How to be a DIY landlord?

Hi All,

I am in the processing of doing up my property getting it ready to be rented out.

I would like some advice on how to get things going, basically I think I may have a few tenants in soon. As I had people approaching me off the street while I was doing some work around the house.

In short, I have a few questions:

- Wheres the best place to get a free rental agreement contract or buy one on the internet for NSW leases?

- Are there any templates I can use online to document the state of the property prior to the lease. This is so that the tenants can sign and agree to it so that if there is any more damage to the property after the lease they are liable to pay to get things fixed?

- For self managed rental properties, is GST required? So I basically add this to the price of the weekly rental? or have it inclusive. I noticed that people either side of my house are renting for $500 a week there abouts. This is from a commercial agent? I'd assume somehow this includes GST for the full amount? so as a landlord somehow you only get $445 back? or something?

- Receiving rent, I negotiate the terms with the tenant, get them to deposit the amount of rent into an account and I email them or post them the invoice / receipt when received?

- Bond, I ask for 6 weeks bond and register with the NSW bond board or something?

Obviously this is the first time I am managing a property, I would rather do it myself then to pay an agent to do something thats trival. Obviously if anything needs to be repaired I would be in a position to arrange that.

Any advice will be appreciated, anything else I should be aware of?

Thanks in advance,

Slam
 
First of all, make very sure you locate the relevant laws in relation to rental properties in your state and read them thoroughly so you understand your legal obligations regarding tenant rights.

You can then decide if this is appropriate for you.
Marg
 
I would rather do it myself then to pay an agent to do something thats trival.

They were some pretty weighty and costly questions for something so "trival".

I'm sure the professional PMs on this forum will be along any moment to assist you Slam.
 
The other option is to pay a PM to let it for you, for a letting fee, like 2 weeks rent. Then you manage things after that yourself.

Once the PM rents it for you, you can then familiarize yourself with the rental tenancy act.
 
Gotta agree with TPFKAD a bit there .....there is nothing trivial about managing your property(s)...

Now, don't get me wrong, I self manage...but I have been doing for years now and I do know my way around the NSW legislation and have dealt with quite a few tenants so far, including the difficult ones.....I can assure you it is not a trivial thing to self manage.

You will need to know much more than you appear to know right now....time for some research and then some......there are plenty of threads on here you can search and study...lots of great advice already documented.

What you may consider is trivial may well be the mechanics of managing...but have you considered the people management side of things...?


Quick answers:
* Rental agreements can be purchased at the newsagents for about $16...they also include a inspection report.
* There is no GST on rent....at least to residential tenants that is...
*Yes you negotiate rent and put in place methods of payment and receipting of such.
*No you don't ask for 6 weeks bond...it's 4 weeks maximum ! ..and ypu lodge the bond with bond board...yes they hold it, you don't....You could ask for two weeks rent in advance along with the bond to get the contract started.
*It's good to have trades available to do repairs but suggest you have an emergency plumber and sparky listed in the agreement and their phone numbers so the tenant can effect emergency repairs...unless you don't mind being woken up in the middle of night to do it....?

Good luck, glad you are willing to have a go...;)
 
Thanks for the help guys/gals.

Post are very informative, I do agree that there are times things arent trival.

But then I live a street away and should be able to arrange tradesmen for repairs and stuff quickly or do it myself.

The rental agreement and inspection report is handy, the house is in decent condition but lacks alot of items =D. So I mean there isnt really that much that can go wrong. As long as the tenant knows what he is renting and pays his rents ontime, it should be ok. When I do decide to live in it, it will be a big makeover for myself both the kitchen and bathroom.

Definitely going the DIY landlord route, will start preparing the reports and rental agreements today. Every dollar saved now can go towards my extension later.

Cheers,

Slam
 
Hi All,

I am in the processing of doing up my property getting it ready to be rented out.

I would like some advice on how to get things going, basically I think I may have a few tenants in soon. As I had people approaching me off the street while I was doing some work around the house.

In short, I have a few questions:

- Wheres the best place to get a free rental agreement contract or buy one on the internet for NSW leases?

- Are there any templates I can use online to document the state of the property prior to the lease. This is so that the tenants can sign and agree to it so that if there is any more damage to the property after the lease they are liable to pay to get things fixed?

- For self managed rental properties, is GST required? So I basically add this to the price of the weekly rental? or have it inclusive. I noticed that people either side of my house are renting for $500 a week there abouts. This is from a commercial agent? I'd assume somehow this includes GST for the full amount? so as a landlord somehow you only get $445 back? or something?

- Receiving rent, I negotiate the terms with the tenant, get them to deposit the amount of rent into an account and I email them or post them the invoice / receipt when received?

- Bond, I ask for 6 weeks bond and register with the NSW bond board or something?

Obviously this is the first time I am managing a property, I would rather do it myself then to pay an agent to do something thats trival. Obviously if anything needs to be repaired I would be in a position to arrange that.

Any advice will be appreciated, anything else I should be aware of?

Thanks in advance,

Slam

to be honest, it doesnt seem like you have very much knowledge in this area, especially given that you believe that managing a property is 'trivial'. Unfortunately it is the naive landlords who find themselves in trouble because they do not know the law, do not know what they are doing, do not know the right questions to ask when processing an application etc etc etc and there are tenants out there who will look for a private landlord just like you to take advantage of. I am not saying this to be mean, it is just simply fact.

I simply just dont understand why people will risk their half a million dollar investment (sometimes more sometimes less) for the sake of saving themselves $100 per month that is totally tax deductible anyway.

I understand that there are owners out there who are savy and have done the research and know what they are doing... but if i had a dollar for every private landlords property i took over to try and clean up the mess (and generally expensive messs) that they had created for themselves i could almost retire! It may cost you more now but it will save you a ton of money later on... i have had to clean up situations that have cost the owner upwards of $15,000.

Lol but what would i know, my job is just trivial ;)
 
Managing one property is dead simple. They get PMs that were Coles check out chicks yesterday and managing my house today.

You advertise, get a tenant, fill out the form, lodge the 4wk bond and deal with things as they arise. You don't need to know the relevant law or questions to ask, you just find out on a need to know basis. And its not hard to find out.

Most pms are pretty ordinary. Good ones are rare. Usually because they have too many properties to look after and are over worked. If you have a good relationship with your tenant, it can be a fantastic arrangement (make sure you do). A pm with 200 properties to look after could never have a relationship with a tenant like a self manage land lord can.

God, if everyone waited till they were an expert at things, nothing would ever get done.

I managed my first property in my mid 20s. So easy. Go for it mate. If you need a hand, pm me.
 
to be honest, it doesnt seem like you have very much knowledge in this area, especially given that you believe that managing a property is 'trivial'. Unfortunately it is the naive landlords who find themselves in trouble because they do not know the law, do not know what they are doing, do not know the right questions to ask when processing an application etc etc etc and there are tenants out there who will look for a private landlord just like you to take advantage of. I am not saying this to be mean, it is just simply fact.

I agree, I think that until you know what you're doing and fully understand the law then you should use a professional slam. I experience a similar thing in my job, people trying to save $$ by not asking for their accountants advice and end up making very costly mistakes. They think they can DIY their own tax return (yes e-tax makes it simplier, and it's easy to input your information but unless you understand the tax laws, what you're inputting could be completely wrong).

I've also worked in real estate (in the administration side, not an agent or property manager) so I have seen a bit of what goes on with managing a property. It's not trivial and I think there's a lot more work that goes on than landlords realise. I think the fee you pay them (provided you have a good agent) is well worth it, especially if you aren't fully competent yourself to do the task. I'm not saying it's not possible to do, if you do know what you're doing, great, save yourself the money. However, from the questions being asked by slam, I think you should use a professional initially and get your knowledge up to speed first.

I find it amusing people complaining about the letting fee or paying $10 for an annual statement etc. I'd like to know what occupations these people work in who do complain. Trades people won't come out for less than maybe $60 plus then their other charges, professionals charge hundreds of dollars an hour, hairdresser charges maybe $80 for an hours work etc. Yet property managers are expected to hold what.... say 4 OFI's at say 15 minutes each, plus travel time there and back another 20 minutes, then preparation time say 30 minutes, let's call it an hour each open (minimum). Then when you do get a tenant, there's a lot of paperwork and checks and phone calls etc. etc. So let's say it's another 5 hours (probably more), that's so far a total of 9 hours, which comes to $67 an hour so far. And that doesn't include all the overheads and advertising etc. The commission maybe harder to justify IF you have a house with no problems and completely trouble free tenants, but I'm guessing this doesn't happen all that often.

Not having a go at people who wish to self manage, by all means do so if you can, but I don't think that property managers should be viewed as a waste of money if you don't fully understand what you're doing.
 
Leikela

You make all that so difficult but its very simple to do. Slam is doing up his house himself so he's probably capable of doing repairs or what he cant do himself he can get a couple of quotes.

And the admin stuff (calls, forms, checks etc) is dead easy. How can you say its difficult?

btw: And i'm not having a go at PM's. Just that's its so easy.
 
Leikela

And the admin stuff (calls, forms, checks etc) is dead easy. How can you say its difficult?

btw: And i'm not having a go at PM's. Just that's its so easy.

Not saying it's difficult, just that it's more time consuming I think than people think. And I'm sure it is easy when you know what you're doing, but slam was going to charge his residential tenant GST for example, which I think just shows he has a bit to learn. But I say good on him for giving it a go anyhow, I just hope he doesn't get himself into trouble.
 
I agree with Evan on this one. I've been managing my own properties for about 5 years and have not had a problem. Any problems that do arise, you deal with, they are not going to be any more or less expensive if a PM deals with them for you, except for your time - which I believe is the only advantage of using a PM. So if you have the time, go for it.

In WA, the DCP provides all related forms on their website, assume this is the case in every state.

Read the standard tenancy agreement, this will give you a good start. Any other info you need to know is available at the relevent govt department, or here of course.

but if i had a dollar for every private landlords property i took over to try and clean up the mess (and generally expensive messs) that they had created for themselves i could almost retire!

But didn't they pay you to get them out of the mess? So in actual fact you do have a dollar for every property you took over, more than a dollar no doubt :rolleyes:
 
I've self managed one property, and had two PMs. (PM1, self, PM2).

PM1 was a waste of time which is why I took it over.

After a few years I found myself with too little time, I could not respond to tenant demands quickly enough. They used to get upset about things like not having a working toilet :( and I had a big workload- so I took it back to the agency- which was now staffed with an excellent PM.

I found something which had quite surprised. In the two years I was self managing rents had gone up substantially. I thought they had gone up a bit, but I didn't want to impose on the tenants.

The rent rise itself was well in excess of the PMs fees. It had been a false economy to self manage.

The other thing that a good PM can do well is to manage non payers. I've had to evict two tenants (out of a total of 25 which I've had over the years) and I would not have liked to have been carrying out the stressful and complex process of eviction myself.
 
Geoff,

Why weren't you keeping up with past & current rental increases?

Re your other point. I have no trouble booting out non payers, drop kicks etc. But they were pretty rare.

I've self managed one property, and had two PMs. (PM1, self, PM2).

PM1 was a waste of time which is why I took it over.

After a few years I found myself with too little time, I could not respond to tenant demands quickly enough. They used to get upset about things like not having a working toilet :( and I had a big workload- so I took it back to the agency- which was now staffed with an excellent PM.

I found something which had quite surprised. In the two years I was self managing rents had gone up substantially. I thought they had gone up a bit, but I didn't want to impose on the tenants.

The rent rise itself was well in excess of the PMs fees. It had been a false economy to self manage.

The other thing that a good PM can do well is to manage non payers. I've had to evict two tenants (out of a total of 25 which I've had over the years) and I would not have liked to have been carrying out the stressful and complex process of eviction myself.
 
I agree that self-managing means you do have to keep up with what rents are, but it seems that some PMs don't do this as well as others anyway.
 
I managed my first property in my mid 20s. So easy. Go for it mate. If you need a hand, pm me.

Thanks mate, Im willing to give it a go. I have a mate thats a real estate agent, but Im also willing to understand the whole process and ensure things are done legally. Hopefully I will find good tenants, Im very selective on who I choose. In addition as evand said deal with things that arise and are reasonable. If things break and require maintenance I can get on top of it. I live 1 street away from the house, I can get my parents in to organise a tradesman out to get things fixed.

Its only when things go pear shape you will deal with the mess. When you set conditions upfront and have everything on paper. If they do a runner on you, insurance covers it. Generally we have both parties agree on the terms and hopefully rent is paid ontime. If they are behind by 2 weeks, I will start questioning them and see whats happening.

Lets see how we go, I didn't need to advertise and someone is already knocking on my door. Because 2 doors down their owner is selling the property and they will need to move out soon. I will be inspecting the property they are renting tonight and see what they are paying for compared to my place. Then I will take them through my place and see whether they like it and work out a fair price.

Im an observant person, so if they are dodgy tenants I will pick up on the small things when I inspect their house they are renting now. If they are good then we can go from there.

Will keep you guys posted, I have been through a whole messy situation with this house after settlement kicking out the commercial tenants that have put their company in administration. It doesn't stress me or get to me emotionally, I'll deal with anything that comes.

Slam
 
Since this will be a semi short term lease, 6-18 months I may work something out with the tenants upfront. I intend to live in the place after 18 months, so Im not sure raising rents every 6 months is the way to go, it will definitely annoy your tenants.

I have my RE mate inspecting the property tonight, so I will see how it goes. If nothings broken and rent is paid ontime and you have good relationships with the tenants I can't see how a mess will arise.

Will keep researching and should be able to get this property on track soon.

Cheers,

Slam
 
Geoff,

Why weren't you keeping up with past & current rental increases?

Re your other point. I have no trouble booting out non payers, drop kicks etc. But they were pretty rare.
While I donh't want to hijack the thread, I think some of my experience in that property has been relevant.

My property is very much different from the rest of the street. It's a battleaxe dual occ, with aluminim clad cottages. I think every other building in the suburb is brick. And there's not many rentals available, so it can be hard to compare- especially when those few available are not always very comparable.

When I took the property to the PM he implemented increases when they were due. One tenant was not happy, and took the matter to the tribunal. The agent was able to prove to the tribunal that the rent rise was just due to market adjustment, and was therefore not excessive. The tenant gave notice, the next tenant came in after two days vacancy paying higher rent again. (The earlier tenant had been very demanding anyway, so we were not too upset to see him go)

A PM can also be aware of demand. When the other cottage became available he suggested a starting rent well above the going rents, giving room for negotiation. The demand was there, and we did get the rent suggested.


I did have a block of 9 1BR units a few years back. It was due to the PM's suggestion that we furnished the units (cheaply but comfortably). We spent less tha $2K furnishing each unit, and achieved a rent increase of $40-$50pw. So I was completely happy with the PM commission. (That price increase also meant that we had a better class of tenant- the deadbeats were the ones who had rented a very low cost non furnished unit).
 
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