Finding and keeping Good Tenants
Finding and keeping good tenants is essential for property investors. Here are a few ways to maximise your rental income and minimise your tenant turnover.
There are a few basic principles to find and keep good tenants. Whilst many people use the services of a good Property Manager to help do this for them, it’s important to know what’s involved.
Start by charging a fair rent: check the market value and set your rent a little under; if you over charge you are likely to have a higher attrition rate, leaving you with no rental income while you search for another tenant.
Check your property thoroughly before putting it on the rental market. You’re looking for someone who’ll take pride in your property and pay the rent on time. A good tenant will be particular about the kind of place they live in are all appliances safe and in working order? Also make sure the place is spotless inside and out.
- Be organised and professional
- Set a fair rent
- Make sure your property is well presented
- Ensure all appliances are safe and working
- Check references from previous landlords
- Be approachable
- Fix problems quickly
- Check property regularly
- Look after the gardens
- Remember tenants’ birthdays
Make sure you look your best when meeting prospective tenants. A good tenant will look for a good landlord a professional appearance and attitude tells a tenant that the place will be run right. Show that you take pride in your property and care about your tenants by also setting ground rules. Use checklists, have a set procedure for showing the property, arranging the rental application and agreement with the prospective tenant. Also ensure you explain what is expected regarding qualifications. Always check references. Never take on a tenant without speaking to the previous landlord first!
Once you’ve found good tenants, the next step is keeping them. The first rule is be approachable. You don’t need to become best mates, but make sure your tenant feels comfortable calling you when there’s a problem. Ensure repairs are done immediately and pay someone else to fix problems you can’t handle. If you can’t attend to it straight away, arrange a time and stick to it.
Keep an eye on rent levels in your area. If rents are falling it may be worth offering a small reduction for an extended contract.
It’s important to call around to inspect the property every six months. Also involve your tenants when conducting a routine inspection and get them to point out any work that needs doing. This will mean that the tenant feels valued while reminding them that you are keeping an eye on their treatment of your property.
Always take care of the garden. If you don’t fancy mowing lawns at the weekend, hire a gardener. This will keep the tenant happy while ensuring that the property remains presentable at all times. Also think about sending your tenant a card or present at Christmas a bottle of red is a great way of thanking a good tenant for looking after your property.
Fixed
vs. variable
There is no easy solution when deciding between a fixed or variable rate. But careful consideration and an understanding of your financial goals are key to making an informed decision.
Rate movements always prompt debate over the benefits of a fixed vs. variable rate home loan. It is difficult to predict what will happen over the coming year, but if you think a hike is likely to hurt, now may be a good time to consider fixing.
While a rate rise looks likely at some point there may still find some good value in fixed-rate loans – some of the best 3-year fixed rates, for instance, range from 6.79% to 6.99%. These figures are comparative to the banks standard variable rate of 7.07% and the market-average rate of 6.85%.
With competition between lenders in the fixed-rate market, there are some good deals if you are looking for certainty in monthly payments. Make sure you look at a variety of fixed rate products however as rates can vary substantially from lender to lender. The good news is that competition between lenders has also driven fixed and variable rates closer together.
The main difference between fixed and variable rate loans lies in how they are structured and how interest is calculated.
Fixed rate products secure a rate for a set period generally between one to ten years. The fixed rate reverts to a variable rate at the end, or depending on the terms of the loan, you may have scope to renegotiate at that point. This protects you against increases in interest rates and is useful for forward planning when budgeting to achieve financial goals.
But they do tend to have fewer features and more restrictions than variable rate loans; are generally expensive to break; and of course you could end up paying more interest if rates fall.
Variable rate loans can appeal if you are willing to speculate on rate movements. If you want flexibility in your repayments, and can deal with rate increases, then a variable product may be for you. However, these products are sensitive to economic conditions and you may pay more interest if rates rise.
Variable rate products can include various features, including accelerated payment options, offset, redraw, variable payment schedules and split loan facilities.
Split loans offer a half way point between fixed and variable. If you are concerned with the uncertainty of a variable rate you may want to consider a split loan. Split loans allow you to fix part of your loan while having the freedom of a variable rate.
They normally allow for early repayment, offset and redraw facilities without gambling your whole loan on rate fluctuations. You could, however, still incur some “break fees” if the fixed section of the loan is payed out early.
It’s wise to review your position regularly. Please give us a call if you have any questions or are reviewing your current position.
Learn
how to negotiate a better purchase price
Following a few simple rules can help you to negotiate a better purchase price for your next property.
Knowledge: Make sure you know how much you can borrow and get loan pre-approval before you start looking so you know exactly how much you have to work with. Also have a good idea of prices in the desired area and be aware of how many properties are on the market at that time – the more competition the seller has, the better the buyer’s bargaining power.
Bottom line: Know what it is before you make an offer; set a figure and don’t go above. By viewing similar properties you’ll have a good idea of what to expect for your money.
Do your homework: It’s not very often that you get to see or speak to the seller, so find out as much as you can from the agent. Has the seller already bought another property? Is a job taking them out of the area? Is the sale the result of death or divorce? The more knowledge you have regarding the seller’s motivation, the better your position when negotiating.
Win trust: We don’t like doing business with someone we don’t trust. Demonstrate early that you are reliable and honest. Your first offer should be at the low end of the price range, but not unrealistic – place an offer that is too low and you will loose credibility. Also be punctual for any viewings or appointments.
Let the negotiating begin: If the agent wants you to ‘up’ your offer, look out for negotiation opportunities other than price. Give them some insight into your situation without giving too much away. Can you get a fast settlement? Remember a pre-approval means the funds are already there. Look at the agent’s conditions for settlement: if it is 90 days offer 60 and so on. Make the agent feel that a deal is there to be done at the right price.
Renovate and add value
Renovations not only make your house more desirable to live in, they can also add substantial value if you're considering or trying to sell.
Renovations not only make your house more desirable to live in, they can also add substantial value if your considering or trying to sell. Here are some easy rules for renovating success:
- Utilise natural light by opening up spaces and linking your garden with inside living areas. This will create a sense of continuity.
- Capitalise on existing features such as leadlight windows, ceilings and fireplaces. Restoring your house to its former glory or giving it a ‘period’ feel is a great selling point.
- Create a sense of size by using neutral colour one on walls, one of floors and one on ceilings. If you want a splash of colour paint a feature wall and complement with matching artwork elsewhere.
