If you are a landlord – or the less feudal term ‘property investor’ – do you think of your tenants as assets or liabilities?
You might worry about getting bad tenants, but are you ever concerned that you might be a bad landlord?
A bad tenant is pretty easy to identify and we’ve seen them on countless TV news magazine shows.
They don’t pay rent on time, wreck the property, break strata rules, become aggressive when challenged and annoy the neighbours. Perm any three from five for an unhappy experience.
These nightmare renters are, of course, in a tiny minority and they aren’t always so easy to spot.
Well dressed with great references and a steady income in a large law firm? I know investors who won’t rent to lawyers because the chances of being constantly harassed with legal threats – some valid, many spurious – increase exponentially.
But getting back to bad landlords, they fall into two basic categories; don’t want to know and don’t care.
In an ideal world, good tenants would find good landlords and their relationships would last longer and more amicably than most marriages.
But, regardless of how good a tenant you are, if your ‘don’t care’ landlords are purely motivated by profit, you could find yourself having to move every year, as churning tenants at the end of every lease is by far the easiest way to raise rents.
Actually, if your landlord is a dedicated tenant flipper, you probably won’t even get a look-in these days, as they’ll already have their flats permanently listed on Airbnb.
However, if you think of your tenants as an asset, just as important as the actual property, then you must address the issue of what it takes to be a good investor.
A bad investor just buys a lump of shares and hopes they provide a steady income and increase in value over time.
A bad landlord – the ‘don’t want to know’ variety – does the same, often with the aid of a rental agent whose main job seems to be to collect the rent and protect the owner from any complaints.
Why would you allow that to happen? If your tenant is behaving badly, they are diminishing the value of your investment and you need to know about it.
So don’t ignore pleas from your neighbours to do something about constant by-law or rules breaches. In most states that’s also a breach of the tenancy agreement so you have considerable heft when you do get involved.
On the other hand, if your neighbours turn out to be tenant-hating strata-fascists, take up cudgels on your renters’ behalf whenever they are misused or abused. You are in the best position to get things done and it’s a responsibility that comes with taking your tenants rent every month.
Wringing your hands and saying “oh, it’s the committee …” butters no parsnips. If need be, get on to the committee and fix things.
Good tenants aren’t that hard to find, but they are harder to hang on to if you ignore them or allow them to be mistreated.
This column first appeared in the Australian Financial Review.