Property investment poses risks, like any type of investment, and one risk that can never be completely eliminated is the chance of having a bad tenant.
This can either happen when a bad tenant has given false information that was missed at application stage, or they were previously a good tenant but their circumstances changed resulting in bad outcomes for the landlord, agent and also themselves.
Here are some things that you can do, should you experience a bad tenant:
1. Landlord Insurance – Landlord Insurance is now quite a popular cover, being provided by many banks and financial institutions. However what is clear is that many of these type of policies have quite high policy excesses when claiming for rent default, and some policies even exclude a claim should the tenant be on a non-fixed term tenancy at the time of default. It is always best to speak with your Property Manager to find out what policies are available that do not have these ‘little surprises’ when it comes to a possible claim.
2. Mortgage Buffer – when the rent isn’t paid on time, it is always safe practice to ensure your mortgage bank account has enough funds to cover the mortgage payment(s), should the rent monies not be paid. Not doing so will cause financial stress. It is always best to be proactive with your payments, just in case.
3. Right Expectations – renting a property automatically places the property management under a ‘rule book’ called the Residential Tenancies Act which is a set of regulations that both tenant and landlord need to abide by. Understanding right expectations with respect to the process should things go wrong will help you to manage the situation better.