Question: How can I manage a troublesome tenant living in my investment property?

Answer: By Carolyn Parrella, Executive Manager, Terri Scheer Insurance

Attracting the wrong type of tenant can make or break an investment experience for landlords.
While bad tenants are the minority, they can cause major headaches for landlords. Tenants can become troublesome when they fail to pay their rent on time, break the lease agreement or cause damage to the rental property.

Bad tenants may leave investors out of pocket, so it’s important to try to minimise the risk of malicious damage and loss of rental income.

• Regular property inspections

Regular inspections are essential to ensure the tenant is looking after the property.
Regular inspections can make it easier for landlords to quickly identify if and when any damage to the property has occurred, whether there are any maintenance issues that need attention or if there are any concerns that may pose a legal liability threat.

Any issues identified should be dealt with promptly to send a clear message to the tenant that you care about the property and value their concern for its condition. If a tenant’s requests for repairs go unanswered they may begin to question their own commitment to the property and become more careless about it.

• Good relationship with tenant

Maintaining a positive relationship with your tenant can help to ensure they remain cooperative throughout their lease agreement.

Listening and carefully considering requests for changes to lease conditions and responding quickly to queries or concerns helps build rapport. Requests to change lease conditions should be carefully considered and if rejected, sound reasons should be provided in writing.

Where routine maintenance needs to be undertaken, working with the tenant to determine the best time for the work to be undertaken is also good practice.

Troublesome tenants may avoid communicating with landlords, if they haven’t been looking after the property or paying their rent on time. This should send warning bells to landlords that there could be issues with the tenancy and they should act promptly.

• Enforce lease agreement

Having a clear lease agreement in place may help to ensure tenants are meeting their obligations.

Lease agreements can be tailored to meet specific needs and may include pet or smoking policies.

Landlords should regularly check and enforce their lease agreement to ensure tenants are doing the right thing. Tenants should be made aware of any breaches to the lease agreement, while landlords should deal with the breach promptly to minimise any risk to the property.

• Deliver notices on time

If a tenant falls behind in their rent, the sooner you know about it, the sooner you can attempt to resolve the issue and mitigate any financial loss.

Even if you are aware that your tenant is suffering from financial hardship, it’s still important to send breach notices on time and according to regulations.

If you delay sending the notices and you later have to make an insurance claim for loss of rent, your claim may be reduced.

In the first instance, a breach notice should be sent to the tenant for non-payment of rent and arrears should be monitored daily until the tenant pays their rent or the issue is dealt with accordingly.

• Tailored landlord insurance

Despite your best efforts to attract and retain suitable tenants, there are still risks associated with owning a rental property.

Even the best tenant can accidently damage a property or endure financial hardship leaving them unable to pay rent. Specialised landlord insurance is essential and can provide cover for landlords should an unforeseen insurable event occur.

Landlord insurance policies can provide cover for malicious and accidental damage, loss of rental income and the landlord’s legal liability.

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Carolyn Parrella

Carolyn Parrella joined Australia's leading landlord insurance specialists, Terri Scheer Insurance, in 2004 and was appointed Executive Manager in 2009.
Carolyn oversees all operations within business, which aims to protect landlords against the risks associated with owning a rental property. These include malicious damage by tenants, accidental damage, legal liability for occurrences on the property that cause death or bodily injury, and loss of rental income as a result of damage to a property or a tenant absconding.
As a South-Australian based national insurance firm, Terri Scheer Insurance is the only company in Australia to specialise solely in landlord insurance.
Carolyn also owns two investment properties.

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