The Three Biggest Mistakes New Landlords Make
Updated: Mar 14, 2020
New landlords with little experience often find themselves with bad tenants, damaged property, and insufficient insurance, paperwork and/or records to hold the tenants accountable to their rights and obligations through the Residential Tenancies Act.
I know this scenario well. I have managed thousands of property over the past 10 years, and met a lot of new and inexperienced landlords who needed help in getting their rental property back on track. These landlords were at the mercy of their tenants because they did not implement these three basic disciplines into their property management system.
As a professional property manager I base my daily management systems on an acronym - R.I.P. This name suits me well, because if I don’t follow my R.I.P system, then it’s R.I.P for me! This system will ensure I am ready to manage disagreements, tenancy tribunal applications and general enquires with tenants quickly and gracefully.
Lets get into what R.I.P stands for, and what each section means. R = Record Keeping. I = Insurance. P = Paperwork.
1. R - Record Keeping is essential, as poor record keeping can leave you in breach of the Residential Tenancies Act, and/or relying on memory to resolve disagreements or answer questions from tenants about rental ledgers and property condition. A landlord must keep good records of the tenants rental ledgers and water payments, this is a requirement under the Residential Tenancies Act. Tenancy Services provides a simple Rental Ledger Template to record the date of each payment, and the period the rent covers. This applies to water payments also. Other important things to keep good record of are entry, routine and exit inspection reports with good photos. Also, keep record of all email, text messages and personal communication with tenants to refer to in future.
2. I - Insurance. Take your time to select the right insurance. Premiums and excess vary between providers. The general cover is for tenant damage and loss of rent. If the property is furnished, you can get cover for furniture that is included in the tenancy agreement. Landlords pay the insurance premiums, and must provide an insurance statement in the tenancy agreement. Tenancy Services provides more details on landlord insurance here, you will also find a downloadable Insurance Statement to be included in the Tenancy Agreement. Select the right insurance that suits you. For example, if your rental property is in a rough area, then get a higher premium and a lower excess. This will reduce the cost of using it when you need it. I had one landlord who had the lowest premiums, and when we needed his insurance, the excess was $5000 which was more then the loss we were claiming for.
3. P- Paperwork. Get a good tenancy agreement. This will ensure you have the law on your side when needed. Also a solid tenancy application form that has been thoroughly processed (landlord references called, employment confirmed and identification confirmed) This will ensure your insurance provider’s terms and conditions are met when you need to make a claim. The Tenancy Services website provides a basic Tenancy Agreement, and a Tenant Application From you can use. Tenancy agreements have a lot more to them then they used to a few years ago due to new regulations, so be cautious and diligent.
With a good R.I.P system in place, you can quickly find what you need, when you need it. It will form a solid foundation for you to work from to handle tenant disagreements and enquires quickly and gracefully.
If you are dealing with a tenancy issue that you feel is out of your depth, feel free to get in touch with me. I’d love to hear from you.