6 Problems Landlords Have And How To Solve Them
Renting has always been popular, but soaring property prices combined with the rising cost of living are contributing to a growing population of renters.
In fact, renters make up 32% of Australian households, a figure that’s been slowly rising for decades. As a landlord, there are positives and negatives – plenty of competition but also common problems like tenant turnover and tax headaches. If you’re a landlord, here’s what you need to know to overcome these hurdles.
Here are the top six problems for landlords and how property managers help solve them.
1. High tenant turnover
The biggest issue with high tenant turnover is the financial uncertainty it brings to landlords’ lives. Not only that, but it requires a much greater investment of time – such as cleaning or repairing the property, marketing it to new tenants and taking care of the paperwork – than simply welcoming a new tenant in your property.
Solution: Keep the lines of communication open at all times and try to build rapport with your tenants. Fixing issues at the property quickly is a good way to develop a strong relationship. Find out why each tenant is leaving, and see if there is a way to solve it. Also think about rewarding loyal tenants – maybe deferring that rental hike for another six months will keep them happy and encourage them to stay?
2. Lengthy vacancy periods
There are many reasons for vacancy periods: losing a tenant suddenly, bad advertising or daggy photos that don’t attract tenants, too much competition, or asking too high a price.
Solution: Invest in a quality marketing and advertising campaign – the longer your property sits on the market, the longer the vacancy period and any financial losses will be. Consider investing in professional photos that can be used for advertising it. In some cases, perhaps it would pay to even partially style the property for open inspections. And be realistic about the price you’re asking: you won’t attract new tenants if the home costs more than it’s worth in the current market. If you’ve got a good prospective tenant who is keen, but not happy about the price, it might be worth considering negotiating a minor decrease in rent. After all, $5 or $10 less per week is a lot different than losing your entire rental income if the property sits vacant.
3. Keeping your property competitive
How appealing your property is to prospective renters depends a lot on the competition. If every other property has a modern kitchen with a dishwasher, but yours is a relic from a bygone age, then it may not be able to compete, except on price, even if your property is bigger, or in a great suburb where lots of tenants want to live. But it can be challenging to keep your property competitive against other homes in the neighbourhood, without spending too much.
Solution: You don’t always have to drop your rental price to attract more tenants – although it is one thing likely to increase interest in your property. Alternatives include doing up the home with new fixtures and fittings, or making a few additions to add appeal to the property and keep it fresh – buy new blinds, carpet, or give the property a coat of paint. Make sure you choose additions and changes that will add to its value longer term. Dishwashers, built in storage, air conditioning or heating are simple fixes that are very popular with tenants. Sometimes throwing in a service like lawn mowing or regular gardening can lure a tenant to consider you above the competition in a very competitive market. When prospective tenants can truly visualise living in your investment property, they’ll be more likely to submit an application.
4. Knowing when to raise the rent
Timing is everything when it comes to raising the rent. First, you need to make sure you legally can hike up the rent according to the agreement with your current tenant. You’ll also need to monitor your local market to ensure a rise in rent price is appropriate right now.
Solution: Queensland has a number of specific requirements that must be met for a rent increase to go ahead, so make sure you understand what the Residential Tenancies and Rooming Accommodation Act has to say before making any big moves. And an experienced property manager will be able to advise you on what a fair price is in the current market.
5. Dealing with late rent
No one likes getting paid late. Unfortunately, rental arrears is a common problem but there are ways to mitigate the risk.
Solution: Step one is to choose the right tenant at the beginning. Make sure their finances are in check and they have good references from previous rental properties. If for whatever reason a tenant is late with their payment, take a gentle approach first. Keep the lines of communication open and remind them of their obligations, but also allow them to adhere to a repayment plan if they are having financial issues due to job loss or otherwise. Eviction should be your very last port of call and there are guidelines in place around this from the Qld Government.
6. Knowing what your landlord tax obligations are
The end of the financial year is a headache for most Australians, and it can get even more complicated if you own investment properties. The government expects that you will understand the laws around landlord obligations – or that you will use a tax agent with the required knowledge – so not knowing the law is no excuse.
Solution: Use a registered tax agent or other expert to manage your paperwork and obligations according to your rental properties. You must declare rental income, so it’s worth understanding the law – at least on a surface level – so you don’t get into hot water.