Finding a tenant for your residential rental property could make or break investment success. Here are some tips that might help you.

In Australia, a landlord can find a tenant for their investment property in a number of ways. The two main ways are:

According to the Real Estate Institute of Australia (REIA), the majority of rental properties – around 80% – are managed by agents (known as property managers).

Either way, aspects of the rental cycle that need to be managed include:

  • rental assessment
  • advertise the property for rent
  • manage and assist with property viewings
  • receipt and processing of applications
  • screening tenants, including checking their references and rental history
  • management of the signing of rental contracts
  • manage all pre-rental reports, such as condition and repair reports (if required)
  • collection and deposit of rental deposits
  • handing over of keys to tenants
  • collection of rents and continued late payment of rents
  • arrange regular routine rental inspections
  • organization of craftsmen for repairs and maintenance
  • comply with legal obligations
  • handle tenant disputes. For example, this may include issuing a Notice of Violation if a tenant fails to pay rent.
  • manage the end-of-lease process, such as an exit assessment and the return of the rental deposit

Expert advice: find a good agent and a good tenant for your property

If you have purchased an apartment building, chances are you are looking for a tenant. But how can you be sure that the person who takes the lease will take care of it and, in doing so, help to ensure the sustainability of his investment? Canstar interviewed Real Estate Training Solutions educator Melanie Galea about it.

How do you hire an agent to manage an investment property?

It is always important to meet an agent at the property where they can undertake a rental appraisal on the property [and] discuss a marketing strategy and their ongoing property management services.

Once you have determined which agency is right for you, you will then be required to sign an Exclusive Management Agency Agreement. This agreement is between you and the agency, allowing the agent to advertise and act on your behalf. Read this agreement carefully and if you have any questions, be sure to ask them.

What should landlords look for when choosing a real estate agent to manage their rental property?

There’s a lot to look for when choosing a property manager to manage your investment property – it’s important to know that it’s not just about fees. I would recommend considering the following:

  • How will your property be marketed when it is rented out? Where will it be announced?
  • What is their process for inspections and requests? How do they communicate with their requests?
  • Who will manage your property? This is an important question. More and more often there are agents who sign up purely for a ‘new business’ and then another property manager takes care of it which is fine but make sure there is transparency on this subject. Ultimately, who manages your property after the initial rental process is also important
  • Live. What is the experience of the agent who will manage your property? However, don’t confuse experience with enthusiasm.
  • Staff turnover. Ask how long the property manager has been in the business. High turnover of property managers can lead to inconsistencies with the management of your property.
  • How many properties does the property manager look after? Some offices will overcharge their property managers and your property might not be maintained the way you want it to be.
  • Are they “portfolio-based” or “task-based”? In other words, will you have a property manager to talk to, or a different person for rentals, maintenance, lease renewals and ongoing inspections? This is important because it impacts management style and each owner’s needs are different.
  • Their processes:
    • How often will routine inspections be carried out? For example, in New South Wales, inspections can only be carried out a maximum of four times a year.
    • Incoming Inspection Report: This is a crucial part of the process. Does the agent use a detailed report with photos? This can potentially save the landlord if there are any issues at the end of the tenancy.
    • Rent arrears process: How quickly does the agent act on their rent arrears and when is the landlord notified that their tenant is overdue?
    • Rent reviews and lease expirations: What is the agent’s process for lease expirations and rent reviews to ensure rent is at market value?

How are potential tenants screened during the rental process?

Generally, a prospective tenant is required to complete a detailed application. This will include details such as their name, current address, rental history, work history, proof of income and personal references.

Items a property manager will check include:

  • ensure there are sufficient funds to pay rent and job security.
  • check rental history or previous places of residence.

Most “good” agents also have a rental database subscription to find out if a tenant has been listed as a defaulting tenant or has an outstanding debt.

[A property manager may] check personal references, in addition to employment and rental history.

What makes a good tenant? What can a tenant do to go further?

Some people consider a “good” tenant to be someone who pays the rent on time and keeps the house clean, which is true. There are other qualities and actions that landlords and agents really appreciate, such as a tenant who:

  • is accommodating – provides access to property inspections during tenancy with minimal inconvenience to all
  • is respectful and easy to communicate with
  • takes care of the property – promptly informs the agent of any real maintenance issues, to ensure the property is well maintained for the investor
  • follows agent policies, such as providing requests in writing or using an online form, for example.

What makes a good owner?

Over the years when I have managed properties I have often found that some properties had “higher than usual” tenant turnover, and this was often due to the property being in poor condition or that the owners had expectations that did not correspond. [with the tenants]’.

As a landlord, you are responsible for ensuring that the property you rent is habitable. Once rented, the property should be maintained, clean and free from any security issues.

During the rental, if any issues arise, they must be dealt with in a timely manner by a licensed tradesperson.

In my experience, tenants also want a landlord [or agent] who respects their privacy. A landlord who constantly attends to the property (attempting repairs, verifying repairs, and attending all routine inspections) can often make a tenant feel like their privacy has been invaded.

Some tenants prefer to be in a fixed-term lease for security. For some, this is important and may affect their decision to stay. Not everyone agrees, but it’s important to understand your tenants’ needs as well.

About Melanie Galéa

Melanie Galea is the Student Support Manager (Qualifications) for Real Estate Training Solutions (RETS), which has been providing professional training to Australian professionals in the real estate industry since 2003. Melanie began her career in real estate in 2005 and is an agent licensed real estate, accredited auctioneer, Strata licensed managing agent and stock and station agent.

Cover image source: studio ALDECA/

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