how to avoid ending up with a $5000 property damage bill when being a first time landlord please

A neighbour rented their house and said they now have $5000 in damages. I'm unsure what damages there are .

How can someone rent out their apartment or house and do everything in the topics below or more to avoid ending up with a $5000 damages bill?
contracts?
photos and signing a contract of state of the property originally and at the end?
having a bond and using it for any damages
having landlords insurance?
choosing tenants carefully
using a good property management agent / or can one achieve this doing it on our own or in other ways please. what its vital and what more can you tell me please.
Thank you.

 

You pretty much summed it up yourself.

All those things.
-First get landlord insurance. Popular insurers are EBM and Terry Sheers.
- Get the best PM you can find.
- Have a proper lease agreement which should include a bond. PM will organise.
- Choose tenants carefully. Check rental history. PM should do this.
Have regular inspections. Quarterly or bi-annually. PM should do this.

 

+1

No point self managing if not prepared to run it like a business, know/understand your & tenants legal rights (varies by state), be admin efficient, prepared to be firm when required.
If you don't have the tolerance for managing sales/customer service forget it and use a PM.

That's the toughest task of the lot.

Overall hope for the best outcome, sometimes frustrating shiet happen$

 

Agree. But if you can find a good one, it makes a hell of a difference even if it's 1 or 2% more fee. A bad one can end up costing you alot of money

 

All these recommendations are valid including your own insights. Choosing a PM is an important decision as it will be a long standing business relationship provided the PM is delivering a good service. Experienced, proactive PMs manage their portfolio of properties carefully provided they are not overloaded with high case loads. Explore PM:Caseload ratio's when making a choice about a PM; find out if you are guaranteed one point of contact to discuss matters expediently...it is about putting multiple safeguards in place to minimise the risk of damage to the property. Tenants welcome inspections when they have positive relationships with their respective PMs (a PM requires the capability to build and sustain positive relationships with both the owner and the tenant with a balanced perspective to work through matters), an eye for detail when engaging in inspections and to follow up any maintenance matters immediately - tenants tend to care well for properties when the properties are well maintained...

 

Choose a good PM. Ask them what their tenant background check strategy is and what tools to use to ensure the tenant (and their references) are legitimate.

Those saying do regular inspections are only half right. They need to be very good ie lots of photos and very specific on wording so that they can be used as evidence in court.

Have both landlords and building insurance. Preferably have them at the same place so they can't argue over which one should be claimed on. Also check how many weeks rent they cover in various situations.

Have the max bond you can. This is 4 weeks rent in most cases but can be more in a couple of circumstances.

 

Thanks everyone for your very helpful hints.

I have a question please for DI property lookerafterer.
Please can you tell me which companies you have been happy with who do both landlords and building insurance.

thank you

 

Hi Justine,

As has already been mentioned, a good PM and landlord insurance policy are very important.

Also think carefully about how the place is set up (ie to minimize damage). Some surfaces/products are either easier to damage than others, or show wear & tear far sooner than others.

Understand under what circumstances an insurer would pay out on rental default and malicious damage. Some insurers will only pay out on rental default if the default started while the tenant was under a fixed term lease (even if it lapsed to a periodical lease thereafter). However if the default started when they were on a periodical lease, you're often on your own and should ensure your PM gets the situation under control as quickly as possible.

Understand the insurance policy and which things are considered to be "malicious damage" and which are not. For those that are not, focus on which things in the property would cost heaps to replace if you had to, and think about what materials would be best to use. For instance, a light coloured carpet is almost certainly going to end up with marks on it, even if the tenants are trying to keep it clean. Dark colours, well, they could spill red wine on it, not bother to clean it up, and you still probably wouldn't know.

Spend some time in floorcovering stores (eg Carpet Court) talking to them about the sort of carpets that are suitable for rentals. They'll show you the sturdy carpets. They'll almost certainly by a nylon or polypropylene carpet, which feels quite cold underfoot if you put it in with standard underlay, but use the upgraded underlay and suddenly it feels squishy and luxurious and warm.

Also spend some time wandering around Bunnings and Spotlight to understand what products are out there and what they cost. Start to understand what window coverings would be suitable in rentals and why, and how much they cost. If a window blind cost $5, you probably won't care if you have to replace it at the end of the tenancy. Knowledge of what's out there will help you feel more in control of things, and not panic with the great unknown if your PM rings you to say something needs doing.

 

Another common Q not "easily" found in the search function that could do with a sticky, or something that lists PC members most preferred providers etc (not just insurance)
https://propertychat.com.au/communi...nce-and-other-insurance-recommendations.3307/

Main ones recommended are;
EBM, they offer a discount to propertychat members (check your flood area situation)
Fellow PC member @brettc can be contacted here to organise a quote https://propertychat.com.au/community/members/brettc.345/

There's also Terri Scheer https://www.terrischeer.com.au/

 

Used EBM for all of my own props.

 

Agreed!!! The best $300 you will spend, i use EBM and the service when it comes time to claim is excellent.

 

Yes I agree with all of the above, you need to have a good relationship with your PM and trust them implicitly. It is best to go through a referral agent if you now anyone that has a good relationship with their agent.
Yes, Landlord Insurance is key but you also must ensure you have very detailed condition report with photos to ensure the claim goes through without a hiccup.
Choice of tenant is also key obviously Depending on the price and location of the property you could also request a higher bond too which can be helpful in times of need.

 

I started off with landlord insurance through AAMI ($140), had issues and wasn't covered. Then changed to terry sheer ($300) which was much better.

I would say one of the best attributes of a good property agent would be someone who is contactable, hard to know up front, but I had periods where I spoke to agent every day, and nothing would have been more annoying than if I couldn't get into her.

 

i had landlord insurance (with Australian unity). Tenants split (as in separated). couldn't afford anything - decided to run split.

A PM can only do so much (so i self managed this from going to VCAT To get the bond released as well as getting the damages itemized and having them binding upon the tenant). and dealing with insurance (all it had to be proven was malicious damage).80% was paid out by insurance and bond. the other 20% i just left it to debt collector (managed to get back 10% ) and left it at that.