Frequently Asked Questions for First Time Landlords

Questions you should be asking

These questions are also availble as as free download. Click Here to download your copy.

1. How much rent should I ask for my property?

This is probably the number one question of landlords. Marketing and achieving the correct rental is critical to your vacancy period, your pool of available tenants and your annual rental income. The right rental should strike a balance between offering enough value to attract the right tenants and maximising our yield as a landlord, and minimising vacancy periods. A professional property manager will take into account recent comparable rentals, time of year and property condition when assessing market rental

2. Why are rents higher in summer than winter?

A number of factors contribute to the seasonal variations in rents. Generally speaking, a higher rent can be achieved between January and March due to university intakes, the new school year beginning and  most corporate relocations taking place at this time of the year. These factors, as well as the natural ‘hibernation’ that occurs during Melbourne’s winter combine to help landlords achieve higher rents during Summer.

3. What works/improvements can or should be done prior to letting?

The property should be presented in its best light for photography and open for inspections. When a property is clean and undamaged, it will attract a better quality tenant who will respect the property. Ideally a property for lease should be freshly painted or have very minimal marks to walls and no obvious stains to carpeted areas.

Other work than can lift the aesthetic appeal include new blinds and keeping the property clean throughout any vacancy period. It is also important to ensure any outdoor living areas are kept in excellent condition while the property is vacant.

4. How long will my property be vacant?

This is completely dependent on the way the property is presented, asking a realistic market rent and the time of the year. Your property manager should aim for minimal vacancy periods of 3 - 8 days during peak letting periods. Three days vacancy is allowed to accommodate for completing a thorough final inspection to ensure the property has been left in good condition, as well as an ongoing condition report for the new tenants. To achieve a short vacancy period asking rentals must be correct, Refer to Question 1.

5. Can I negotiate on fees?

All fees in property management are negotiable by law. It is important as an investor to ensure that you are receiving the service that justifies the fees charged by your property manager. As one of your highest Value investments, you need to ensure that your property is in the hands of a professional manager who Will ensure it is maintained to the highest standards and is achieving the best return possible.

Quality property management service can be delivered for a management fee of between 6% and 8%. Lower fees are obtainable but are often coupled with a compromised, poor quality service as a result.

6. How do you check references?

There are a number of key checks and screening processes that every tenant should be put through prior to being accepted into your investment property.

Be sure that your property manager complete the following steps:

• Check out tenancy information databases (a log of people who have been bad tenants right across Australia).
• Get payslips to ensure the tenant can afford the rent (ensuring the rent is not more than 30% of their income).
• Get a reference from their previous two rental managers.
• Collect 100 points of ID.
• Conduct a 30 minute interview with them prior to signing the lease.

The applicant’s information is then presented to you as the landlord for the final decision on whether they are approved as tenants for your investment property.

7. Can I show tenants before Settlement/vacating?

It is important to include an early access clause into your sale contract if purchasing a property with the intention of having it let immediately after settlement. Generally this will allow access in the final two weeks prior to settlement for open for inspections and any works required.

When a tenant gives 28 days notice that they are leaving the property, the law states they must allow access for the purpose of re-letting 14 days prior to their vacate date. If a strong relationship has been established between your property anager and tenant, most will allow access prior to this.

8. How will you advertise my property?

The internet is by far the most commonly used tool for rental enquiries (65%) by tenants, compared with walk-ins (21%), signs (12%) and print advertising (7%). At Synergy, we know from our own rental data over the last couple of years, that over 90% of our rental enquiries come from realestate.com ‘feature properties’, with other property search engines falling a long way behind. As a result, every property advertised with Synergy is made a Feature Property on realestate.com.au and is also advertised at www.synergybsm.com.au and on our in-house
rent list.

9. Apart from the leasing fee and the ongoing management fee, is there any other expense that I should take into account?

It is important to thoroughly read through the fee schedule provided by your property manager. Many Melbourne agents will charge additional fees for routine inspections, condition reports, financial statements and arranging maintenance so it is important to look at the total fees being paid per tenancy, rather than focusing on a lower management fee.

10. How is the leasing fee paid?

Once a tenant has been selected, they are required to pay the first month’s rent immediately. The leasing fee and any other costs incurred are then deducted from this amount and the balance forwarded to you.

11. How long is the standard lease term?

The standard recommended lease term is for 12 months, depending on the time of year your property is leased. Ideally your property manager should aim to have the lease expiring during a strong leasing period to maximise your return and minimise vacancy periods. This provides stability for both you and the tenant, and is line with yearly rent increases. A longer lease can be beneficial when the lease has expired in a slow leasing market, such as December, to put the lease expiry back on cycle with a stronger market.

12. When are routine inspections completed?

The first routine inspection is conducted after 3 months, and every 6 months after that which is the maximum number of inspections allowed by law. Inspecting the property after 3 months allows any minor issues with the tenant’s maintenance of the property to be dealt with before they escalate into major problems after 6 months.

After every inspection we will provide a comprehensive 3 page report with photographs of all rooms and any maintenance required, as well as suggested improvements for
future consideration. 

13. Is there a fee to arrange maintenance during the tenancy?

Arranging maintenance is covered by the management fee charged monthly on rent collected. There may be additional fees for larger jobs, which become a renovation rate rather
than maintenance.

14. Does the tenant pay for water rates and council rates?

Where a property has an individual water meter, the tenant is required to pay for water usage costs. The tenant also pays for electricity and gas usage costs where applicable. As a landlord, you are responsible for payment of water rates, council rates, insurance and body corporate fees. In cases where there is only one water meter for an entire block generally the landlord will be responsible for an apportioned amount of the water usage cost, split between all owners. Talk to your property manager for advice on what applies to your property.

15. Can you pay insurance, rates and other costs from the rent?

All costs can be deducted from the rent. You will be provided with a monthly statement and copies of all invoices for that month. You will also be provided with an end of financial year statement detailing all income and expenditure. All statements can be sent by post or email.

16. When will my property be open for inspection?

While your property is vacant, it is important to make it as accessible to prospective tenants as possible. To enable this, we conduct mid week and Saturday open for inspections as well as allowing private appointments. Keys are never handed out to prospective tenants.

17. While the property is vacant, do I still need to pay management fees?

Management fees are only charged on rent collected. This means that if the property is vacant no management fees are charged to you. 

18.Does the tenant have to look after the garden?

In the majority of cases, when a tenant has access to a garden for their private use, it is their responsibility to maintain the garden and regularly mow, weed and trim any plants. Where there is a communal garden generally the body corporate will employ a gardener to maintain these areas.

It is important that the tenancy agreement specifies that the tenant must maintain the garden where applicable. Many landlords have made significant investment in their garden and include a gardener to protect their asset.

19. How are tenants required to pay their rent?

As part of Synergy’s application, any prospective tenants must agree to pay their rent by direct debit. Other options offered are payment by personal delivery of a bank cheque or money order, but 90% of tenants pay by direct debit. This enables you to rest easy knowing the rent will be paid on time every month!

20. When will the rent be paid into my account?

Once a tenant’s account is debited monthly, it takes 3 business days to clear into Synergy’s trust account. Once cleared, the rent is immediately transferred into your nominated bank account/s. No more waiting until the end of the month, mid-month or ‘the next landlord run’, receive your rent as soon as it is paid!

21. Can I specify whether pets are allowed at my property?

You can specify in advertising that properties do not allow pets, and we will ensure this is included in the tenancy agreement. Sometimes it is advisable to accept pets ‘upon application’, meaning if someone applies with two large dogs their application may not be suitable, but a pet canary may be!

22. Do I need Landlord insurance?

We strongly recommend all landlords take out landlord insurance, in addition to building insurance. While very few claims are made, landlord insurance will cover many of the worst case scenarios that can cause hesitation in owning an investment property. Your Synergy Property Manager can guide you through taking out insurance.

23. How do you determine the rental value of my property?

Many factors are considered when determining the advertised price on a rental property. Current market conditions and the time of year the property is available are both very important, as they can fluctuate regularly and it is important that your property manager takes these into account. We look at comparable rentals in the same area that have recently leased, as well as properties we currently manage.

It is important to advertise the property at a realistic rent, as a long vacancy period will negate any financial gain from achieving a slightly higher rent.

24. How often is the rent reviewed and is this completed in correspondence with me?

Synergy reviews all rents every 9 months. This is to allow one month of negotiation between landlord and tenant, plus the required 60 days notice to issue a rent increase. At the same time, it is important to evaluate whether the tenants should be offered a further fixed term lease if they have been quality tenants. All rent increases and lease renewals are completed only with the explicit instructions from you.

Discuss your needs with Synergy’s professional Property Management team by calling 03 9827 3355  or email enquiries@synergybsm.com.au. Or visit the Synergy website for more information about our Property Management