How to become a savvy landlord

So you’ve just bought a buy-to-let property. There’s plenty of legwork to be done before you get your first rent payment. Get it right and the tenancy could be plain sailing. Get it wrong and you’ll be on call 24/7 to fix problems and could end up out of pocket.

Friday, September 23rd 2005, 11:07AM

RULE 1: Present your property well

If your property looks like a dump, the chances are that you’ll scare good tenants away. So make sure your property’s clean, tidy and ready to move into before viewings start. You might even consider getting a cleaner and gardener in for a one-off blitzkrieg. If you can get an extra $50 a week out of the tenants or they stay longer ensuring fewer empty weeks, you’ll recoup your money very quickly. Remember, small things just as much as the big things will put a potential tenant off your property. Getting maintenance done at the outset not only stops the tenant bugging you and getting the tenancy off to a bad start it ensures that minor problems are checked before they grow. A small leak in the roof now can lead to major damage in six months. Your presentation of the property also sets a standard of cleanliness and tidiness and lets the tenant know that small things matter to you. What’s more, it’s more likely that a clean property will be maintained and returned in a tidy condition.

RULE 2: Check your tenants

Assuming you’re planning to manage the property yourself, it’s time to learn some ‘people savvy’. Plenty of ratbag tenants have charmed a potential landlord. So follow the rules and don’t make yourself the next mug. There are plenty of good books on the market and in libraries to help you, but here are some basic points:

• Sort yourself out a pre-tenancy application process, including forms and checklists to ensure that you do all the research necessary on your prospective tenants.
• Make sure you always give yourself time to check references and the credit record of your prospective tenant.
• As you interview, make sure you keep notes on each applicant. It’s amazing what you can forget after an interview and it’s easy to confuse one applicant with another.
• When you’ve chosen a short list or your favourite, ask your potential tenants to fill out a simple form to verify who they are and other background details so that you can get a credit check done. It will also give you contact information should you need it later down the line during the tenancy.
• Whatever you do, look in the phone book or electoral roll to see if a referee’s name is genuine and then make sure you follow through with verbal reference checks.
• You can find credit check companies on the Internet and Yellow Pages and some companies have specific packages for landlords.
• It’s worth remembering that the Human Rights Act prohibits you from basing your decision on things like marital status, religion or colour of skin.

RULE 3: Get the tenancy agreement right

The tenancy agreement is a legal document and it must comply with the Residential Tenancies Act. The good news is that you can download one for free from the Tenancy Services website, or buy a copy of it from the Good Returns Bookstore. The document includes things such as the type of tenancy you have agreed to, legal addresses for you and your tenant, and outlines any special conditions such as how many people can live in the property. Whatever you do, make sure you make the agreement conditional on the rent in advance and the bond being paid before your tenant moves in otherwise you may be in for a nail-biting time. You can ask for payments to be made by bank cheque or cash. And you can even wait for the cheques to be cleared before you hand over the keys. Make sure you give your tenant a receipt — starting the tenancy off on a good footing needs both parties to respect each other. Unfortunately the law doesn’t allow you to start asking too many details about your prospective tenants.

You can ask:
• current address
• how long they’ve lived there
• why they’re leaving
• current landlord’s details for reference, if currently renting
• close relative’s details
• driver’s license/passport
• car registration, make and model
• two other referees (including one for credit worthiness)

RULE 4: Get the property inspection report right

You need to think very clearly about what items you intend to provide for your tenants. If you’re too stingy, you might rule out a better class of tenant. Too many, and the repair and maintenance could prove a nightmare. Remember if you provide a dishwasher or washing machine, you’re responsible for repairs required due to normal wear and tear. When filling out your tenancy agreement you should ensure everything you provide is included in the Property Inspection Report. That includes carpets, curtains, white goods, lawnmowers, gardening tools etc.

RULE 5: Don’t forget insurance

Always make sure both your property and any contents such as drapes or lawnmowers are covered by insurance and inform your insurer that the property is tenanted. You should always make sure your tenants know they’re responsible for insuring themselves against

Source: NZ Property Magazine, November 2004.

The New Zealand Property Mag is a monthly magazine written specifically for property investors and homeowners in New Zealand. Click here to subscribe online.

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