"Rogue tenants" targeting private landlords

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Landlords opting to self-manage their rental properties are putting themselves at risk of being targeted by problem tenants who would not pass the background checks conducted by professional property managers.

Without access to national tenancy databases, Shannon Davis, a director with Metropole Property Strategists, believes private landlords are greatly increasing the probability they will end with a tenant that will cause problems down the road.

“Private landlords run the risk of being targeted by rogue tenants. If somebody’s listed on one of the national tenancy databases then sometimes the only way for them to go is to find a private landlord because they don’t have access to those databases,” Davis told Your Investment Property.

“I think there’s probably a four times greater chance of ending up with an undesirable tenant if you’re a private landlord,” he said.

Davis believes many private landlords are unwittingly putting themselves at risk due a desire to take what appears to be the cheaper option.

“A lot of the time it’s people looking short term. For starters the fees are tax deductible and a good property manager is going to maximise your returns on your investment, so they’ll add value rather than cost you anything,” Davis told Your Investment Property.

“People need to realise just how involved it is and it’s more than just collecting the rent. It takes a lot of time and effort to maintain the property, to lease it out and keep up to date with all the areas you need to be compliant in.”

Though not all private landlords will exploited by problem tenants, Davis believes self-managers still run an increased risk of taking money out of their own pockets.

“The rental market can be something that takes a lot of time to understand and the only way you can gain that understanding is by experience, doing things like open homes and collecting feedback from people.

“Private landlords run the risk of pricing the rent too cheap or they price it too high and up incurring a vacancy period.”

While some investors may still opt to go it alone when it comes to managing their properties, figures from NSW Fair Trading may be another reason for them to reconsider.

According to the regulator, tenancy, rental bonds and residential parks were the most common causes for complaint in the state over the 2015/16 financial year, generating a combined 4,584 complaints.

The same industries topped the 20114/15 list with a total of 4,045 complaints and Davis believes a property manager is likely to help keep landlords out of the disputes that end up ate rental tribunals or similar bodies.

“The legislation’s an always changing beast. It’s extremely involved and detailed and it takes an exhaustive amount of time to become au fait with it.

“One of real advantages of a property manager is that it becomes something that’s kept at arm’s length. Personal relationships which can often cause disputes are kept out it.

“The tenants also like the arm’s length transaction. There are some unethical landlords out there and tenants might feel like they’re not having their privacy respected or the condition of the property won’t be maintained so they want that third party to be involved.”

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  • Burned by Property Managers says on 17/08/2016 03:16:52 PM

    Finding a property manager as invested in your property as you are and that will take care of the property as much as you will is impossible. I know because I've trusted a slew of property managers to run my properties and all I ended up with was a damaged property and no rent going in to my bank.... and no follow ups from the property manager. I blame the agencies for this; pay peanuts, get monkeys. I've found good and bad tenants on my own, but I can't see good sense in paying for someone else's mistakes. I had a tenant call me direct to advise a window was smashed and noone at the agency was returning his calls. I had a leaking kitchen that never got reported to me, only to the agent. Easy small amounts of money that eventually cost a fortune down the track. I'll take my chances on my own thanks.

  • A Good Private Landlord/Manager says on 18/08/2016 08:49:41 AM

    This article is somewhat misleading as it suggests that only Property Managers are capable of managing well. With the current RTA review in Victoria happening now (Landlords take a look please and respond) there are many tales of woe from tenants that are not being well served by Property Managers. I maintain a good relationship with my tenants and in turn they mostly do a good job of being a tenant and let me know when items need attention.

    What is also clear is that there are many tenants that manage to get past the vetting processes despite the checks and this will happen with or without a manager. What would be useful is that the tenancy databases are able to updated/accessed by both private landlords as well as agents which would reduce the incidence of tenants moving between the two which also helps them to hide poor behaviour habits.

  • Frankly says on 18/08/2016 09:42:24 AM

    promo for real estate agents - I've worked for one - yes a naive owner will be taken in by a dodgy tenant - but can also be taken in by a dodgy agent - especially if they live remote from the property - agent 'gee we just can't find a tenant' - while secretly pocketing the rent themselves, etc.

    agents are driven by profit - so tend to minimise their work to maximise their profit - promising 3 monthly inspections - then when you ask the last time 'oh yes - regularly' - ask the tenants 'never saw them'

    and agents are happy to turn over tenants every 6 months - why ? so they can charge one week's rent as 'letting fee' - money straight into their pocket - not the landlords.

    so while agents may quote fees around 5% - after their extra fees I often find I'm paying 10% if not 20% of rent to the agents.

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