For those considering hiring a property manager, the cost is a key factor. In Australia, property management fees vary, but they generally range from around 5% to 12% of the rental income. This fee covers services like tenant screening, rent collection, property inspections, and handling maintenance issues. The exact percentage can depend on the location, type of property, and the range of services provided by the property manager.

If you’re set on a property manager, then your landlord’s checklist largely ends here, as they will likely do a lot of the legwork for you. However if you want to go for a more DIY route, read on.

Landlords should also stay informed about any changes in rental laws and market conditions in Australia, as these can influence tenant selection strategies.

1. How to Market the Property

Perhaps the key way in reaching the largest number of eyeballs with your investment property is through listing the rental on sites such as Realestate.com.au and Domain. These likely come with a fee.

Potentially free sites include Facebook Marketplace and Gumtree, however these are considered less formal. When listing your property for rent you’ll want to include:

• Property address

• Rental Price

• Lease length

• Open home/inspection dates

• Potential move in date

• Your contact information

• Description of the property

• Clear photos of the property

• Total square footage or a floor plan

• Number of bedrooms and bathrooms

• Size of bedrooms and bathrooms

• Furniture or appliances that are included

• Outdoor spaces

• Parking

• Some information about the area, and proximity to shops and public transport

• Any special features included in the property (fireplace, deck, courtyard, rooftop, pool, laundry etc)

• Allowances - pets, smokers etc. Make sure you research pet allowances in your state before you finalise your listing, as some areas differ

Once people start to arrive on open day, make sure you greet them; show them around the property. If you have an apartment or the place is in a complex, a partner at the lobby or entrance could be handy to direct prospective tenants to the right place. Try and make a mental note of the people that attended.

• Who was organised?

• Who had an application already filled out?

• Who showed genuine interest in the property?

Once people have seen your property, hopefully the applications will start coming in. Don't just skim the applications. Start by removing any applications you're uncomfortable with, or any that are incomplete or don't have completed references.

2. Financial Stability and Employment Verification

Financial stability is paramount in ensuring that the tenant can consistently pay rent. Landlords should look for tenants who have a steady income and a good track record of financial responsibility.

Landlords should verify the tenant’s current employment status. This can involve contacting the employer or reviewing recent pay slips. Stability in employment is often a good indicator of financial reliability.

3. Rental History and References

Past rental history can be a strong predictor of a tenant's behaviour. Landlords should look for tenants who have a history of long-term stays and positive relationships with previous landlords.

Landlords could contact previous landlords or property managers to inquire about the tenant's conduct, including their promptness in paying rent, property maintenance, and adherence to lease terms. A rental ledger will go a long way in ensuring a tenant’s ability to pay rent on time.

For tenants with no rental history, such as young adults or recent migrants, landlords may consider other factors like their employment stability or require a guarantor.

4. Legal Considerations and Compliance

In Australia, it’s illegal to discriminate against potential tenants based on race, religion, sex, disability, or other protected attributes. Landlords should familiarize themselves with the relevant anti-discrimination legislation in their state or territory.

Understanding Tenancy Laws

Familiarity with local tenancy laws is crucial. These laws govern security deposits, lease agreements, and the rights and responsibilities of both landlords and tenants. It’s worth looking at your state’s relevant tenancy authority to find out what you can and can’t do as a landlord - this includes items like notices of inspection and rental price increase laws.

5. Lifestyle, suitability, and pets

A tenant's lifestyle should be compatible with the property and the neighbourhood. For instance, a small apartment may not be suitable for a large family. Many apartment buildings also have occupancy limits for individual units.

If it's close to a university, you'll probably attract university students wanting to live in a share house. Apartments located in the inner-city might attract young professionals. Houses in the suburbs, close to local schools, might attract families with children. Keep in mind the average rent prices for the area you've bought in.

Pet Policy

Landlords should decide on their policy regarding pets and communicate this clearly. If pets are allowed, additional clauses may be included in the lease agreement. Many states have now banned the outright exclusion of pets. Again it’s worth familiarising yourself with your state’s policies as to renting with pets, or for a quick rundown, you can find out here.

Smoking Policy

Landlords should establish and communicate their policy on smoking inside the property. Further, if you have a strata-titled property you should familiarise yourself with the bylaws that may exclude smoking on balconies or common areas.

6. Long-term Intentions

Stability and Long-term Tenancy

Landlords often prefer tenants who intend to stay long-term, as this reduces turnover costs and vacancy periods. A 12 month lease seems to be about the standard these days.

However, you will need to assess your own goals too, if you plan on moving into your investment property, or treat it as a holiday home and thus prefer short-term leases.

Evaluating Tenant's Future Plans

Understanding the tenant's future plans can give insights into their potential length of stay. For instance, students or temporary workers may only seek short-term accommodation.

Further, if someone’s workplace is a lengthy commute from their residence, this could hampen their ability to sign-on long term.

7. Organisational Skills and Cleanliness

Tenants who are organised and adhere to deadlines (like rent payments) are highly desirable. A tenant's commitment to cleanliness and upkeep can significantly impact the property's condition over time.

Unfortunately, no one has a crystal ball, and you’ll never know someone’s expectations of cleanliness just by meeting them. There’s also a difference between a bit of a messy kitchen, and putting holes in the wall or stinking out the entire apartment complex. In the case of damage caused by tenants, a landlord insurance policy can be worthwhile.

Read more: Investing Home Loan Basics

Harrison Astbury

Editor and Financial Analyst

Harrison is InfoChoice's editor and market commentator. With years of experience at some of Australia's largest comparison sites and media organisations, Harrison is passionate about all things banking.

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