12 Things You Probably Didn’t Know About Property Rentals

12 Things You Probably Didn’t Know About Property Rentals

If you’re renting out your property for the first time or looking for more information on how to improve your property rentals, there are a few things you need to know:

1. It’s important to have a strategy

Renting out a property isn’t as simple as one might think. Getting responsible tenants won’t be your only concern — you also have to take into account landlord insurance, necessary repairs and maintenance, and overall property management.

Before you plunge into property rentals, it’s important to do your research and decide on key issues concerning the handling of your rentals. Real estate is, after all, an investment, and would require a solid financial plan for it to become profitable.

2. Location affects the success of your rental

The location of your property can affect its tenancy and rental rate. Things like infrastructure development, employment rate and opportunities, and the local lifestyle scene can help propel rental success.

Property management experts also recommend looking into the market where your property is situated. For example, if the community is made up mostly of families, it would make more sense that homes with 3-5 bedrooms will likely get rented out more over smaller units.

3. Different laws apply per state

When having your property rented out, it will be helpful to read up on the legal requirements for property rentals in your state. Amount and filing of bond charges, building safety protocols, and laws on short-term accommodations are some of the things you need to familiarise yourself with if you opt to self-manage the leasing of your property.

4. You can choose between a fixed term or periodic lease

When it comes to renting, you have two options on how long you can lease your property:

Fixed-term tenancy

A fixed-term tenancy secures the lease terms and charges over a period of time. The usual duration is six to twelve months. Throughout the course of the contract, all conditions and stipulations are understood to remain the same. When a fixed-term tenancy ends, the contract can be shifted to a period tenancy contract if the tenant doesn’t give the landlord notice to renew.

Period tenancy

Most transient renters opt for this type of tenancy. Your tenant may be in the area just for a month, or is simply looking for a temporary setup until he or she finds a more suitable place to stay in. Whatever the circumstances your tenant may happen to have, a period tenancy secures the lease usually for a short period of time only. A fortnightly or monthly term is the usual run of a period tenancy contract and can be renewed depending on the agreement between the landlord and tenant.

This setup is beneficial for property owners who want to test out the waters when renting out a property, or are considering moving into the investment property sometime in the future. A period tenancy contract also gives the property owner more flexibility in retaining or rejecting a tenant.

5. It’s not always a seller’s market

While landlords and property owners pretty much control the terms of the lease contract, a decrease in the demand for rental homes has caused a shift in the market and made the competition among rental properties stiffer.

Competitive pricing, a well-managed property, and easy rapport with the landlord are elements you can integrate into your rentals to increase your chances of having your property tenanted successfully.

6. You can charge a rental bond

While it is not required, landlords can charge their tenants a rental bond. The bond is usually equivalent to four weeks’ rent or less and is secured by the landlord or property owner until the lease expires. If there is no breach in the lease contract, the rental bond is returned to the tenant.

7. Landlord insurance is different from a regular homeowner’s insurance

It’s not compulsory to get landlord insurance, but it gives you several benefits that you won’t be getting from regular home insurance. For one, it protects you during times of rental loss. Damages incurred by your tenant will also be covered by landlord insurance.

8. Joint property can be rented out

You can have a property that you co-own with another person rented out. The rental income can be split according to the percentage of ownership of the co-owners. A 50-50 co-ownership, for example, can have the rental income split in the same proportion.

9. Mortgaged property can be rented out

You can convert a mortgaged property into an income-generating asset through rentals. Even better, you can apply for an investor home loan to enjoy taxation benefits. To get the best value out of your investment — and select the right tenant for your unit — we recommend getting property managers to handle the rentals for you.

10. Your investment property can be your primary residence

Property owners can use their rental property as their primary residence. As a property owner, you will need to inform the Australian Taxation Office of this arrangement if you plan to move into your investment property.

11. Increase of rent depends on the contract terms

Increase of rental charges depends on the contract terms that you have with your tenant. A fixed term-tenancy agreement will secure the rental fee at a fixed rate through the duration of the lease, unless stipulated otherwise. When the contract ends, rental increase can be implemented.

It’s easier to increase rent when you have a rolling lease or periodic agreement. When the rental term is up, you can increase the rental fee during contract renewal. The usual period of rent increase is once every six to twelve months.

12. You can rent out your property through an agent

Getting your first tenant may not come as quickly as you expected. That’s when property management comes in. With a property manager, your rental property is represented by an agent who will handle rental inspections, manage the upkeep of your property and market it to prospective tenants.

Through professional property management, you are assured that your rental terms are upheld by your tenant and your investment is kept in good hands. All this, without any worries on your end. That’s property rentals with some peace of mind for you.