5 Way To Protect Yourself From Bad Tenants

By Johnny Nguyen

Over 7 million people rent their homes in Australia, according to 2016 census data. That’s close to a third of the population.
The vast majority of this group are reliable and trustworthy, making for fantastic tenants. Unfortunately, there are some who are the exact opposite, presenting a huge risk to landlords by damaging the property, missing rent payments, and acting dishonestly.
How can you protect yourself and your investment from dodgy tenants?

1. Make sure you’re fully insured

Reducing your risk to zero is impossible – but the right landlord insurance policy can help you come close. Premiums in most states are around $1,000 per annum on average, but you can go as high as $3,757 in North Queensland thanks to the risk of a tropical cyclone, according to Canstar.
For that cost, you’ll be covered for many of the risks of tenanting your property. The most common claims made under landlord’s insurance include:

  • Loss of rental income: caused by tenants who leave unexpectedly or default on rent
  • Malicious or accidental damage: everything from holes in the walls to stains on the carpet
  • Water damage: usually flooding from appliances, fittings or plumbing

It’s important that you don’t go online and buy the first policy you see. Speak to a qualified insurance broker to make sure you have the cover you need at a competitive price.

2. Screen tenants thoroughly

The best way to minimise the risk bad tenants present is to avoid them completely by thoroughly screening each applicant. This is your property manager’s responsibility, but for peace of mind, you should ensure they’re being as thorough as possible.

Their process should include checking applicant’s income and identification. Next, they should check references, including employees and former landlords.
Last of all property managers should always check the National Tenancy Database, where they’ll be able to see the tenant’s rental history and record of any complaints against them. This process will help make choosing the best possible tenant far easier.

3. Conduct Regular Inspections

Inspections shouldn’t be an inconvenient necessity for property investors. They’re a chance to ensure your property’s being looked after, to look out for any areas in need of maintenance, and to show your tenants that you care. If you conduct them regularly, you’re likely to spot problems before they become serious.
However, you should be absolutely sure you conduct your inspections within the law. Legislation differs from state to state, but generally speaking, you should give your tenants seven days’ notice prior to performing an inspection.
They should also be performed once every three to six months, depending again on the rules in your state or territory. Speak to your property manager about inspections at the beginning of the tenancy to ensure they’re aware of your expectations.

4. Know the law inside out

A long list of laws dictates how you must treat your tenants, and what you must do when issues arise. Knowing this, or hiring a professional property manager with an in-depth knowledge of tenancy law, is absolutely essential to being a successful landlord.

That’s because if you act outside the law, you open yourself up to legal action from your tenants, non-payment of insurance claims and various other fines and penalties. If your tenant doesn’t pay rent, for example, there’s a very specific process you must follow to solve the problem.
The notice period will differ depending on what circumstances you’re evicting your tenant under. For example, if you want to renovate, you must provide your tenant with 60 days’ notice and have all council permits in place before evicting them.
On the other hand, if the tenant maliciously damages the property they can be asked to leave immediately. Knowing all of these details is key to ensuring you’re not exposed to unnecessary risk by acting outside the law.

5. Choose a capable local property manager

There’s no better way to minimise your risk than to manage your property and tenants well throughout the entire process. The secret to doing this is simple – choose a property manager with plenty of local experience and a track record of excellent results.
Look for someone with over five years’ experience managing similar assets in the area your property is located. Ask for references from past clients, and look for a professional with the backing of a large firm if possible.
With the right help, a solid strategy and working knowledge of tenancy law – you can avoid those risky tenants and watch as your investment grows.


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