Reducing Risk as a Landlord
Being a landlord comes with unique benefits and advantages. However,there are also risks with having tenants or guests stay in your property. To best protect yourself and your property, it’s important to know where to look and who to trust. In most cases, you can learn the most from other landlords who have been in business for a long time. Specifically, you’ll want to find landlords in your area, as they are likely have a good understanding of local laws and regulations. The New Zealand Property Investors Federation is a great place to start and connect with your local property investors association.
Generally speaking here are some of the top tips for reducing risk:
Everything goes in writing
Absolutely everything needs to be in writing. In real estate, it’s commonly said that if it’s not in writing, it doesn’t exist. While it can be tempting to rush a lease agreement to a new tenant, you want to carefully ensure everything is included. From who can live in the residence and what activities are permitted, to when rent must be deposited by and how non-payments are handled, only what is written is enforceable.
Get the right insurance
If you wait until an accident happens or loss has already occurred, it’s too late. Get the right insurance policy in place from the start to protect yourself and your assets. Having a specialist insurance policy like Initio offers means you have the cover you need to protect your property. Click here to find out more about the cover offered by Initio.
Pay attention to the property
Again, waiting until something happens means it’s already too late. Keeping your tenants safe requires you to keep up property maintenance and ongoing issues. If something is broken or potentially hazardous, have it inspected and take care of it. This allows you to stay on top of anything that comes up before it can develop in to more serious damage.
Don’t ignore tenants
No matter how frustrating a tenant might become you must always listen to them. If they claim something is broken or dangerous, attend to it immediately and take steps to prevent future issues. By not addressing something that a tenant points out, you are exposing yourself to consequences in the future.
You can avoid many unnecessary risks by appropriately and effectively screening potential tenants. Do they have a job? Can they pass a background check? Do they have any prior history of evictions? These are all important questions to ask and research. When screening tenants, require them to provide you with prior references, ideally from former landlords because they are your best tool for gathering information.
Safeguard your business
While it’s great to get everything in writing, it’s only useful if you properly store and protect that information. If your documentation is in paper form, it’s best to store a digital copy as well. For digital files, it’s best to conduct regular backups and keep all virus software up to date. From an organisational point of view, clearly label all documents and keep files easily accessible.
Handle evictions carefully
Ending a tenancy is a serious matter and should not be started without carefully completing all of the lease and legal steps required. Always consult a lawyer before evicting a tenant and ensure you have all written documentation in place before proceeding. Never threaten a tenant with eviction as a means of getting a rent payment; the regulators and Courts don’t look highly upon landlords threatening tenants.
Develop relationships with tenants
Sometimes it simply comes down to personal interaction. By developing a reputation as an approachable and honest landlord you can build trust and prevent circumstances from becoming confrontational. When there is a relationship tenants are less likely to file a formal complaint over a minor matter.
This advice is provided as common practice information, and not as legal or property management advice. If you require specific advice, please consult your lawyer or property manager.