If you have spare real estate, it makes sense to start looking for renters in Australia. Leasing privately will earn you passive income from your investments.
Like any money-making venture, there are tricks to the trade. Nothing gripes a good landlord more than a pesky tenant. Fortunately, the pros far outweigh the cons. Leasing an apartment or house is lucrative business. It also helps pay off the mortgage. Get in the game with a good start by tapping into all the sound advice you can get.
If you’re a new landlord looking for renters and you’re wet behind the ears, this list is for you. With these tips, you can avoid visiting the property and discovering five people have nested in the space.
Here are 5 tips to keep in mind for a smooth life as a new landlord:
Tip # 1: Set a long-term timeline
It’s great if your property is raking in revenue at the get-go. Sometimes, it does take time to break even and earn profits on leased space. Set your sights on your personal end game–be it paying off your mortgage as soon as you can, or saving money for a specific goal. This requires sheer commitment, which you’re tempted to break every time the monthly check comes in.
Before you spend the rent money on a beach getaway or a new car, consider how this impacts your long-term goal. Think of leasing privately as a marathon—you should never sprint on a marathon.
Tip # 2: It’s a numbers game when leasing privately
Expenses can pile up. After you’re done with the task of looking for renters, you need to treat your tenant-landlord contract as a business deal. Aside from the upkeep and maintenance of the property, set money aside for administrative costs and taxes.
Stay on top of the situation by figuring out how to spend revenue when you receive it. Prioritize urgent over non-essential costs. As a new private landlord, don’t fall into the trap of fixing everything at the same time. Spend enough to maintain the upkeep, save the rest.
Tip # 3: Organize commitments, have a landlord checklist
Being organized will prevent you from wanting to pull your hair out with your bare hands. Have you covered everything to ensure the property is code-compliant? What requirements should you meet before a tenant moves in or out?
Rules on upkeep vary between locations. Write down scheduled maintenance work like pest inspections and other events specific to the property you’re managing.
It will pay off to write it down. You’ll feel better every time you tick one item off the list! A well-drafted list will save you a world of hurt in the years to come.
Tip # 4: Befriend paperwork
Everyone hates filling out and filing forms, but there’s good reason why deals are sealed in ink. How would you feel if your tenant pays the month’s rent with a bag of 50-cent coins? You’ll avoid this insult if you stipulate in the terms your preferred payment methods.
Forms protect you from abuse and sleights-of-hand tricks. Tenants will have an excuse to skip rent if they want to, but you can counter and remind them late payments come with penalties. Follow up with forms signed by all concerned parties. Dispute resolved.
Tip # 5: Be picky with tenants
This is rookie lesson you don’t have to pay hard to learn. When looking for renters, avoid choosing family. Remember you’re leasing for profit; this mistake will mess with your business, and can ruin relationships. It’s easier to overlook terms of lease when the tenant is a relative, asking you cut some slack.
Ideal tenants are acquaintances (not friends) and colleagues. You know the tenant well enough, but you can keep the relationship formal. Conduct a thorough background check on strangers. Don’t grab the first offer that comes along. If the deal sounds too good to be true, it may end up as a problem.
Newbies and veterans face the same challenges in leasing, at least when it comes to due diligence. You’re better off not making decisions you’ll regret, though. It’s better to learn from the experienced, instead of learning from experience!
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We’re certain you’ll love these other blog posts for private landlords:
- 5 mistakes private landlords should avoid
- Finding renters for your property: 5 tips to avoid bad tenants
- Rent my house: Terms to include in a lease agreement
- Good news! A free online tool for both landlords and tenants
- 5 advantages of leasing unfurnished property