Sourcing and screening tenants can be one of the more labour-intensive tasks of managing your property.Unlike real estate agents, who receive a steady supply of rental enquiries due to the nature of their business, DIY landlords need to work hard to generate interest from would-be tenants.
Investors can place advertisements seeking tenants and promoting open house inspection times in newspapers, or on online noticeboards and websites. The landlord would then need to field enquiries from potential tenants, conduct open inspections and process applications until a suitable tenant is located.
Screening tenants is the next important part of the selection process. The first step is usually to contact the applicant’s employer, to confirm that their position and salary is correct. You should then contact the tenant’s previous landlord or property manager, to investigate whether there were any issues throughout their previous tenancy. You can then contact their personal references.
It is also wise to run the applicant’s names through a tenant database. These are databases that contain the details of tenants that have had problems associated with previous leases, such as not paying the rent or causing damage to the property.
Tenant databases are generally geared towards professional memberships from registered real estate agents who purchase annual subscriptions, but it is possible for landlords to buy individual memberships from certain providers. TICA (www.tica.com.au) offer packages from $143 for bundles of ten enquiries ($14.30 per enquiry), while Trading Reference Australia offers one-off searches for $36.30 each.
You must comply with certain conditions, however, such as giving your potential tenant a notice to let them know that you will be searching their name on a database, prior to conducting a search.
Once you have sourced and screened your tenant, you need to make sure you have the correct documentation organised.
Documentation and bond lodgement
Lease documents are relatively easy for landlords to obtain from the residential tenancy authority in your state or territory – often, the forms will be available for download from the website. These companies will also be able to provide information about how to correctly lodge a bond, and the process you need to follow should you wish to make a claim against the bond.
You can also download residential tenancy resource kits from websites such as rentalagreementsdiy.com.au, who for around $40 will provide you with a professionally drafted tenancy agreement, property condition report and supporting material to help you set up your lease. Their kits provide all documentation in both editable word and non-editable PDF formats, and you can reuse them as often as you like.
You may legally be obliged to provide a certain renting guide or handbook to your tenant, depending on the location. In NSW, for example, under the Residential Tenancies Act 1987, landlords must give their tenants a copy of the Renting guide at or before entering into the residential tenancy agreement. This is a legal requirement, so check with your local authority and make sure you provide each new tenant with an updated version of the documentation.
A rental bond is an amount of money paid by a tenant as a form of security for the landlord, in case the tenant does not follow the terms of the agreement. The amount of bond that is to be paid if any should be written on the lease agreement. The landlord or agent must send any bond paid to the relevant rental authority, usually within seven days of receipt from the tenant.
As a DIY landlord, you should be aware that you can’t request a bond and then simply bank it in your account – it is an offence for a landlord or real estate agent to request a rental bond from their tenant and then not lodge it with Fair Trading.
For downloadable residential tenancy applications forms and information about starting and ending a tenancy, notice periods, managing your tenant and lodging the bond, visit the appropriate authority in your state or territory:
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