How do I find the right tenant and how much rent should I ask for my granny flat?
Having a granny flat can really help retirees when they’re looking to boost their income, or accommodate family and friends. But if your specific goal is to boost your retirement income, then you need to consider carefully whether you want to manage the property yourself and risk the challenges that can come up with tenants. These can be anything from unauthorised pets peeing on everything, to constant complaints about minor issues and even clandestine meth labs in the bedroom. There is frankly no end to the creative license some tenants will take with your property. The very best thing you can do first and foremost is decide how you want to run your rental property and getting a good property manager on board is rarely a bad decision. They have the professional skill and expertise to not only quickly and easily navigate these things as they happen, but are also across the rights and obligations of everyone involved. A property manager can do all the things you need in a fraction of the time it would take you, and is also much better positioned to solve problems, as a professional and objective third party.
A property manager certainly takes the stress and complication out of the day-to-day running of your property, however, choosing the right tenant is still something you should be involved in. Remember – what you want is someone reliable and considerate, to not only consistently pay the rent, but to also act as somewhat of a caretaker for your property. The tenant is your first port of call for things needing repair or maintenance; unreported issues can cause big problems and become expensive, so you need someone who truly understands the responsibilities of being a tenant to take care of your property.
So, who is that wondrous being and how do you find them? Your property manager will have standard criteria their agency uses, however there are a few basics to look out for and the final choice will ultimately be yours so here’s a few tips to keep in mind.
Can they pay the rent?
This may seem obvious but a lack of desirable tenants can force you to make dubious choices and, before you know it, your tenants have transitioned to squatters and your dreams of supplementary income have gone up in smoke. If you have a number of good applicants to choose from, look for the ones that have already been paying similar rent for a considerable period of time. All applicants will provide detail about their current or previous rental payments and usually income as well, so it’s safer to narrow it down to those who already have that level of outgoing in their budget. It’s also an accepted belief that the rent a tenant pays should be no more than a third of their monthly income. Sometimes an abundance of choice can be dealt with by just doing some basic maths!
What is their life stage and does it suit your property?
If your granny flat is in the suburbs, near a university then it’s likely you’ve considered it might settle into a niche as student accommodation. This is okay if you accept that your tenant turnover will be high and your property may not be that well taken care of. For some homeowners this is fine – a location with a guaranteed need for housing, along with tenants who will report essential maintenance but not be too fussy about minor aesthetic issues – perfect! Other owners however have different ambitions for their granny flat. Hands down the most popular types of tenants are single parents, couples saving for their own home, or people with pets. They not only need a good home to house the people and pets they’re taking care of, but they are also less inclined to move regularly. There is a bit of extra wear and tear, however a longer-term tenant will save you money in the long run. What a landlord needs ideally is a tenant who will make the place their home and want to stick around well into the future.
Are they legit?
One of the many advantages of having a property manager is that they’ve seen it all when it comes to rental property open inspections and applications. They can sniff out a fraud a mile away and have good instincts about human behavior as people wander through your property. People who quickly dash from room to room and squeal about certain features are a dead giveaway as inexperienced tenants. Conversely, people who are testing for squeak in the floorboards, checking how windows open and close or asking questions about energy efficiency, noisy neighbours and parking, have clearly been around the block and know from experience the things that matter to them as tenants. Although single parents, students, young couples or people with pets may be the ideal, a property manager will notice things like an overly pampered pet being fawned over as their owner views the property, or parents not disciplining kids who are rubbing dirty hands across walls, or jumping up and down on beds. These kinds of behaviors can be warning signs – no property manager wants to get locked into arguments with parents justifying damage because their beloved treasure ‘didn’t mean it’ or ‘doesn’t know any better’. Damage is damage and a responsible tenant will not only report it when it happens, but will actively work to prevent it through the duration of their tenancy.
Do they tick all the boxes?
When it comes to the paperwork, a property manager can scan through dozens of applications and weed out the duds in seconds. Numerous rental properties in a short period of time? Bonds not refunded? Their clothes were covered in cat hair, or they reeked of cigarette smoke at the open, but their application says they have no pets and are non-smokers. A property manager knows to call their employer to check their employment status, and to ask their referees how they know the person to get a true sense on how reliable that reference is actually going to be. They also have industry cred to be able to have an honest chat with the applicant’s previous property manager and really find out what kind of tenant they were.
Now, you can re-read this post and consider all of these issues without the involvement of a property manager, or you can just stay relaxed and get one! In addition to helping you find the right tenant; a property manager will also be the best person to advise you on how much rent to charge for the property. They can give you informed advice about what the going rent is in your area and also let you know if the rental amount you have in mind is realistic or not.
The investment in professional management can be invaluable and property management for many homeowners becomes an essential part of their property’s expenses, to ensure the sustained growth in the value of their property into the future.
DISCLAIMER: The following advice is of a general nature only and intended as a broad guide. The advice should not be regarded as legal, financial or real estate advice. You should make your own inquiries and obtain independent professional advice tailored to your specific circumstances before making any legal, financial or real estate decisions.