Choosing tenants and dealing with repairs

Some landlords lose sight of the basics when it comes to taking care of their investment property, or simply don’t know what is really involved in the day-to-day running of a rental property. Pamela Yardney presents a crash course on how to manage your biggest asset


Many people prefer to manage their own rental properties, believing it to be a fairly simple process. Unfortunately, a large percentage of these ambitious hands-on investors either do not understand the detailed workings of managing a rental property or get so bogged down in the smallest of details that they lose sight of their initial goal – building a top-performing property portfolio!


This can lead to a string of unnecessary frustrations, including finding good tenants, handling the smallest of maintenance issues (some tenants need help to change a tap washer!) and dealing with vacancies (at which point the whole process starts all over again).


The truth is that property management is a specialised industry. Employees are required to attend lectures and pass examinations to ensure they have an intimate knowledge of the Residential Tenancies Act to start with. This is on top of the hours spent training on the job.


One important role of the property manager is that of liaison between the landlord and tenant. Your rental property is an investment and should be handled like a business. Think of yourself as the business owner and the tenant as a client. Would the head of a multinational corporation talk directly to their clients? Of course not; they would employ a professional team to get the job done so that they can focus on building the company and generating further wealth.


In reality, while some landlords are great at managing their own investments, for many it is poor time management for them to do so. Property management involves advertising vacant properties on behalf of landlords, showing properties to prospective tenants (in many instances conducting weekend or after hours inspections), vetting applicants for credibility, taking bond and rent moneys, drawing up lease agreements and preparing condition reports prior to tenants moving into the premises.


All of that is just for starters and occurs before the tenants even take possession and move in. For this service, a letting fee is charged which is either a set fee or a fee based on a percentage of the monthly rent.


Once a tenant has been placed, the property management company is responsible for accepting rent, responding to and addressing maintenance issues, conducting routine inspections during the tenancy period and overseeing tenants vacating. For this ongoing service, you will be charged a percentage of the gross rent collected each month.


Then there are the other ‘behind the scenes’ aspects of property management that many landlords do not even consider. These include participating in, or initiating, litigation of tenants. Special attention is given to landlord/tenant legislation and, most commonly, evictions and non-payment of rent. Therefore, it is essential that property managers remain up to date with the relevant state’s residential tenancies regulations and practices.


Again, additional fees will be payable should your property manager be required to attend Tribunal hearings. However, if you have ever been unfortunate enough to end up at Tribunal, you’ll realise it’s a small price to pay to have someone on side who is used to dealing with this situation and who can alleviate the unnecessary stress that may result from handling any legal recourse yourself.


A property manager’s relations with tenants give a face to the landlord and provides the necessary buffer, servicing their desire to profit and distance themselves from their tenant.


Some landlords feel they are getting better bang for their bucks by doing it all themselves and not having to pay a professional. However, when you consider that this is time you could be spending looking for your next good investment, do the savings really add up?


Vetting your tenants

Why is it important to vet tenants before signing them up using a tenancy agreement?


We’ve all heard horror stories from friends and family, or seen the current affairs shows depicting the mess left behind by those “tenants from hell”. So, how can you as a landlord find the right tenant to take care of your property?


Firstly, there are the inspections. With the rental market currently experiencing record low vacancies, these can involve a barrage of desperate would-be tenants all trying to elbow their way through the door at once.


A fundamental aspect of good property management is to show tenants through the property personally, rather than simply handing over a key and telling them: “Go and have a look through and let me know what you think when you return.”


By doing this, you are safeguarding your asset as well as getting the opportunity to “feel out” prospective tenants. First impressions do count and it is good to have that initial contact with the people who are considering renting your property.


When applications are received, thorough tenant checks should be conducted. Contact their current agent to find out how they have looked after the property they presently occupy, whether they pay their rent on time every time and to ensure they look after the property well.


Call their employer to confirm that they are reliable and trustworthy employees, with secure employment, who earn enough income to pay the going rent. Next, contact the referees they provide on their application for character references. Personally, I wouldn’t bother calling mum or dad or their brother or sister – of course you will get a good reference from people close to them. Then get in touch with their “emergency contact”. All of this will let you know whether they are legitimate and honest people.


Then, and of great importance, the final port of call is a tenancy database such as the NTD (National Tenancy Database) to check for any recorded defaults against the applicants from past tenancies. This is another reason hiring a property manager can be beneficial, as these services are only available to licensed real estate agents.


Careful tenant selection is important, and placing the right tenant will minimise problems such as loss of rent, possible damage and, frequently, short-term tenancies. But remember, no matter how careful a tenant is screened, no-one can guarantee that nothing will go wrong.

What happens when the tenant requests maintenance/repairs?

As inevitable as death and taxes, in all rental properties some type of maintenance issue will arise from time to time. Just as you would take care of your own home, you need to ensure that your rental property is kept in good working order. This is not only financially beneficial, as it will ensure the value of your investment is upheld, it is also the right thing to do to keep quality tenants on side.


Tenants are growing more and more discerning as they pay soaring rental prices, so they want the same thing as owner-occupiers: a pleasant and comfortable home in which to live.


The difference with a rental property is that you are bound by regulations set down by the Residential Tenancies Act when it comes to maintaining the premises. In accordance with the relevant Act in the state your rental property is in, when the tenant submits a request for maintenance/repairs it is the duty of the agency/landlord to make good any repairs within 14 days of the notification from the tenant.


The Act distinguishes between urgent and non-urgent repairs, with those in the former category including basic services that tenants require to live. These repairs are the landlord’s or agent’s responsibility, but if the tenant caused the damage the landlord can ask the tenant to arrange and/or pay for the repairs.


There are set procedures that tenants, landlords and agents must follow. For instance, tenants must continue to pay rent even while waiting for the repairs to be done. If the matter goes to tribunal, the tenant can apply for their rent to be paid into a special account while the issues are being sorted out.


It is important to communicate in writing all information regarding repairs, and copies of letters, etc must be kept for future reference.


Repairs considered to be urgent are:

  • A burst water service
  • A blocked or broken toilet system
  • A serious roof leak
  • A gas leak
  • A dangerous electrical fault
  • Flooding or serious flood damage
  • Serious storm or fire damage
  • Failure or breakdown of any essential service or appliance provided by the landlord or agent for hot water, cooking, heating or laundering
  • Failure or breakdown of the gas, electricity or water supply
  • Any fault or damage in the premises that makes the premises unsafe or insecure
  • An appliance fitting or fixture which is not working properly and causes a substantial amount of water to be wasted
  • A serious fault in a lift or staircase in the rented premises


If a tenant requests urgent repairs, the landlord or agent must respond without delay.


If the landlord or agent does not respond quickly, the tenant can arrange for the repairs to be done for a reasonable cost, up to a value of $1,000 per repair.


For non-urgent repairs, the landlord or agent has 14 days in which to make sure the required maintenance is carried out.


If the landlord or agent does not carry out the repairs within 14 days of receiving the notice, the tenant can send a copy of their written notice to Consumer Affairs or the relevant body in the state in which they are renting and pursue the matter further.


Remember, while you may be more than capable of administering your own rental properties, as a landlord you need to weigh up the pros and cons of going it alone versus employing the services of a professional team.


Saving a bit of money on fees could end up costing you more in the long run, particularly if you don’t vet applicants carefully enough or deal with maintenance issues as they arise. Remember, property managers are here to help and they look after rental premises for a living, leaving you free to do what you do best – find that next big investment deal!



Pamela Yardney is director of property management at Metropole Property Investment Strategists and co-author of ‘All You Need to Know About Buying and Selling Your Home’. Subscribe for free to our fortnightly e-magazine and receive a property investor’s pack


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