Congratulations on owning your first investment property! Now, it is time to start finding a tenant for your property but how should you go about doing it? Are there many things to watch out for? Yes, and here are 5 concerns which (I personally feel) first-time landlords will have and should take note of- from finding a tenant, to managing the property during the lease and taking over the premises when the lease expires.
1) To hire an agent, or not?
Here comes the million dollar question- should I engage an agent or should I DIY? My recommendation- yes, you should engage an agent (whom you can trust) to help you with the marketing and guide you along the paperwork/ procedure for the first tenant at least. Engaging the right agent will not only help you rent out the property at the right price quickly, the agent will also process the paperwork (both Letter-of-Intent and Tenancy Agreement) properly. I have met Landlords who faced issues with tenants because the paperwork wasn't done properly, especially when the terms in Tenancy Agreement are not clear and etc. Perhaps when you get the hang of the procedure, you can try DIY-ing it with the subsequent tenants.
2) Should I wait longer, for a higher rental price?
To know what are the current market prices, you can check with URA from the following sites:
Rental Contracts for Private Residential Properties
HDB Market Rental Rates
If the offer you have on hand is very much lower than the current market price, yes you can consider waiting but depending on the lease commencement date, lease period and tenant's profile, sometimes it would be good to accept the offer even if it differs slightly. Imagine you're the Landlord in the following scenario and you got 2 offers on the same day ...
Situation: 1 Bedroom unit for rent at Kovan Regency, available from 1 October 2017.
Deal A: $1900 for 2 years to commence from 5 October 2017
Deal B: $2000 for 1 year to commence from 1 November 2017
Which deal will you take?
3) Who are my tenants?
Please find out more about your tenant's profile and make sure their respective passes are valid for at least 6 months at time of renting. Do verify the particulars in the passport with the passes, and that you have a copy of their documents for record purpose. Check validity of passes here.
Always practise your due diligence! Should you be found harbouring illegal immigrants or overstayers, you risk facing a $6,000 fine or imprisonment of up to 24 months.
4) What are the more important clauses to take note of in the Tenancy Agreement?
In my opinion and no order of priority, the following:
- Cleaning of premises, curtains
- Servicing of air-conditioner
- Minor repairs
- Reimbursement of commission for earlier lease termination
I have came across different situations whereby disagreements between Landlords and Tenants happened because the terms are not written properly. For instance, who to pay for gas top-up? What should be done when the minor repair costs above the stated amount? How should all the relevant cleaning be done? All these misunderstandings could have been avoided with clearer terms.
5) Take back the property like how you handed it over, fair wear and tear excepted.
"What is fair wear and tear?"
I get that question alot, like seriously. Put it across simply, if it is likely that the stains/marks are going to be there still if someone else were to be staying- then it most likely is fair wear and tear. Yellow toilet lids, burnt marks on leather sofa, deep scratches on parquet floor- these are not. Of course, there are different kinds of "damages" which I cannot cover accurately over here. I guess so long as the property is still in proper, intact, liveable piece- just move on if the issues are minor. Some touching up will make it more enticing for the next incoming tenant!
Before I forget, check your bank accounts and make sure rental payments are in every month (punctually). Some tenants may be early or late in terms or payment but it is up to the Landlord to enforce the schedule. I have met a few Landlords who did not check monthly and there were missing and/or late payments (could be accidental or on purpose). So ... Make sure the money comes in and make your investment worth!
Copyright @ StarProperty.sg (2014-2017)
Last Update: 06 October 2017 (In Progress)