree to a clause at the time of signing a tenancy agreement, this clause may not be upheld if a dispute is taken to the Tenancy Tribunal.
OPT FOR A FIXED-TERM TENANCY OVER A PERIODIC TENANCY
You may have a good tenant who is going to pay the rent and look after your property, but if you sign them onto a periodic tenancy instead of a fixed term tenancy they could leave with just 21 days’ notice. This gives you very little time to find a new tenant and could cost you in lost rent. A fixed term tenancy, enables you to find new tenants before the current tenants move out, potentially saving you thousands of dollars. It also enables you to protect against the property becoming vacant at a time of the year when tenanting is difficult, such as late November/December or mid-winter.
TAKE THE MAXIMUM POSSIBLE BOND
Many private landlords feel that no bond, or only two weeks bond is necessary. But it’s very easy for a property to be damaged, potentially leaving the owner deeply out of pocket. Given that tenants are being given the right to live in an asset worth hundreds of thousands of dollars, it’s advisable to insist on taking the maximum bond possible of four weeks.
LODGE THE BOND WITH THE DEPARTMENT OF BUILDING AND HOUSING
Always lodge the bond. Not lodging the bond with the Department of Building and Housing is illegal, and means you could be fined up to $1,000, if a tenant takes you to the Tenancy Tribunal. The actual amount is at the discretion of the adjudicator, but you could also lose many hours dealing with the tenants and attending the hearing.