Number 9 in a series of short articles for investors on What Good Property Managers Do by a Victorian educator/real estate agent.
A good property manager will require the tenant(s) to pay a bond.
The maximum amount the property manager may charge is usually outlined in legislation. For example in Victoria the bond amount usually required is equivalent to one calendar month's rent. In some cases, as with the renting out of a family home, this amount will be considerably more. In Victoria, whatever the amount is, it must be sent to the Residential Tenancies Bond Authority (RTBA).
A good property manager will discuss the amount with the landlord and there is a tension between having a good solid amount to cover damages and having an amount so high that it discourages tenants from applying. When moving between rental properties the tenant may not have received the refund of their previous bond when they are required to pay the bond on the new property plus pay a month's rent in advance.
Real estate agents are not permitted to hold bond money in most Australian states. In Victoria if there is any dispute at the end of the tenancy about any rent due or any damage to property the dispute is heard at the Victorian Civil and Administrative Tribunal (VCAT) by a Member of VCAT.
Condition Report - By law, if a bond is taken a Condition Report must be given to the tenant.
A good property manager prepares this very carefully. The report is given to the tenant(s) after all the paperwork is done and when they come to collect the keys. etc. The tenants are required to return this report in three business days with any comments they may have written onto the report.
The term 'fair wear and tear' is one, which is often used when assessing a property. Members at VCAT will not expect the property to be in exactly the same condition as it was at the beginning of the tenancy as 'far wear and tear' is allowed and the landlord may not seek compensation for it.
A good property manager will be able to ensure the property is kept in good condition because of evidence such as photographs they will store as documentary evidence of before and after condition to take to the tribunal.
At the first routine inspection the property manager will ascertain the kind of tenant they are. If there is any thing which need attention the property manager can send a Notice to the tenant to remedy the situation. The property manager should then ask the tenant to provide photographic evidence of the remedy. By keeping on top of the situation the property manager can minimise the wear and tear factor.
When the tenant gives the required notice at the end of the tenancy the property manager should provide a list of professional cleaners for the tenant. A good property manager should negotiate a 'deal' for the tenant with the providers. This way it is a win-win situation with the landlord's property professionally cleaned and the tenant having a better chance of recovering the whole bond amount.
Make sure you choose a good property manager.
Toni Planinsek, principal of Planinsek Property Group, is happy to answer any queries through social media - Facebook and LinkedIn. She has prepared some free offers to help you on your road to becoming a successful property investor. To access yours go to www.toniplaninsek.com.au