The 10 worst rental mistakes investors make in Perth

While Perth’s rental market is seeing a jump in interest from investors, it’s important to be careful and not make any of these mistakes.

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According to Shane Kempton, chief operations officer for Professionals Real Estate Group in Western Australia and the Northern Territory, there has been a drop of 23 per cent in vacant rental properties in Perth compared to this time last year.

“Rents are now stabilizing and with properties in many lower priced Perth suburbs very competitive, [property] investors can now achieve rental returns in some areas of Perth that are above 5 per cent,” he said.

“With the resources sector now on the rebound, it is only a question of when, and not if, property prices in Perth start to rise.

“This combination of rising rental returns with the prospect of future capital growth, makes it a great time for investors to enter the Perth property market.”


He warns however that investors entering the Perth market should do their research and watch out for these top 10 mistakes that could ruin any investor:

1. Not doing background checks

The worst mistake, Mr Kempton said, was to not perform a thorough background check on tenants, as selecting a reliable tenant is the most important part of renting out an investment property.

“Bad tenants are therefore the most common problem encountered by owners of self-managed investment properties,” Mr Kempton said.

2. Refusing to budge on rents

If investors want to expand their pool of potential tenants, it may be difficult to listen to but they can reduce the weekly rent by a small amount, Mr Kempton recommended.

3. Wrongly complete the contract

Incorrectly filling out the contract, like not spelling names correctly or having it properly witnessed is an amateur move and can invalidate the entire contract.

4. Relying on verbal agreements

Avoid making agreements outside of the contract, like rental payments, as Mr Kempton warned these agreements would be invalid if the tenant challenged them.

5. Doing bonds wrong

A common mistake by investors is to incorrectly lodge bond money or fail to collect the right amount of bond money, which is vital if tenants break the lease.

6. Being friends with your tenant

The relationship between tenant and landlord should be strictly commercial, Mr Kempton said, which if problems arise, it can make it emotionally difficult to approach topics if the tenant breaks the contract.

7. Not dealing with maintenance problems

If you want a happy tenant, dealing with maintenance problems quickly is the way to go, while arguing with tenants will result in difficult tenants when it comes to retention or expecting regular rent payments.

8. Ending the lease early

Mr Kempton said investors usually end leases early incorrectly, which if done so, can place the investor in a difficult position.

“Generally, not enough notice is given or the notice given is not in writing. In particular, there are special procedures which must be taken if the landlord wishes to evict a tenant,” he said.

9. Not having adequate insurance

If there are any issues with the tenancy, investors should make sure they have the right insurance cover to protect themselves and their assets.

10. Not fixing up properties when leases end

When a tenant leaves, that is the perfect time to fix up any crucial elements that needs fixing, like carpeting, painting, or improving windows. Being lazy and not addressing this maintenance could make it harder to secure new tenants.

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