As a property investor, it is vital that a number of tasks are completed before handing over the keys to your new tenants. By completing these tasks you are much more likely to have a smooth tenancy so It is important to set the scene from the beginning as to how the tenancy will unfold.
I have outlined the 5 most important things every property owner must do before handing over the keys to your tenants and having them move in.
Get a Full Period’s Rent
The first thing you need to do is get a full period’s rent. That is to say, if you collect rent on a monthly basis, then the tenant has to give a full one month’s rent before you hand them over the keys. If it’s on a weekly basis, a full week’s rent. This is important for two reasons: if the tenant seems to have problems paying the first period’s rent, he or she is also most likely going to have trouble paying rent in the future. Another reason is that it starts the cycle of the tenant paying rent in advance, otherwise described as “prepaid rent.” So it is best to do this before or during the signing of the lease.
Another important point is that you should get the maximum bond that you are legally allowed to receive from your new tenants. This is different from state to state. Doing this can help cover any damage incurred at the end of the tenancy or if there is any unpaid rent. Once you receive the bond, you should have a bond form signed by all parties then handed over to the relevant government body, which will hold the money in trust until the end of the lease when all parties agree to the disbursement amount of the said bond.
It goes without saying that you must have an agreement in writing signed by both parties, this is generally called Residential Tenancy Agreement. This lease should be signed by all parties and a copy should be given to each. Attached to that lease should be a printed copy of the keys (photocopied or a printed copy of a photo), and the key should be taken off the key ring so you can easily identify and match up the keys at the end of the tenancy. You must attach a copy of the relevant Renting Guide (called differently from state to state) to be given to the tenants prior to or when signing the lease. These forms are now easily accessible through The Landlord Academy, you can download copies of the lease forms relevant to your state anywhere in Australia with just the click of a button.
You should complete a comprehensive condition report of your property before the tenants move in. The more comprehensive your report is, the less likely there will be a disagreement at the end of the tenancy. You should also include photos, videos and an inventory with the report just to be clear of the condition of the property before the tenancy. Although this may seem like a lot of work but a well documented condition report will save time in the long run and spare you from arguments at the end of the tenancy.
Make it clear on how your tenants should pay the rent, preferably have a direct debit form signed by the tenants. When there is some sort of automatic schedule in place for the tenants to pay rent, the rent is less likely to ever be paid late.
It is essential to accomplish these things before the start of the tenancy, because once the keys are handed over, most of them are nowhere near cooperative and it becomes difficult to get them to agree to sign more documentation once they have moved in as the motivation is now gone. From experience the party that holds the keys, holds the power. Use the power while you still have it. Of Course there are rules and regulations to follow and each party has certain responsibilities but don’t make your life harder than it needs to be and get it right at the start of the tenancy. Set and forget.