Let­ting prop­erty can be lu­cra­tive – if land­lords heed the ad­vice of ex­perts

Weekend Argus (Saturday Edition) - - PROPERTY -

LET­TING a prop­erty can make good busi­ness sense and gen­er­ate con­sid­er­able in­come – if han­dled cor­rectly and pro­fes­sion­ally, says Adrian Goslett of Re/Max.

Rent con­trol laws that favour ten­ants, along with bad ten­ant be­hav­iour and the re­spon­si­bil­ity of looking af­ter an­other prop­erty may put many peo­ple off the idea of let­ting their homes, says Goslett. But if land­lords are well versed in all as­pects of let­ting a prop­erty, it need not be a headache.

“Whether you em­ploy a rental agent or man­age the prop­erty your­self, land­lords have cer­tain re­spon­si­bil­i­ties and obli­ga­tions to ful­fil. Th­ese in­clude pro­vid­ing a safe and well-func­tion­ing home for your ten­ants – such as mak­ing sure plumb­ing, wiring and ap­pli­ances func­tion and that out­door ar­eas and stair­ways are safe. It also means quickly re­spond­ing to a ten­ant’s re­port of any mal­func­tion or prob­lem.”

Land­lords will need to ad­ver­tise the rental, se­lect suit­able ten­ants and evict them if prob­lems arise that can’t be re­solved.

“The ben­e­fit of deal­ing with a rep­utable rental agent in­stead of go­ing it alone, is that they take care of the good, the bad and the ugly when it comes to ten­ants and are ex­pected to have the knowl­edge and pro­fes­sional ex­per­tise to han­dle dif­fi­cult sit­u­a­tions cor­rectly and in ac­cor­dance with rental laws.”

Be­fore let­ting a prop­erty, land­lords need to care­fully cal­cu­late the cost of keep­ing the prop­erty func­tion­ing smoothly. This should in­clude bond re­pay­ments, util­i­ties and main­te­nance, re­pairs and any pro­fes­sional ser­vices such as prop­erty man­age­ment through a rep­utable rental agent, tax as­sis­tance and le­gal con­sul­tants, says Goslett.

The rental price needs to be com­pet­i­tive, he says, “so just trans­lat­ing your own­er­ship costs into a rental fee won’t work”.

Casey Ed­wards, co-au­thor of The Com­plete Idiot’s Guide to Be­ing a Smart Land­lord and The Com­plete Idiot’s Guide to Mak­ing Money with Rental Prop­er­ties, sug­gests work­ing up two profit-and-loss state­ments: a best-case list and a more con­ser­va­tive one that in­cludes all the things that could go wrong.

“But even if the fig­ures don’t show an im­me­di­ate profit, there are many other good rea­sons to let a prop­erty, in­clud­ing the long-term ap­pre­ci­a­tion, or hold­ing out un­til you can get the price you want if you con­sider sell­ing the prop­erty.”

Ten­ant screen­ing is a cru­cial task, Goslett warns. As­sess­ing suit­abil­ity in­cludes check­ing back - ground and fi­nan­cial ca­pa­bil­i­ties with in­for­ma­tion about their earn­ings to en­sure they have enough to pay the rent on time each month. A payslip and ref­er­ences from em­ploy­ers would help.

The rental ap­pli­ca­tion should in­clude an ap­pli­cant’s full name and iden­tity num­ber, rental his­tory and credit pic­ture. If you are go­ing to per­form a credit check, this must be dis­closed on the ap­pli­ca­tion and prospec­tive ten­ants need to sign the form in­di­cat­ing they agree to this.

A rental agent should pro­vide all the nec­es­sary le­gal doc­u­men­ta­tion when as­sist­ing you with a rental prop­erty. The rental con­tract should in­clude clauses spec­i­fy­ing what the rental charges are and what the con­se­quences would be if the prop­erty were not va­cated when the con­tract ends.

The con­tract should also spec­ify that sub-let­ting is pro­hib­ited and the pe­riod of no­tice on ter­mi­na­tion of the rental agree­ment must be clear.

Goslett ad­vises that who­ever man­ages the prop­erty, rental records should be sep­a­rate from per­sonal ac­counts.

“This will al­low you to see at a glance where your rental prop­erty stands fi­nan­cially,” says Goslett.

Other ad­vice in­cludes putting monthly con­tri­bu­tions into a sepa- rate, high-in­ter­est-bear­ing ac­count that can then be drawn upon for re­pairs, new ap­pli­ances, main­te­nance and taxes if and when re­quired.

If you need to evict a ten­ant, it should be han­dled pro­fes­sion­ally, Goslett says, sug­gest­ing it would be wise to en­list the help of an at­tor­ney, as land­lords must is­sue ap­pro­pri­ate warn­ings be­fore they can pro­ceed with an evic­tion.

Even if let­ting a proper ty through an agent, pay ten­ants an oc­ca­sional visit to make sure your as­set is be­ing well looked af­ter. Th­ese vis­its must be ar­ranged with the ten­ants in ad­vance, he says.

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