How to minimise rent in arrears

Having a good tenant makes investing property so much better. However, even good tenants encounter financial loss and this will have a direct flow in effect to the landlord. On the other hand a bad tenant can cause significant problems to a landlord in more ways than one. Here are some ideas to help minimise rent in arrears:

Upfront background checks

When your property manager contacts you to present a potential tenant application, make sure they have processed appropriate background checks. The most common background check is to speak with their employer to identify their personality, working traits, employment roles and income etc

Employ a good property manager

Employing a good property manager will be a reliable trusted partner when leasing your investment property. They will have established systems in place to help screen your tenant, monitor their livelihood, address the expectation to paying rent on time and taking care of any rent in arrears. Having a professional understand the laws, obligations and be at arms-length between you and the tenant will benefit the outcome.

Maintain good lines of communication

A happy tenant is a happy landlord. The more satisfied the tenant is living in your property, the more likely they will look after it, pay rent in time and continue to occupy it for the long term.

Establish your expectations

Establish your expectations from the outset. Outline the rent payments, due dates etc. Make sure your tenant understands you have no tolerance to experiencing rent in arrears. Early expectations last.

Establish a payment plan, if necessary

Another way to minimise rent in arrears is to accept a payment plan. As a landlord we want our rent paid in full. Unfortunately, even a good tenant can encounter financial hardship or family woes. If the tenant has demonstrated all the traits and find use capacity in the past, showing some compassion to help will improve your relationship with the tenant and have them feel more inclined not to leave you out of pocket. In the short term, it may not suit you, but if you can afford to cover the property outgoings and loan payments, you may have a better tenant long term. Be vigilant in this situation. You do not want the tenant to take advantage of your kind deeds either.

Property inspections

Have your property manager conduct regular property inspections. This will identify their living standards, livelihoods and their care factor to look after your property. If they demonstrate bad traits, this may represent some potential issues in their life or work.

There are many ways to minimise rent in arrears, however certain circumstances are unavoidable and beyond your control. A further way to protect yourself is to acquire landlord insurance cover. A good policy will include coverage for loss of rent. Click on the hyperlink to learn more about the common landlord insurance claims.

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While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you want to learn more, please contact us. We welcome the opportunity to assist you.

Apr 2020