New Management - Tenanted

Summary

This information sheet is for those who are securing a new management that will be already tenanted on handover. The information provided will assist in understanding not only the things to consider but the education points you can use to help your Client (lessor) understand their obligations as an investor.

Not all business is good business

It is exciting to be able to build your portfolio, there is no doubt about that. However simply signing up and managing every property that is offered to you is not always the best way to grow your business. Some business can actually create a loss (financially and time based) for you and it's important that you know how to select the clients and properties that best suit your business model. 

Creating a Client Selection Criteria is just as important as following a Tenant Selection Criteria if you want to be able to sustain growth in your business in all aspects.

Client Selection Criteria

When you set out to create this criteria you should based your "tick boxes" on what is going to reduce risk against you as the agency, what is going to reduce the risk against the property owner and above all what is going to make your job easier. After all, it's important to understand as a real estate agent you are not the decision maker, you are the negotiator and communicator. Consider the below when establishing who are the clients you select for your business.

• What condition is the property in? The property does not need to be brand new but overall is the property in good condition and considered something that is "livable"? 
• Does the property meet compliance requirements under any impacting legislation (e.g. tenancy laws, minimum housing standards, building codes, smoke alarm laws, pool safety laws etc.)?
• Are the inclusions all in working order (e.g. dishwasher, air con units, garage door motors etc.)?
• Is the owner willing to do maintenance when it is requested and do they understand their obligations as a lessor to ensure the property is provided and maintained to a suitable standard including the inclusions?
• Does the owner permit you to have an approved spend limit when it comes to maintenance, allowing you to act on maintenance issues promptly and efficiently?
• Does the owner have realistic expectations relating to market price and rental return?
• Does the owner understand the importance of marketing the property as best as they can (e.g. the use of professional photography, signage, internet/online advertising etc.)?
• Is the owner willing to do improvements to the property to attract the best possible tenant (e.g. freshening up the gardens, professionally cleaning the property, repainting, replacing floor coverings etc.)?
• What is the situation with the current tenancy?
  • Are the tenants in arrears? Does the owner allows for the tenants to be in arrears?
  • Do the tenants look after the property?
  • What is the current rent on the property / tenancy? 
  • What is the relationship between the lessor and tenant?

What do you need to consider by way of forms, documents & items?

Of course you need to ensure that you have a compliant management agreement in place before you even consider advertising the property let alone arranging inspections. Below is a list of documents that you should ensure are prepared, available and if need be signed & executed as part of your onboarding / new management process.

• Management Agreement / Management Authority including all property owners signatures - signed and completed.
  • Please note: If there is someone that is signing on behalf of the property owner/s they need to be any of the following 
    • Enduring Power of Attorney (Australia)
    • Executor of the Estate (Australia)
  • Your Management Agreement should clearly outline the costs agreed with the property owner for your services. Consider discussing the following items as part of your listing presentation and costings:
    • Management fee
    • Letting commission
    • Administration Fee
    • Lease negotiation fee
    • Routine inspection fee
    • Change of shared tenancy fee
    • Tribunal preparation and attendance fee
    • Insurance claim preparation fee
    • Non-PM related property inspection fee
    • Change of shared tenancy fee
    • Advertising fee
    • PLEASE NOTE: As per the Rental Agreement you have signed with @realty Head Office, there are fees considered mandatory for each property management you sign up. Failure to include the fees in your management agreement may result in @realty seeking these fees from you as the agent.
• Current Title Search & Property Report
• Smoke Alarm Compliance documentation
• Pool Safety & Compliance documentation (if a pool on the property)
• Keys - You will need to ensure that you have enough sets of keys for access to the property in accordance with your relevant tenancy legislation. It's important to ensure that you have a full set of keys for your management / office as the backup so you are able to access the property if and when needed
• Strata / Body Corporate By Laws (if relevant) - most, if not all, tenancy legislations require a copy of the By-Laws to be issued by the lessor to the tenant as part of the lease terms
• Warranties / Maintenance Contracts - Are any inclusions at the property under warranty or have a maintenance contract?
• Insurance coverage - It is important to never sign up a new management without the knowledge that your property owner has the relevant insurances in place to protect them. Check out our article on this at: https://www.atrealtysupport.com.au/a/solutions/articles/14000149136

Tenancy Documentation

Just as important as setting up the ownership relationship and beginning on the right foot, having all the information about the tenancy is paramount in a successful transition. When you acquire a tenanted property you need to consider the following items are available to you.

• General Tenancy Agreement / Lease
• Bond Transfer Form or documentation
• Rent / Tenancy Ledger - as at the handover date
• Copy of any outstanding tenancy invoices (water charges, utilities costs etc)
• Entry Condition Report
• Copy of keys provided to the tenants at the beginning of their tenancy
• Copy of the tenants application forms and supporting identification
• Copy of the most recent routine inspection including photos 
• Contact details of the tenants including phone and emails
• Copy of any notices relating to arrears or general tenancy matters (if applicable)

Something that will help you and the tenant in the change of agent process is to request the lessor asks the current / outgoing agency to advise the tenants of the upcoming change and let them know your contact details. That way when you first reach out the tenants will not be shocked or unaware about the change in agents.

Uploading to the Cloud / CRM

Please note that our Head Office Rentals Team will not begin setting up the new management profile in their systems until you, as the Agent, have uploaded the above to the CRM / Cloud and created a new listing.

Review the information on the following link on how to create a management record: https://www.atrealtysupport.com.au/a/solutions/articles/14000148410