8 ways to avoid Tenants being behind in Rent

High rent arrears rates and maintenance costs can be easily avoided with eight handy tips, according to Michelle Williams of Launceston-based @Home Property Management Solutions.

Tip 1: Ensure the property is maintained at a high standard from day one
A poorly maintained property can increase the risk of attracting high maintenance tenants, said Williams, often leading to tenants constantly falling behind in rent and forever making maintenance calls, costing the property manager’s time and the landlord’s money.

Tip 2: Presentation or location
Tardy tenants are often the result of two factors: presentation or location. If location is the problem consider selling and reinvesting in a more desirable area with lower risk, said Williams. If it’s presentation, think about what’s required to bring the property up to scratch. Think about the benefits of doing this (eg. a higher standard of tenant, longer-term occupancy, reduced vacancy periods, better rental return, less risk).

Tip 3: Tenant selection
When selecting a property manager, ask what their procedure is for tenant selection. Aside from checking out all of the rental references, the credit history, the income and employment and tenant databases, what other criteria does the property manager use to approve a tenant?

Williams said that the property manager should make the end decision to approve or decline the applicant based on the overall application.

“I always ask myself the question, would I take the risk if it were my home or investment?” she said.

Researching the applicant online using Google and Facebook for the purpose of character reference is another method landlords should ask their property managers if they use, she said. “You will be amazed at what people publish on this public domain!”

Don’t pressure your property manager into selecting the tenant because after all by spending the extra time they’re reducing the risks, not taking the risks, she said.

Tip 4: Payment Methods
Setting up a direct debit from the very beginning is the smartest way to avoid rent in arrears, said Williams, however offering a rent card with other options available such as bPay and Post Bill Pay avoids any excuses for not paying on time.

Tip 5: Regular rent payment check
Ask your property manager how often they check the rent payments. “This should be a daily task and their duty of care to the landlord,” said Williams.

“I have even heard that some property managers only look at those tenants who are more than four days behind. Being proactive and notifying tenants immediately will substantially reduce the number of tenants in arrears and the number of days they’re behind,” she said.

Tip 6: Chasing up the tenant
Williams said landlords should ask the property manager how they deal with repeat offenders of rent in arrears.

A standard response letter is the most common practice when processing rent arrears, she said. “But if consistently sending the same series of letters to the same people they will be familiar with the process and wait to receive the final notice; in our office we call it the pink letter syndrome.”

Williams said the property manager should never send the same letter twice unless it’s a required form such as a breach notice or notice to vacate.

She said the property manager should always make a call first, “the lazy approach is to print the standard letters and this approach will not reduce your level of rent arrears”.

Tip 7: Be firm
If the same person repeatedly appears on the rent in arrears blacklist, said Williams, the property manager needs to be much firmer in their approach and explain the impact the repeat breach is having on that tenant’s rental history and that this could affect whether or not the owner will renew the lease.

“Negotiating effectively will always get better results compared to standard letters,” said Williams.

Tip 8: Insurance claims
Ask your property manager if he or she knows how to make and maximise the insurance claim for loss of rent if this does happen. The property manager must be able to handle this process, said Williams

Source: Australian Property Investor