Could you handle an unexpected property expense of $80,000? As one landlord recently discovered, the risks can outweigh the reward when it comes to privately managing an investment property. A small number of landlords turn to managing their own investments to save on fees. Working in Property Management we hear some truly horrible stories from landlords who have approved risky tenants and almost all of these could have been avoided with the correct vetting process.
An article was published this week that detailed crime gangs targeting private landlords in order to find properties that can be used as grow houses for cannabis. They targeted these landlords as they knew there was less chance of the correct checks being done on their backgrounds and that the landlord may be desperate to get a tenant in place with their current market climate. In one instance a home had been completely revamped to suit a hydroponic cannabis growing operation including installing fake ceilings, ripping up flooring for a drainage system and sealing the doors and windows. Once they were finished the estimated cost to bring the property back to standard was over $70,000 and as this landlord found out the details of the tenants he had been given were fake, resulting in difficulties when trying to hold them accountable.
In another case a landlord had agreed to include electricity in the contract and, after it had been turned into a grow house, the bill for electricity came out to be over $80,000, Once included in the lease it would be hard for the landlord to argue against this.
Whilst this situation may be rare it does happen and is something that many landlords would never consider. Drugs aren’t the only risk as well. A spokesperson from Terri Scheer Insurance spoke of a tenant who, quite literally, stole everything from the home, including the whole kitchen (yes, that includes the kitchen sink!). Again this is rare but without routine inspections you do run these kinds of risks.
Damage and theft are the most common thoughts from a landlord when it comes to approving a tenant but the biggest risk we as property managers see are tenants not paying rent on time or trying to get out of their agreements early. Tenants who do this are more likely to do it again and this is why background checks from previous landlords and property managers are so important. The tenancy database we access is always checked as this is where the most risky tenants are recorded. Those tenants on the database are rarely going to be approved for a property through an agency and this is why they are looking for a rental properties on sites used by private landlords.
Whilst it is impossible to mitigate all risks when it comes to tenants in investments, there are certain steps and procedures that need to be taken in order to give the landlord their best chance of securing the best tenant. A property manager deals in this daily and an experienced property manager is far more likely to notice the little ticks that give away a problematic tenant.
Can we help with the management of your Brisbane investment property? Or like to chat with a property management specialist? Call us on 07 32146899, email email@example.com or just fill in this form and we’ll be right back to you!