Although it seems like much of the work is already finished if a property is tenanted, this can very often be a negative. If you are in this situation or it relates to you, carefully study this article so that you can be certain that the tenanted property you’re looking at is right for you.

The Potential Pitfalls of Diving Straight in

Before assuming the best and going for the purchase, detailed research must be conducted as to why the property is still tenanted and is it for the wrong reasons.

The most common pitfall is that the tenants are substandard. Often-times this is the very reason as to why the property is up for sale in the first place.

Management disagreement can sometimes be the issue, especially when the current tenant has unrealistic expectations. A very real and potential scenario could be that you’re forced to put a property manager in charge, and that shift of responsibility and routine for the current tenant causes issues.

Often-times it is not advised to investors if a tenant is short term or not. Many of the times when they are, the rental price is elevated which at first sight will create an attractive deal for the investor. When price is the deciding factor,  you will be in for a shock when it comes time for the tenant to leave. Not only do you need to find a replacement, but one at standard market price.

In rare cases, tenants can be quite opportunistic or even greedy, for lack of a better word. This can be common when the investor is a beginner. As soon as you take ownership, there may be unrealistic material demands made upon you for improvements that the other vendor did not consider.

These are just some of the potential pitfalls that could arise. Although there are more,  the foundation you need is research. As an investor looking into a tenanted property, you must be willing to put in the time to find out as much as possible to be certain that the property is tenanted for the right reasons.

The Importance of the Lease Agreement

So you’re now certain that the property is tenanted and none of the above or other issues are apparent. There are certain variables that you will need to look at to avoid any silly mistakes, and these involve the tenants.

A common thought that ponders around new investors heads is whether they’re eligible to kick out tenants or not. This would especially be critical to know if they fall into one of the negative categories mentioned above. This brings us onto the lease.

Is the lease fixed term or periodical?

A fixed term is exactly what it sounds like. For whatever period the contract is set (usually 6-12 months), it cannot be terminated unless the tenant and new owner make an agreement. Alternatively, a periodical lease is the opposite. A monthly contract is usually the case in which the tenant can be granted 60 days notice to vacate.

Aside from the above, it is critical you know other details about the lease so that you’re in control. What is the amount of bond held? Are inspections held, and how often? How much does the tenant currently pay in his or her current contract? All these questions can be answered in the agreement or with a bit of investigation and communication.

As always and as mentioned with tenanted properties, research comes first. Use this information as a guideline as to what to look out for immediately, with every different circumstance there may be a different factor involved with the tenant. It’s worth going to the trouble of finding out as much as possible before making an investment that could be potentially detrimental. Contact us to research your next investment.

So who is your ideal tenant? Simply someone that pays rent on time? To have a smooth and successful journey as a property investor, there’s a few more things you need to look into when choosing the right tenant.

Here are our top tips when it comes to choosing the right tenant for your investment property:

1. Know your target audience

It’s important to understand the type of property you have and who it might attract. For example, is it a house that’s close by to schools and parks, or is it an ultra-modern inner city apartment? The differing factors between properties is what attracts different demographics, so make sure you’re aware of your situation and keep it realistic.

2. Remain objective

Choosing the right tenant for your investment property needs to be an unemotional and objective process. You might even find it helpful to have a checklist of all the things you would or wouldn’t like, as this may make it easier to refer to when narrowing down your choices.

3. First impressions count

If you present the property in a clean, well-presented manner, you’re representing how you would expect the property to be maintained. It might mean you need to give the property a fresh coat of paint, update the fittings, or other minor renovations and improvements, but this will all be worth it when you attract people willing to keep it as well maintained as possible.

4. Do your research

Ensure that the asking rent for your investment property is in line with the area it’s in and to similar properties. If it’s too low you might attract too much unwanted attention from people trying to simply snag a bargain, or too high you will financially rule out many people and be without rental income for longer.

5. Screen thoroughly

When it comes to screening applicants, you need to read between the lines and glean as much about your potential tenant as possible. The biggest factor is whether or not they have the means to pay the rent, and this can be figured out based on their income statements and other supporting documents.

Make sure to call at least three references and find out as much as you can about the applicant’s rental history, or simply who they are as a person in general. You should also speak with their previous rental agency or landlord and find out as much as you can about their renting history, such as if they paid rent on time, if they left damage at the property, or even if there were major communication problems. All of these questions will give you a better understanding of the applicant than just what is written on their paperwork.

Although you can search for and choose a tenant yourself, many investors find it helpful to get the advice and experience from a reputable rental agency when it comes to looking for the right tenant.

Here at CPS Finance, we can take out the guesswork, and assist you in choosing the best tenant to continue your investment journey with. Talk to us today!

As a landlord it’s imperative to understand both landlord and tenant rights and responsibilities. Knowing the process and protocol in your state will see you navigate your way around legislation correctly, ultimately staying away from tribunals and court mediation.

Here are our tips on how landlords can make sure they and their tenants are meeting their obligations.

Get Educated

In many cases, tenants are diligent with knowing their rights – especially if they’ve rented previously – so it’s important landlords become familiar with the Residential Tenancy Act. The Act aims to respect the rights and obligations of landlords and tenants, covering rents, rental bonds and other matters relating to residential tenancy agreements. There is also an abundance of resources available online for free to the public on government websites, Domain or realestate.com.au. The more knowledge you have, the less likely you are to fall foul of the law and end up with unwanted court fines.

Follow the Process

A landlord should always ensure two things at the beginning of a lease; a bond and a condition report. A bond acts as a security deposit to cover any costs of damages or potentially unpaid rent during the tenancy. The bond, however, must be forwarded to the residential tenancies bond authority who place the funds in a trust. Normally worth four weeks rent, the bond cannot increase during the tenancy.

Once the tenancy has been terminated, the landlord can claim the bond if the property is not in the same condition it was at the beginning of the lease (this does not include general wear and tear). If the landlord has no objections to the condition of the property, the tenant receives the full amount back upon moving out of the premises. On the other hand, the landlord can claim damages caused by the tenants, cleaning costs, outstanding bills or unpaid rent which is paid for out of the bond. If there is a disagreement about the compensation or the claim exceeds the full bond amount, an application can be filed to the state’s Tribunal. This is where a condition report will become imperative evidence to use to make a claim.

A condition report is a comprehensive document which visualises and describes the condition of a property at the time the tenant moved in. Accompanied by photographs of existing damage, the condition report is a handy document to refer to over the months and years of a tenancy. During routine periodic inspections, the condition report can be updated and referred to in order to understand the damage to or deterioration of a property.

Hire Help

A property manager will understand and advise on the rules and obligations landlords are ultimately responsible for, and where needed, act on a landlord’s behalf. A property manager can tap into tools and resources to stay up-to-date on changing legislation for both tenants and landlords, monitor the market and the repercussions this may have on rental prices, as well as carry out periodic reports or manage repairs. They are a vital asset to ensure an investment property is receiving maximum returns and as a landlord you’re adhering to your half of the contract.

To engage with a reliable property manager to assist with your investments, contact CPS Property today.