Over the past month or so, we’ve looked at some of the biggest mistakes property investors make when they select a real estate agency to manage their property…and then we’ve looked at other common mistakes they make throughout the tenancy.
We’ve received some great feedback from many of our readers that this information has been helpful, so we’ve really made sure we’re covering the topic thoroughly.
We’re going a little deeper into this topic and whilst I mentioned that we’d wrap it up this week, we’ll cover another couple of points today and wrap it up in our newsletter next week…
- Lack of Appropriate Insurance Cover:
Before a tenant can be placed into your property, you need to ensure that you and your asset are correctly covered and obtain the right insurance coverage. Did you know that you have to advise your insurance company that you are no longer residing in the property and that it is now an Investment? Some Landlords fail to get the right type of insurance coverage or fail to get the proper amount of coverage…or both.
All investment properties must be covered for Property Insurance, this protects you again damage and destruction on your property. This could be caused by fire, wind, storm or similar events. Legal Liability Insurance is an absolute must for and Landlords. This will help protect you and your property in the event of a lawsuit. Various companies offer $10 million even $20 Million…and this covers your legal liability as the Landlord for an occurrence which causes death or bodily injury to other people, or damage to other people’s property.
There is also another Policy that relates directly to Landlords, most call it Landlords Insurance…and this covers you should your tenant default on rental payments resulting in an eviction occurring. This policy may also cover you for costs incurred by yourself to return the property to a clean and tidy manner. If you don’t have Landlords insurance ask yourself, is it a risk you are prepared to take? Do you have enough Cover to protect yourself?
- Not Thoroughly Screening Your Prospective Tenant Applications:
Some landlords that self-manage and property managers that just want to fill the vacant property don’t complete the correct checks…and this places you and your property at significant risk. When your property is available for rent, there are many things to consider…and most importantly, the screening of all prospective tenant applications. Many Property Managers only check current rental references. At ‘Innov8 Property’, we have a very strong screening process for our prospective tenants.
We contact current and past rental references, current employment even their previous employment if they have been in their job for less than 6 months…and cross check each applicant with TICA (The Tenancy Information Centre of Australia). If your applicant is listed on this site, that is normally a huge ‘red flag’. If the tenant is listed on this database, it often means a previous Property Manager had to attend a Tribunal Hearing in regard to a default that occurred during their tenancy. We also contact personal and business references and check the applicants’ affordability.
It is vital to ensure that all applicants are thoroughly screened, this enables us to provide the Landlord with true and correct information about the applicant before they make their final choice of their future tenant. You’d be amazed how often you find that this process is ‘short-cut’ by the real estate agencies…and if your tenant starts to show signs that they are trouble, it is often that you discover that they were trouble in a previous tenancy in their last property. Sometimes, it can be very hard to remove a problem tenant and given that there is new legislation being considered (more about this in coming weeks), it’s never been more important to ensure that you’re doing everything you can to put the best possible tenant in your property.
Next week, we’ll provide the final few ‘Biggest Mistakes Made by Landlords’.
Until then, Happy Renting, Happy Listing & Happy Selling.