An investment property can be an excellent financial move, but it isn’t all portfolio building and cash flow.
Managing tenancies comes with a range of challenges to deal with. Here are some of the common issues faced by landlords and how to deal with them.
Landlord problem #1: Finding a good tenant
Long rental vacancies can be stressful and financially tough, but landlords shouldn’t be tempted to fill the property with a less-than-ideal tenant. Tenants who are unreliable with payments or destructive to the property can cost much more in the long run, so finding a great tenant with a positive rental record is really worth the extra time and resources.
Those unsure of how to find the perfect tenant should consider the benefits of a professional property manager. While the services might differ slightly, they’ll field applications, identify red flags and present only the best to the landlord to review.
Landlord problem #2: Managing maintenance and repairs
Maintenance is an important part of owning a rental property. But managing tenants’ requests can be overwhelming, especially if the property needs a bit of TLC.
This is another situation where landlords need to think long-term. Small maintenance issues can turn in to major repairs. Getting them fixed as early as possible can help make sure a property stays in good condition so that you avoid expensive work down the track.
To stay on top of potential maintenance issues, landlords should conduct regular inspections. They should also make sure the line of communication with tenants stay open so they feel comfortable reporting issues as they arise.
Landlord problem #3: Increasing the rent without losing a tenant
Rent increases are a normal part of any tenancy and important for covering costs. But it’s not always easy for landlords to make the decision to ask for higher payments from quality tenants. Good tenants can be hard to come by, so some landlords fear the risk of losing a great tenant on the basis of a rent increase.
Before raising rent landlords should speak to their property manager about when to raise the rent and by how much, so they can be confident the new rate is fair and the timing is in line with legal requirements. Then, once the increase is decided, tenants need to be notified in accordance with the law. Victorian rental laws state that the tenant must be notified in writing at least 60 days before the increase.
With good communication and an explanation of the reasoning behind the increase, raising the rent doesn’t need to be a negative experience.
Landlord problem #4: Knowing when it’s time to renovate
Whether they’re large-scale upgrades or small improvements, a renovation can be a great way to command a higher rent on an investment property, or boost the asking price when putting the home on the market. But knowing which renovations are right for your property or when the time is right to invest in the upgrades is often a balancing act.
The first step in deciding whether or not to renovate involves becoming more familiar with the property’s issues, both by talking to the current tenants and by analysing similar properties in the same area. This will help identify what’s lacking from the property and what tenants would be willing to pay more for. A real estate agent with local knowledge is an excellent resource in deciding how to renovate.
Landlord problem #5: Issues with unreliable tenants
For landlords who don’t have good tenants, dealing with issues quickly and effectively becomes vital. These issues might include missed rent payments, damage to the property or loud noise that disturbs neighbours.
Landlords should familiarise themselves with tenancy laws and the terms of the lease, so they know what their rights and obligations are for dealing with problems such as rent arrears and evictions. A professional property manager can also be helpful in understanding these rules and managing any issues.
Need help managing an investment property?
Contact the team at Grants today.