If you invest in property to rent it out, it is important, whether you manage that rental yourself or whether you have a rental agent, to follow certain guidelines so that your investment is a success and you don’t run into problems later, said Michael Bauer, general manager of IHFM, the property management company.
Asked to list what he sees as important when renting out a property he said:
• Screen your tenants properly. Don't rent to anyone before checking their affordability (payslips and three to six months’ bank statements), credit history, employment references and previous landlord references. If this is not done properly, it often results in problems later - a tenant who pays the rent late or not at all, damages a property or allows undesirable visitors might have a record of doing this repeatedly. Be sure to have a written rental application with all supporting documents to get all of the prospective tenant’s information.
• Get things in writing. Be sure to use a written lease agreement to document the important facts of your relationship with your tenants - including when and how you handle complaints and repair problems.
• Handle the deposit paid by the tenant correctly. Establish a fair system of setting, collecting, holding, and returning security deposits. Inspect and document the condition of the rental unit before the tenant moves in so as to avoid disputes over refunding the deposit when the tenant moves out. These inspections should preferably be done with the tenant present.
• Make repairs to the unit timeously. Keep up to date on maintenance and repairs needed to the unit and ensure these are done when requested by the tenant. If your property is not kept in good repair there is very little chance that good tenants will want to stay on. Remember, your tenant is your customer. If you want him to pay on time, make sure that he is happy.
• Make sure the premises are secure. Don't let your tenants and property be easy marks for criminals. If the property needs security additions, take the necessary steps to protect it and your tenant. Proper lighting, trimming tree branches that hang over the wall or fence and decent security gates are often all that is needed.
• Provide notice before entering the property. While it is recommended that you inspect the property from time to time, your tenant’s privacy must be respected. Notify them whenever you plan to enter the unit and provide as much notice as possible.
• Disclose environmental hazards. If there is a hazard such as damp or mould from the damp, your tenants should know beforehand and steps should be taken to remedy the problem. If your tenant later has health problems that can be linked to the hazard in the home, it could create problems for you.
• Choose and supervise your rental agent carefully if you use one. Do a thorough background check and clearly spell out the manager's duties to help prevent problems later. Remember, you own the property and the rental agent provides an administration service. Decisions must be taken by the owner of the property and not the letting agent.
• Make sure you have adequate building insurance. Purchase enough liability and property insurance. You must protect yourself against possible losses to your rental property caused by anything from fire and storms to burglary and vandalism.
• Try to resolve disputes with your tenants without lawyers and lawsuits. If you have a conflict with a tenant over rent, repairs, your access to the rental unit, noise, or some other issue that doesn't immediately call for an eviction, meet with the tenant to see if the problem can be resolved informally. If that doesn't work, consider mediation by a neutral third party or lodge a complaint at the Rental Housing Tribunal.
“A property is a big investment and you don’t want to end up in a situation where you lose money (either through damage or bad management) on the investment because you didn’t follow all the necessary steps to prevent this from happening,” said Bauer. “Prevention is better than cure.”