Your success as an investor depends significantly on your tenants. You want people who pay rent on time and keep your property in top shape. So how can you find and, more importantly, keep such tenants? Tony Winterbottom explains
Images of the tenant from hell loom large in the minds of many investors. Although residential property managers try to weed them out, significant numbers seem to slip through the screening process.
The national tenancy database, TICA, recently reported that 360 ‘dodgy’ tenants had been blacklisted by real estate agents in Townsville
this year alone for rent arrears or damage to property, or as a result of tribunal orders.*
Disputes between landlords and tenants are fairly common, but relatively few rise to the level of blacklisting. Although Queensland’s Residential Tenancies Authority received 22,700 dispute resolution requests in 2011–12, its Annual Report for the year indicates that they helped resolve more than 76% of those disputes when people agreed to participate in the process.* And why not? A good landlord-tenant relationship is a two-way street. Wherever you live in Australia, it benefits both.
It’s unfair to generalise or exaggerate when describing tenants. The ‘tenant from hell’ has assumed almost mythical status and is sometimes associated with any behaviour that falls short of a landlord’s expectations.
Real vs mythical tenants from hell
Tenants from hell:
- don’t pay rent or are frequently late
- damage the structure of the property
- damage fixtures like heating and cooling
- allow pests and vermin to multiply
- use the property for criminal activity or sublet it for business purposes
- increase your running costs with excessive wear and tear
- harass or intimidate
- generate the need for frequent intervention
- skip town leaving a financial and physical mess
Mythical tenants from hell will be:
- periodically late paying rent
- untidy or rude
- a large group of people with kids and pets
- easy to stereotype by age, race, colour or culture.
The major difference between the tenant from hell and the ‘mythical’ tenant from hell is the extent of the structural damage they have made to the property.
Tenants from heaven
Tenants from heaven:
- pay rent on time
- make a long commitment to stay
- are good neighbours
- require minimal contact
- cause minimal damage
- maintain gardens and the basic household fixtures
- agree to yearly increases in rent
How to keep a model tenant
Content landlords and ‘tenants from heaven’ tend to come in pairs, when the expectations of both parties are met. Tenants expect that fixtures, fittings and services will be in good working order when they move in and will be maintained and repaired promptly if they fail. Landlords expect that rent will be paid on time and the tenant will not damage the property, disrespect the neighbours, or get in trouble with the law.
It’s important to find a property manager who will respond promptly and respectfully if a tenant is unhappy and will inform you of any issues early. Good communication can deter ‘hellish’ situations before they develop. Examples of scenarios that can turn sour for both parties include:
- a minor plumbing or electrical problem left unattended
- an unreported pest infestation that results in major damage and expense for the landlord
- rent not paid on time
Owners should be prepared for unforeseen costs, but a well-maintained property is likely to generate fewer complaints. Take care of your investment property and more often than not, your tenant will respond in kind. Many tenants live by the principle that they will leave the place as they found it.
It surprises me that landlords and tenants don’t come to creative agreements more often to help each other out. If the front yard becomes overgrown with weeds, why not consider splitting the cost of gardening or building it into the rent at the outset?
Investors should also be mindful that there can be limitations to action when there are strata or body corporate issues. If the complex doesn’t have good management, there may be little the landlord, tenant or property manager can achieve easily.
You can increase your chances of finding and retaining good tenants by investing in a property that is purpose built and well located for renters’ needs. Sturdy fixtures, fittings and appliances reduce the chance of breakages. Proximity to shopping, restaurants, public transport and amenities will help your tenant feel at home in the community.
With a good manager, diligent screening and fairness in the relationship with tenants, residential property investors should be able to avoid close encounters with ‘tenants from hell’ and keep model tenants.
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