With a good tenant, you get what you give. In order to have an ideal tenant, you must have an attractive property while maintaining an upfront tenancy agreement.
So what kind of investment property should you consider in order to attract the right tenant? Condition and location are huge determinants of the type of tenants your property will attract. Consider the type of suburb, schools, shops, local amenities and business districts in the area to determine the type of tenant who is likely to be looking for a home in your area. When your property is located in an area renowned for its lifestyle options, schools or one that is in proximity to places of interest, you are more likely to attract more applicants and be able to pick the ideal tenant.
After finding an investment property, finding good tenants who will treat your property as if it is their own is about marketing and due diligence. Ensure that your property is well presented and desirable then market the property accordingly. Once prospective tenants begin expressing interest in your property, you should undertake background checks and screening. A normal tenancy application requires tenants to provide three references including a reference from an employer, a property manager and a personal referee. Contact past employers about the prospective tenant’s reliability at work, their employment history and financial status.
As a future landlord, select tenants who:
Most importantly, select a tenant who will last. The longer a tenant stays in your property, the less time and money you spend replacing them. Supporting good tenants and dealing with problems promptly can encourage tenant retention. You should only implement a rent increase if the market justifies an increase, and explain to your tenant in writing why you have decided to increase their rent, ensuring the tenant is given plenty of notice.
Fundamentally, you are ensuring you have a tenant who will provide a steady stream of income in the long term. A strong cash flow is key to making a sound investment. Furthermore, accepting the wrong tenant could result in a loss position. For example, a tenant who leaves your property in a state of disrepair will leave you a damage bill and costly maintenance bills that will overthrow your cash flow.
It sounds like hard work and it is a lengthy process; however, finding a good tenant is important to ensure your investment is safe. If you don’t have the time or the inclination to go down the independent road and still want to invest in a property, investing with Defence Housing Australia (DHA) could be the best option for you.
Investing in a property with DHA gives you peace of mind. Properties are sold to investors and leased back to supplement the housing supply for the Australian Defence Force. Your property is in good hands because DHA is backed by the Australian Government and DHA tenants are members of the Australian Defence Force or Defence civilians. DHA may well be the ‘good tenant’ that every property homeowner wants to have. Rent is guaranteed* for the term of the lease (up to 12 years), is accrued daily and paid monthly in advance directly into your bank account, even if your property isn’t occupied. The management fee is calculated as a percentage of rent income and is deducted from your monthly payments.
DHA is responsible for organising and covering the cost of non-structural repairs and maintenance work. As such, your responsibilities are significantly reduced when compared to conventional residential property investments. There are fewer phone calls concerning maintenance and repairs. DHA even arranges a licensed independent valuer to annually review your property’s market rent and then adjusts your rent based on the review. As an investor, you will know your property is being cared for without the hassle of doing it yourself.
When the lease agreement comes to an end, DHA ensures that your property is returned in good order. The property is professionally cleaned, and grounds and landscaping are maintained to a neat and tidy condition. For properties with a lease of six years or longer, the property is painted internally. If the lease term is nine years or more, the carpeting is also replaced and the property is painted inside and out. You then have the choice to move in, rent privately, or sell the property.
In essence, DHA can ensure that you invest in a property that receives the rental income it deserves without the headache of securing long-term good tenants.
The advice contained in this article is for general information only and should not be taken as financial advice.* Rent may be subject to abatement in limited circumstances.
* Lease term is subject to variation as specified in the lease.