The leasing process explained
Looking for an agent
Appointing a professional property manager to look after your investment property is a smart move. It makes property investment easy for you. Our advice is to choose wisely, after all your property manager is responsible for one of your biggest financial assets. Shop around and be sure to select an agent you trust, who prioritises clear and regular communication with you. A strong track record is also a must. An agent with solid industry experience will bring to the table invaluable expertise.
Appointing an agent
After selecting a property manager you will need to enter into an agreement called an Exclusive Leasing and Managing Authority. This is a legally binding contract which entitles the agency to market and lease the property on your behalf. The agreement will outline the agent’s obligations and duties in representing you as well as their fee for doing so.
You will also need to provide your bank details to your property manager so rent can be paid into your nominated account.
As the property owner it is your responsibility to maintain insurance over the property with a minimum of $10million public liability. You will need to contact your insurer to request they provide your agent with a certificate of currency.
At RPM, we can’t recommend an insurer, but we can point you in the direction of some of the commonly used insurance companies.
You may be offered a product called Landlord Protection Insurance. Whilst not essential, it’s something we strongly encourage. This type of insurance is in addition to building insurance and offers protection for a variety of tenancy related issues.
Marketing the property
Your agent will coordinate the marketing campaign on your behalf. You want maximum return with minimum expense. Advertising on key websites and signage at the property are always strong lead generators with 360 degree video tours also useful. We strongly encourage professional photography to increase the appeal of your property online (in our experience, it’s helped to lease properties more quickly).
During the marketing process, your property manager should provide you with regular reports on the level of interest, as well as arrange and conduct open for inspections.
Your property manager will do the necessary due diligence when reviewing applications. A detailed tenancy application form is required so the necessary reference, credit and employment checks can be made. At RPM, we reference check current and previous tenancies, employment, ID verification, credit checks and where relevant, visa checks.
Your property manager should submit all applications to you together with their recommendation for you to make the final decision (it’s your property so you get to choose).
Lease agreements and terms
As a landlord, you are entering into a contract with your tenant which is formalised by the Residential Tenancy Agreement. Your property manager will draw up the lease agreement in accordance with the Residential Tenancies Act.
This agreement is a legal document, you should read it carefully. It is comprehensive and covers off a variety of terms and conditions that are in the interests of both parties.
Initial lease terms are usually for 12 months with further fixed terms to be agreed by both parties at the end of this period.
Where a landlord/agent receives a bond for a property, they must provide a condition report specifying the general condition of the premises. Tenants should receive a copy of the report prior to moving into the property. Within three business days of occupying the property, the tenant must return one signed copy of the condition report to the agent. If there are multiple tenants, all tenants must sign the document.
The condition report is a comprehensive document that notes the condition of specific things within the property. For example, the walls, floors, window coverings and appliances and what state they are in (are they clean, undamaged and working). It’s a useful document for both the landlord and tenant as it documents the condition of the premises at the time of occupation.
Bond and rent
Your property manager will arrange the collection of the first calendar month of rent in advance as well as the bond (ideally the equivalent of 5 weeks rent).
The bond is held by the Residential Tenancies Bond Authority, a government agency. The rent is paid into the agents trust account, they will deduct their fees and any bills and deposit the balance into your nominated bank account.
Your property manager should send you an itemised statement with every payment.
The first routine inspection will be conducted in the first 3 months with subsequent inspections carried out every 6 months thereafter. Routine inspections are necessary to ensure the property is maintained to a consistently high standard and that any repairs or maintenance may be inspected and appropriate action taken.
Our property managers provide our tenants with a guide on what will be inspected prior to the inspection taking place to help them prepare. We will also advise our tenants of the date and time of when we will be calling in to conduct the inspection.
Our landlords are welcome to attend inspections, but we usually find they prefer to receive a comprehensive report post inspection including photos of any damage or maintenance items that require attention. Our landlords approve any maintenance prior to us coordinating the repairs.
From time to time properties need a little extra care. If something needs attention we provide our landlords with a clear and detailed description of the problem and seek their approval before coordinating the necessary work. We also seek the tenant’s permission to access the property to make the necessary repairs.
Sometimes things go wrong that need immediate attention. We will always try to contact you first, but in the event we cannot reach you we will act immediately on urgent repairs with costs capped at a previously agreed value (this amount is agreed at the time of signing the managing authority). We have a network of trusted tradespeople that are a wonderful help with providing cost effective and speedy solutions to such emergencies.
Once the fixed period of the lease has ended, assuming both the tenant and landlord wish to extend the lease, we negotiate revised terms and issue a new Residential Tenancies Agreement.