Just a few years ago, privately-managed rentals were a novelty.
But that’s the not case in the rental market nowadays, with about a third of Australia’s more than two million property investors choosing the DIY route.
Renting out a home privately is now a common option for many landlords. Picture: Getty.
Bessie Hassan, a money expert at finder.com.auexplained how to rent out a house, apartment or unit privately without an agent.
How to get a property ready to be rented out
The first step to renting out a house privately is getting it shipshape and ready for tenants.
1. Cover off the basics
Ensure the property has a phone and internet connection, spare keys, blinds or curtains for privacy, decent water pressure and smoke detectors, Ms Hassan said. Also make sure it meets all current safety guidelines and regulations.
2. Clean, clean, clean
A pre-lease clean should include steam cleaning carpets, polishing floors and cleaning windows, as well as cleaning cob webs and dirt from the property’s exterior.
3. Fix it up
“Fix anything that’s broken or in need of repair, such as leaky taps, bathroom mould or burned out light bulbs,” Ms Hassan said.
4. Tidy up outside
Even though most of the focus for rentals is on the inside, don’t forget any outdoor areas or yards. Mow the lawn, get rid of any leaves from the gutters and trim back overhanging trees or vines.
You might need to dust off your lawn mower if you want to impress prospective tenants. Picture: Erinna Giblin
5. Quick updates
Without spending too much, it’s possible to increase a property’s rental value with small improvements, such as new carpet or reverse cycle air-conditioning. These are added bonuses, rather than necessities though.
How to decide the amount of rent to charge
Deciding on the amount of rent to charge can be a difficult process, but it’s crucial to the success – or otherwise – of an investment property. Ms Hassan said there are several factors to consider when setting the rent.
1. Look at the market
Check out the median rental price in the area and assess comparable properties to gauge a suitable amount.
2. Assess the property’s features
In assessing the property’s features, look at things like the number of rooms, parking spaces and the property type. “Proximity to amenities like public transport, shops and restaurants should also be taken into account,” she said.
3. Consider expenses
Ms Hassan said rent shouldn’t be determined purely on expenses, but “you want to make sure all expenses associated with your property are covered and that you can still generate an income.”
4. Consult a professional
“An independent rental assessment from a property manager or leasing agent can help you determine whether you’re charging a fair price. You may also want to consult a financial planner to ensure your rental amount suits your investment strategy.”
Picture: realestate.com.au/rent
5. Adjust if needed
Keep across the local rental market to work out whether the price needs adjusting. “If prices begin to surge or drop in the area, you may want to adjust your price in line with market conditions,” Ms Hassan said.
List the property
Today, about 90% of tenants search for rental properties online, so it’s the place to be when it comes to finding someone for a private rental.
Manage inspections
Once potential tenants have found the listing and got in touch, the landlord should set up inspection times, so they can inspect it in person. “It’s also a good idea to meet potential tenants in person, so you can assess their suitability and character,” Ms Hassan said.
She advised owners to be organised before the inspection. Create a list of the property’s best features, along with any helpful information about the building or area.
Creating a list of the property’s best features can make inspections run more smoothly. Picture: realestate.com.au/rent
“Be as transparent as possible, especially when it comes to things like when the property is available and whether pets are allowed. Depending on the number of tenants who show interest, it’s up to you whether you hold one-on-one inspections or show multiple people through at a time,” Ms Hassan said.
Information you’ll need to select the tenant
Sifting through applications can be a time-consuming process as a private landlord.
“You won’t have access to the same tenant databases that agents or property managers do. However, for a small fee, you can access basic tenant and credit checks through sites like Naborly and FinRet.”
In most cases, prospective tenants will submit an online application on the site it’s listed on. Ms Hassan said applications should ask for:
- personal details, a drivers’ licence or photo ID;
- at least three references from previous landlords and employers;
- employment and credit history;
- reason for leaving the previous one or two properties;
- details about eviction notices or history of rent arrears.
Suitable tenants should have a demonstrated history of paying on time, providing adequate notice before moving on and keeping properties in good condition.
Four red flags to look for in a rental application
There are some warning signs to watch out for when it comes to picking an applicant, said Ms Hassan. They might not exclude the applicant entirely but further information should be sought if these red flags arise. These include:
- A low income-to-rent ratio
- References coming entirely from friends or family
- A disjointed employment history
- Income that can’t be proved
Do the paperwork
The last step is the dreaded, but important, paperwork. As with a tenancy through a real estate agent, the tenant and owner sign a tenancy agreement and the tenant lodges a bond.
“The (tenancy agreement) form differs by state, but most government websites have a free template you can download and use,” Ms Hassan said.
A tenancy agreement should outline the following.
- The number of people living in the property.
- The bond amount
- The bank account where rent will be paid into.
- Any specific property conditions, ie if something is already broken or damaged.
- Contact details of all tenants.
The landlord must also complete a property condition report within seven days of the tenancy starting and provide a copy to the tenant.
“You’ll also need to finalise and collect the rental bond. The amount payable varies by state and can be anywhere from two to six weeks’ rent. Once the bond is received, you’ll need to complete a Bond Lodgment Form, which can be downloaded from the relevant state government website.”
This article was originally published on 19 Aug 2020 at 3:32pm but has been regularly updated to keep the information current.
