Q: What are the golden rules for tenants?
A: There are two golden rules for tenants:
- Pay the rent on time.
- Maintain the property.
Most things we do at HouseSmart are built around these two golden rules.
Q: Are there any good tenants?
A: Yes, most tenants are good, it is only a minority that are bad and give the rest of the law-abiding tenants a bad name. Most people who own homes today used to rent in the past, and were just fine as tenants.
Q: Are there any bad tenants?
A: Yes, plenty of them. Have a look at the public notices section of the West Australian newspaper any Thursday and you will see two columns of them listed for your reading pleasure. You will find bad tenants congregated around:
- Poorly-managed properties.
- Poorly-maintained properties.
Q: Will I ever get a bad tenant in my property?
A: If you own a rental property for long enough, the answer unfortunately is yes. Anyone who promises that you will never get a bad tenant is either lying or inexperienced. Good tenant screening will provide significant protection, however it is a numbers game and eventually you will get a bad tenant. The important thing is to have a property manager who expects this to happen, will not be surprised by it, and has systems and procedures to deal with it.
Q: How often does the tenant pay rent?
A: The tenant pays rent every week, fortnight or month; depending on what was agreed when their lease was first written. After a while, sometimes tenants pay at uneven frequencies, which they are allowed to do as long as they are in advance of their due date.
Q: How does the tenant pay rent?
A: All new tenants are requested to pay rent by direct debit into our trust account. The direct debit is run by payment services provider Rental Rewards . Using direct debit is the most reliable method of rent payment and helps to keep rent arrears low.
Q: Do tenants ever get into arrears with their rent?
A: Yes, almost all tenants will experience difficulty with rent at some stage during their tenancy. A good property manager expects the tenant to default, and has systems in place to manage the situation. Anyone who tells you that there will be no problems with arrears is either lying or does not have much experience with residential tenancies.
Q: As an owner, what should I do about rent arrears?
A: Two things you can do as an owner about rent arrears. Firstly, have a good property manager who will manage and control the situation. Secondly, build up over time a cashflow buffer in your bank account. Try not to live and make loan repayments directly from your rent account. Have enough reserves that you can run your life for up to three months without any rent coming in. Note you will get the rent money eventually, but for example an eviction will create a gap in cashflow until the money is recovered through the court and insurance. Be prepared is the watchword for rent arrears.
Q: What is your company policy for rent arrears?
A: We have a zero tolerance policy for rent arrears, and the HouseSmart difference is that we actually enforce that policy!
Q: So what do you do to manage rent arrears?
A: Our rent arrears procedures are as follows:
- We reconcile our trust account by 9AM every morning – if you do not reconcile your trust account daily, any remaining procedures are largely irrelevant.
- On every day that the tenant is late, we send them an SMS reminder that their payment is due.
- Day 1 in rent arrears – we issue tenants with a Form 1B Notice of Termination for non-payment of rent.
- Day 7 – we lodge the tenants on databases NTD and TICA.
- Day 12 – we apply to the Magistrates Court for termination of the tenancy.
- Day 34 – we attend the hearing at the Magistrates Court (yes, there is an average 22 day wait for your case to be heard).
PAYMENT TO OWNERS
Q: How often do you pay owners?
A: We pay our owners monthly, and mid-monthly if requested by the owner.
Q: What method do you use to pay owners?
A: We pay owners by electronic funds transfer direct to your nominated bank account.
Q: What day do you make the payment on?
A: We process our payment to you on the last day of the month, and the 15th for mid-monthly payments. Two things may delay the payment to you – your bank and the day of the week. We are with ANZ so if you are too that will speed things up. And if the last day of the month occurs on a weekend, you may not receive the payment until the Monday or Tuesday.
Q: Why have funds been withheld from my end of month statement?
A: Sometimes we have to hold some or all of the accrued funds shown on your end of month statement. We want to pay all your money to you, as it does no good to us having the money sitting in our trust account. But there are several good reasons why the money can be withheld. The first reason for withholding is for uncleared funds paid by the tenant. Cheques take seven days to clear and electronic payments take one day. On rare occasions the money paid to us by tenants turns out to be false and is taken back by the bank. We have to make sure the money is fully cleared before we remit it to you. The second reason for withholding funds is where there is an account payable, for example maintenance expenditure or leasing expenses. It is not fair to remit funds to you when there are people waiting to be paid for tasks we have asked them to complete on your behalf. The third reason for withholding funds is when we anticipate expenditure in the future, and will need the current rent accrued to help pay for it. Some examples of anticipated expenditure are where a new hot water system has been ordered, or a tenant is likely to be evicted and we will need to arrange clean up and re-leasing.
Q: Do I get a statement?
A: Yes, of course. Each time we pay you, we issue you a statement, normally by email.
Q: What about invoices, do I get them?
A: Yes, if you receive email statements then you will get pdf copies of invoices paid on your behalf to external suppliers.
LOCATION OF PROPERTIES
Q: Can you manage my property in (suburb)?
A: Yes, HouseSmart manages property across the entire Perth metropolitan area from Safety Bay in the south to Yanchep in the north. We have many large investor clients who love being able to use one property manager for their entire portfolio.
Q: How long do tenants normally want to rent for?
A: The two most commonly requested lease terms are 6 or 12 months; however as the owner you can offer any lease term you like. For example, first homebuyers often ask us to set up an 11 month lease so they can move into their property within the first year of ownership. We recommend 12 month leases to encourage stability with your tenants.
Q: Does the rent go up during the lease?
A: The answer is usually yes for a 12 month lease, but no for a 6 month lease as tenancy law prohibits rent from increasing more often than once every 6 months. The amount of the increase for a 12 month lease is set by negotiation with the tenant before the lease is signed.
Q: What happens at the end of the lease?
A: One month out from the end of the lease, we contact you to obtain your instructions. You can choose to renew the lease or ask the tenant to vacate. If the tenant has been following the golden rules, we normally recommend that you renew the lease. Once we have obtained your instructions, we contact the tenant and see what they would like to do.
Q: What happens if the tenant is moving out?
A: We schedule the final inspection and this is the big one that very few real estate agents do because it is hard we commence viewings three weeks prior to the vacate date. This is hard because naturally the tenants do not want our property management staff in their home twice a week running opens but it is the best way to get your house rented again fast. Viewing while the tenant is still in the property reduces the vacant period and also gives us eyes in the property which help to pre-warn us of any issues that will need to be attended to at the final inspection.
Q: How long do your management agreements run for?
A: Our standard minimum management term is two years.
Q: How much bond does the tenant pay?
A: For most tenancies the answer is four week’s rent plus a pet bond of $260 if applicable. For example, a property renting for $500 per week with pets would need to pay a bond of $2260, being 4 x $500 plus $260.
Q: What happens to the bond?
A: We remit the bond to the Department of Commerce who provide a record of lodgement to us and the tenant. Thus a full audit trail of the bond money is completed. Some agencies keep their bond money in their own trust account. We advise you strongly against using an agency that does this. Lodging bonds with the Department of Commerce provides strong independent security to the bond payment system. Several real estate agencies have closed due to convictions related to theft of tenant bonds.
Q: How often do you inspect my property?
A: Six weeks after the tenant moves in, and then every three months.
Q: Do I get an inspection report?
A: Yes you get a two-page written report and one page of colour photographs. We do not use ‘tick and flick sheets’ which are common in the industry, as they do not provide enough detail for you.
Q: Can I come along to an inspection?
A: Yes you are welcome to come along to any inspection. You will be able to see the date of the next inspection through your online agent access. If you are planning to attend, please notify us beforehand so we can manage our schedule to meet you at the property.
FINDING NEW TENANTS
Q: How do you find new tenants?
A: We find new tenants through home opens, internet advertising, SMS to our rental wait list, advertising in our shop window, handing out rental lists, advertising in the newspaper and referrals from our existing tenants and owners.
Q: What is the best method for finding new tenants?
A: The best method for finding new tenants is to conduct regular home opens at the property, as activity leads to results.
Q: How often do you do home opens for my property?
A: We do home opens twice a week, every week, until your property is leased. This is double the activity level of the average real estate agent. We are unaware of any other real estate agency consistently doing twice-weekly home opens.
Q: Which days do you do your home opens on?
A: We hold rental home opens every Wednesday and Saturday. The Saturday opens are more popular than the Wednesday opens as it is much easier for working tenants to view properties on a Saturday. Of course we are open all day Saturday and it is our busiest leasing day.
Q: Which websites do you advertise my property on?
A: We advertise your property on www.housesmart.com.au, www.realestatate.com.au, www.reiwa.com.au, www.rent.com.au, www.rentfind.com.au, and www.homehound.com.au
Q: Why don’t you always advertise in the newspaper?
A: Advertising in the newspaper is expensive for you the owner so we don’t suggest that until we have had at least two weeks of internet marketing. Anecdotally, tenancy applications from the internet are better quality than those received from newspaper (sometimes being from people who don’t have internet access). However in a slow rental market, we do recommend newspaper advertising on Wednesdays and Saturdays to synchronise with our viewing days.
Q: How do you check tenancy applications?
A: We check tenancy applications in great detail, the main areas being:
- Residential history
- Employment history
- Identification documentation
- Tenancy databases
Q: What are you looking for in a tenancy application:
A: We are looking in a tenancy application for:
- Consistency – the truth will make sense, lies can get confused sometimes.
- Stability – we want someone who will stay in your property for a while. If an applicant is changing homes or jobs every 3-6 months, we will normally look for someone else.
Q: Do you have a philosophy of tenant checking?
A: Yes, our philosophy of tenant checking is summed up with:
- If in doubt, chuck it out, and
- The easiest eviction we will ever do is to decline an application (once they get into the house, it is much harder!)
PROPERTY MANAGEMENT IN GENERAL
Q: Do you like property management?
A: Yes, definitely. Property management is about building a long-term relationship with our clients, whereas sales is often a short-term process. At HouseSmart we are here for the long-term.