When you live in a home in Qld that you plan to rent, you need a few things. Some of this you can do yourself, and some you can use the help from the property manager you choose to hire. Want to rent your home to the best tenant possible? Then there are a few things you need to organize before preparing your rental property.
Here is a list to point you in the right direction to preparing your rental property.
A great place to start is having an experienced property manager tell you what weekly rent might be achievable. If you are busy, a remote appraisal is an excellent way to get a start. I do a fair few of these on the Sunshine Coast here in Qld. Usually, they are for homeowners that would like an idea of what’s possible within 24 hours, as I can do them fairly quickly.
Using information online about the property and then researching what similar properties in the area have been renting for, I can give owners a pretty good idea of what weekly rental income to expect. I send them a report with comparable properties that have recently been leased and for how much.
When you get serious, nothing beats seeing a home in person to get an idea of the space & how a home feels. When I do rental appraisals in person, I only need to walk through the house for a few minutes, but it’s the perfect time for an owner to sit down and ask all the questions they want about property management and how it all works.
We service the Sunshine Coast in Qld, and our rental appraisals are free. So if you would like a rental estimate, reach out to me with what day and time best suit you.
CHOOSING A PROPERTY MANAGER – PREPARING YOUR RENTAL PROPERTY
Choose a property manager early because they can assist and guide you as you get closer to the date you need a tenant. There are a lot of pitfalls in choosing a property manager. I suggest not choosing someone just because they are local. Look at Google reviews. We service all suburbs on the Sunshine Coast Qld.
Most owners get caught up in comparing property managers’ fees. But they need to not worry too much about costs and engage a property manager that will get them the best return on investment. It is hard to work out, though, as many things impact how a good property manager will maximize an investor’s returns. From placing an excellent tenant to ensuring the most paid rent, provide preparing your rental property.
Owners focus on fees. Wipe out the small savings on costs if a poor tenant is placed or market rent is not achieved.
So it’s not about fees; it’s about return on investment.
A property rented for $600 PW with 5% fees, the owner is netting $570 PW. If the same property is rented for $700 PW with 8% fees, the owner is earning $644. At the same time, this is a hypothetical example. I see this all the time. Where properties are dramatically under-rented, and leases need to be renewed at market rent, the owner needs to catch up on income they are missing out on.
I see this far too often: A property under-rented with bad tenants in place. The owner assumed they were saving money with an agency with cheap fees, but they also got poor tenants and lower rent.
Some agencies also have “hidden” fees like the end of financial year statement fees & termination fees, monthly admin fees, lease renewal fees, etc. So ensure you see a clear list of what their prices are.
SIGN A FORM 6
It is the authority of your property manager to look after your property. My accountant has suggested that you can only start to claim tax deductions on your property that is currently being lived in by the owner once it’s ready to be rented, and the easiest way to prove that is with a signed form 6. So do this first. Then anything you do after that is a tax decision for preparing the property for tenants. You should also seek your independent advice.
If you get a certificate from a plumber that your home is water-wise, you can charge a portion of your water bill to the tenant. It would help if you got this in place. If your house is not water-wise, the plumber you engage can change taps to ensure it is. I recommend Jet Plumbing &Gas on 0484 194 644. If you are in a strata complex, you must provide your property is separately metered as if it’s shared. You can’t charge for water.
If you have gas, the same plumber above can get you an updated gas certificate which you also will need to meet legislation.
If you have a pool, this will need to be in date, so check its date. You can check your home address to see if your registered pool certificate and current on this government site.
If it’s expired, we can recommend Colin on 0415713855 to give you an updated certificate.
SMOKE ALARM COMPLIANCE
Legislation changed Jan 2022, so you might need new smoke alarms. But even if you have new alarms 30 days after the tenant moves in, they need to be checked. We use Coast Smoke Alarms, which charge about $119 annually to ensure all the alarms are working and compliant throughout the tenancy. Most of our clients have us organise this for them. They charge $119 per alarm to upgrade to the new legislation.
If you plan to have the tenants look after the gardens, it’s a good idea to get all the bushes cut back, all the weeds removed, and even mulch put down, as this is how the tenant will expect to maintain it.
If you are having the gardens and lawns looked after for the tenant, you need to get a quote from who will be doing this to ensure the cost is built into the rent. We use and recommend Emil on 0456 066 411. Garden care can be a grey area, so having this taken care of has advantages.
MAKE SURE EVERYTHING WORKS
When a tenant moves in, if something doesn’t work, they will report it. So go around and test all the lights and locks, and everything is working and in good order, as it’s often easier to have it all sorted while you are still living at the property. We have access to great reliable, value-for-money tradespeople if you need help with anything.
Does anything need to be done before the tenants move in? Like a deck stained or a wall painted, anything performed reasonably will prevent more maintenance in the future; that is a good idea.
SPEAK TO YOUR ACCOUNTANT
Depending on your unique structure, you must ensure you maximise things for tax the best you can.
Usually, it’s best to have photography and a video done while your furniture is in place. Book it as soon as possible. Hence, it’s ready for when you go onto the market, as it can take time to get the photography done and ready. Your property manager might be interested in organising other marketing, like a floor plan.
If you have solar panels, most owners allow tenants to move the electricity into the tenant’s name to benefit from the solar rebate. The only time electricity is kept in the owner’s name is if the refund is enormous, the owner will lose that significant rebate due to the name change.
You can keep the solar rebate and charge the tenant the total electricity bill, but few landlords do this.
If you have gas, ensure they are complete for the tenant’s move-in.
WATER BILLS AND COUNCIL RATES
Most of our clients organise for these to come straight to us. We then pay them, and the best part is it appears on the owner’s end-of-financial-year statement, so it’s easy to track. Some owners prefer to ensure these keep coming to them, but sometimes they must remember to send them to us or send them very late, creating tension with the tenants. You can send it to email@example.com or PO Box 24, Palmwoods Q 4555
While this covers for damage and loss of rent, our agency needed it only because of pet wee. So get landlord insurance that covers pet damage but check how much they will cover. Terry Sheer is excellent in case of a claim. Terri Sheer is on 1800 804 016
TAX DEPRECIATION REPORT
It’s a shock how many owners don’t get these. This report for around $500 will allow you to write off the decreasing value of the home every year. Most owners make $500 back and more in the first year and use this report for years. Summit QS is excellent value on 1800 957 010.
It is a big one. I have saved tens of thousands by reviewing my loans annually. It would be the perfect time for you to do the same. If you reach out to Paul on 0414 752 235, he’s an excellent finance broker who can look at your situation and advise if there is a better structure that will help save you interest and tax; Paul is brilliant. A new system will also help you track when your property changed from home to investment.
It’s tempting to clean yourself. Ideally, get a bond cleaner. A bond cleaner differs from a regular cleaner and will do a deep clean ready when tenants move in. Deb & Dave from Oceans Deep Cleaning on 0430 059 653 or Jason on 0437679551.
I have lots of owners who want to clean, then when I check, they’ve missed so many things like dirt in the window tracks, the ceiling of the ovens, dust on blinds, or the top of fans. The list goes on. It’s understandable. After all, it takes time to realise the expectation.
There is a beneficial article here that explains bond cleans in detail.
I’ve learned not all carpet cleaners are the same. If you have carpets, get them cleaned and ready for the tenants. Aaron on 0413 832 515 is excellent. A tenant needs to return the carpets in the same condition, with less fair wear and tear, so having them cleaned prior is a perfect place to start.
The legislation states that a property needs to be supplied to a tenant pest free. The best way to ensure that is with a professional pest spray. A tenant needs to keep it then pest free, so this is a significant investment. Nambour Pest is an excellent value on 54417090.
WHEN TO START ADVERTISING?
With most properties on the Sunshine Coast, four weeks before a lease start date is a good idea. Interestingly the closer you get to a lease start date, the more inquiries come through from people who need to move immediately. If you go to the market too soon, the question will be low as people need to look farther ahead.
HOW TO AVOID GETTING A BAD TENANT
When I speak to new landlords, their biggest fear is what if they get a bad tenant and trashed home. It’s a valid concern. I take over a few properties where the tenants have not been ideal. I’m unsure how tenants like this get home approval, but they do.
With us, we are cautious about who we approve of the properties we manage. We’ve realised being super careful about tenant selection makes our jobs as property managers much more accessible.
So for owners who engage us as property managers, tenant selection is something they don’t need to worry about.
WHAT ELSE DO TENANTS WANT WHEN PREPARING YOUR RENTAL PROPERTY?
Aside from preparing the rental property, tenants here on the Sunshine Coast have some things they expect. Adding these or updating them will help increase the rent & attract better-quality tenants. I’m not saying you must have these; it all helps.
FANS IN ALL ROOMS
Tenants now expect fans in all bedrooms and, ideally, in the living spaces. If you already have fans check that all the speeds work, as it’s common for the switch to fail, so the fan will not work at its fastest pace.
Fry screens on most windows, especially in bedrooms & living spaces, will allow tenants to keep windows open for fresh air throughout the year.
At least one colossal air con in the main living, but ideally also a small one in the main bedroom. I have an investment in Buderim with two living zones and two large air conditioners. These are enough to filter into the bedrooms and keep them cool.
Suppose your kitchen has no space. Consider having a handyman make one. People’s lives are so busy, and rents are much more these days. It’s just expected & appreciated.
WHAT LOOKS TIRED?
Does anything look tired or dated? You may have ancient fans or old rusting or dated lights. I’ve seen owners do fast, cost-effective updates like new fans and lights that can give a home a more modern feel and help maximise the rent.
Everything you spend on preparing your rental property is a tax deduction. It’s either maintenance or improvements and can be dedicated against your tax in some way. It’s essential to check in with your accountant to ensure you’ve got everything structured correctly. You are starting with getting a form 6 signed with your property manager first. But also, don’t forget about investing in a tax depreciation report. You can complete these six months after the tenant has moved in and backdate it.
SHOULD YOU PAINT INSIDE?
Fresh paint is the biggest bang for your buck. It transfers the look and gives a home a light, fresh feel. So should you spend the money? First, think of it as an investment. It will raise the rent & get a better tenant. Painting inside will cost anywhere from $4,000 to $10,000. Usually, a crew will paint the entire home within a few days.
SHOULD YOU REPLACE THE CARPETS
Carpets last about ten years. We rent properties where the carpets are over 20 years old. Yes, this affects the rental income and quality of tenants. The cost for a rug is around $3,000 to $10,000, depending on the size of the home. If your carpets are incredibly worn, you can still get away with them, and they may need a good cleaning.
Almost all our applicants these days have pets. Soon in Qld, it will become very hard not to allow tenants to have pets. Currently, we advertise all our properties as “pets on application,” which allows everyone to apply, and the landlord decides who they choose.
As pets become more burdensome not to allow, landlords need to consider pet-proofing their properties, so having vinyl planking or tiles instead of carpet.
While we have had a few issues with pets, our current landlords have only needed landlord insurance due to the irreplaceable smell of pet urine in carpets.
ENTRY CONDITION REPORT
After preparing your rental property, we do a detailed entry condition report about 1 or 2 days before the lease start date. We take hundreds of photos and document the condition of the property everywhere. This report is then given to the tenant to check and make additional notes of missing things.
The entry condition report is critical as it guides how the property needs to be returned with less fair wear and tear.
The tenant will need a supply set of keys for every leaseholder. So if it’s two adults and two kids, we need to give them two sets of keys. Plus, the agency needs a bunch too. Bunnings cut keys but did a terrible job. So go somewhere like Mr. Minute or a professional locksmith.
Many agencies send the owner a selection of tenants to choose from. We don’t do that. We usually send our owners the one application we feel would be suitable. Then if they have concerns or questions, we can send more.
I assume agencies send the owner a selection, so when the owner chooses one, it takes the responsibility off the property manager. If things go wrong, I can’t see how an owner could choose the best tenant by looking at a summary of several and choosing one.
Most of our landlords trust that we’ve done our due diligence and that the applicant we suggest will be ideal. If it’s not, it’s really on us to sort it out, which is why we are cautious with our tenant selection process.
LEASE & DEPOSITS
Once a tenant chooses, we send them a lease to sign and ask them to pay six weeks’ rent into our trust account. Four weeks is for the bond we send to the RTA, and the other is for the first two weeks’ rent.
At the time of writing this article, I am finding tenants are applying for multiple properties. Good tenants are being approved in various properties, so I have now been caught out a few times where the tenant takes ages to get back to us to explain they’ve changed their mind and signed a lease on a different property. Because of this, we keep running the ad until the lease is signed and the deposit paid.
TENANTS PAYING 2 WEEKS IN ADVANCE
Many people think a tenant needs to pay two weeks in advance. They do to secure the property, but legislation states that they only have to pay the rent up to date, to calculate it daily. So once they have paid the initial two weeks in advance, they don’t need to continue to pay in advance. Usually, they revert to paying about a week in advance to avoid falling into arrears.
PAYING OUR LANDLORDS WEEKLY
Yes, we are one of the few agencies that pay our landlords weekly every Friday. It’s a lot of work, but the money could be better for everyone in our trust account. So weekly, we dispatch any trust money to all our landlords every Friday.
We do the first routine inspection six weeks after the tenant has moved in. Then every 12 weeks after that. These include photos and some small notes. Once we jump in the car, our landlords get an email with a link to the report. If we see anything of concern, we have a follow-up process with the tenants to ensure they understand what we expect.
CAN YOU RENT THE PROPERTY JUST HOW IT IS?
Above is a lot to take into preparing your rental property. But sure, you can move out and do the basics to cover legislation. So the basics are:
Smoke Alarm Compliance
It has given you an idea of the process and a few things to consider when preparing your rental property. If you live on the Sunshine Coast and looking to rent the home you live in now, get in touch; I will be delighted to hear from you.
Contact us today about your Sunshine Coast investment