Number 2 in a series of short articles by a Victorian educator and licensed real estate agent. These short snippets were written so you can understand who and what is being talked about during the buying and renting processes. Often a newcomer feels intimidated because they are a bit unsure of "the lingo" being used. That puts you on the back foot. As an educator I want all my clients to feel confident and knowledge gives you that confidence.
Landlord Talk: You have bought an investment property, which has now settled, and you are looking for someone to rent it out.
Congratulations you are about to become a landlord. Even if you are a female the term used is landlord. Once there were landladies as well but in all modern paperwork there is just one term used and that is landlord.
You will probably want to engage an agent to manage the property for you. The property manager will need to be a licensed real estate agent or a representative of a licensed agent. Agencies manage rental properties in slightly different ways. Some have the property manager do all the tasks associated with the property, other employ leasing agents whose sole responsibility is to show properties that are for rent.
The real estate agency will find a suitable person to rent your property. That renter is called the tenant. Usually the tenant signs a lease, which runs for a specific period of time. The most common period would be for 12 months though they may be as short as three months or as long as two years. This is negotiated for each lease.
At the end of the lease the tenant is not automatically evicted. The lease rolls over into what is called a Periodic Tenancy, which runs month to month (if rent is paid monthly). To have the tenancy actually end there are notice time requirements for tenants and landlords.
The tenant is usually asked to pay a bond at the beginning of the tenancy. This is usually the equivalent to a month's rent. If a bond is paid then the agent is required to provide a condition report. This is the document, which may be used to prove what condition the property was in at the beginning of the tenancy.
Tenants pay rent in advance. The most common period is for a calendar month though in some jurisdictions it is a legislated shorter period. A calendar month means that the tenant makes 12 equal payments for the year. It is calculated by multiplying the daily rental amount by 365 and then dividing by 12. Many tenants new to the process miscalculate and think it is the weekly rent times four.
When the agency receives the rent on behalf of the landlord that money is considered to be money being held in trust and there are strict legislative requirements on how it is accounted for. Many agencies have a qualified trust manager to ensure this is done correctly.
If you found this article useful there are fifteen in the series, look out for them.
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