Do I Need An Agent to Rent Out My Property?

Published 06 January 2021 by Team :Different

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As any investment property owner knows, your property is worthless without a tenant occupying it. However, finding a tenant - also known as leasing or renting out your property - can be an expensive, stressful and time-consuming task for even the most seasoned investor.

It’s no wonder that many investors ask the question, “do I need an agent to rent out my property?”.  Most property managers will charge an additional fee to lease out your property and find you new tenants. This is because it involves a lot of additional work. 

In this blog post we will outline the steps required to lease out a property. You’ll learn how to rent out your property by yourself, and we’ll throw in our perspective on how a property manager helps with the process.

These steps will leave you with the knowledge, confidence and resources you need to decide for yourself whether it’s worth going DIY, or if it’s better to use an agent to rent out your property. 

Check out our article on the 5 factors you should consider when preparing your property for rent.

How to rent out your investment property

The process of renting out your investment property can be broken down into 4 steps:

  1. Deciding the rent
  2. Advertising the property
  3. Finding the right tenant
  4. Signing the lease and lodging the bond

Step 1 : Deciding the rent

You might think advertising your property is the first step, but if you put your property on the market without doing any research, it’s very likely that you’re not making the most of your investment.

If you are leasing out your own property without an agent, you need to do the research yourself to ensure that your property is attracting the right kind of tenants.

A good place to start is to look for median rent prices for comparable properties in your area on sites such as Domain or Realestate.com.au.

After you have an idea of the average rent for properties in your area, you’ll need to work out what price you want to set your property at.

💡 An experienced agent will already have a good read on market conditions and will be able to give you an accurate rental evaluation for your property. They’ll know the best asking rent for your property and how to help you get the most value out of your investment.

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Here are some questions you should ask yourself, as these factors can affect the rent a tenant is willing to pay:

  1. Is the property going to be furnished or not?

    Although it’s a matter of preference, owners can charge more rent for pre-furnished properties, provide an option to furnish the property in exchange for an increase in rent price, or un-furnish an already furnished property for a discount in rent.
  2. Who will be in charge of paying the utilities - me or my tenant?

    If you choose to include bills in the rent, the rent should obviously be higher - however, you will run the risk of tenants leaving the lights or air-con on 24/7, or having the water running all the time.
  3. How accessible is my property? 

    As a rule of thumb, the closer or more convenient it is to public transport, shops and other entertainment facilities, the higher the rent should be. 

Likewise, if your property has a dedicated parking spot, you can charge a higher rental rate. However, know that a tenant may also negotiate to lower the rent if they have no need for the parking space.

Step 2: Advertising the property

So you’ve decided on the rental amount - now it’s time to find prospective tenants.

If you decide to go DIY, your options will unfortunately be more limited. Popular sites like Domain and realestate.com.au only allow licensed real estate agents to create listings. Instead, you will need to advertise your property on portals like Gumtree, Facebook Marketplace and rent.com.au.

To attract prospective tenants, you want your property to look its best. You might want to consider investing in a set of professional photos as the quality will be much better than photos taken with a phone. A clear, well-written description to accompany these photos also goes leagues when appealing to the tenant pool.

💡 Property managers usually include photography and advertising in their leasing fee. A good property manager will have negotiated deals with the top real estate sites so they can offer competitive advertising prices to their owners.

At :Different, we charge a flat fee, which includes professional photography and premium advertising in Domain and Realestate.com.au. In our experience, premium advertising is key to get top positions on both sites and ensure maximum exposure for your property. Maximum exposure = more applicants and a better likelihood of securing the best rental price.

Learn more about our leasing fee here

Step 3: Finding the right tenant

You’ve done your research, got your listing up and going, and the calls start coming in.

Next step? Make sure you set aside time in your schedule to conduct property inspections. 

Inspections can either be open or private. You can read our tips for finding good tenants here.

An open inspection is usually held on the weekend, when you allocate a certain period of time for prospective tenants to view the property. 

Private inspections are when prospective tenants directly contact you and arrange for a time to view the property. Allowing for private inspections can significantly increase the reach of your property - however, if you’re busy with work or other duties, it can be hard to make time for this.

Before conducting the inspection with any prospective tenants, it’s important to have prepared answers to the most commonly asked questions. This way, you won’t be surprised during the inspection. 

Some of the most common questions include:

  • How far do I need to go to do my groceries?
  • What kind of parking is there?
  • Are the length of lease, bond and rent negotiable?
  • I have a cat (or dog), is that fine?
  • What kind of internet connection does your property have?

The more inspections you hold, the more experienced you’ll become - but that could mean that you could potentially miss some good tenants at the beginning.

💡 Using the services of a property manager will mean you don’t need to lose your precious time conducting open homes. A good property manager will run open homes twice weekly - once during the weekend and once during the week to maximise the exposure of your property and accommodate the needs of potential tenants.

When a tenant expresses interest, you should get them to submit an application form. Typically this will include information that can verify whether the tenant has a good credit score, good rental history and if they have a stable income to pay the rent. 

A quick Google search will show that the options for rental applications are endless - for your convenience, here is one that you can use. 

However, note that owners don’t have easy access to the same background check databases that real estate agents do. Instead, consider including a section for referees, as character references would be the most convenient way of verifying whether the tenant will meet their obligations. 

You should also keep in mind that character reference checks might not be as reliable as background checks. In the end, you might need to rely on your own intuition and gut feeling when picking which tenant to go with.

This step is where having an experienced agent working for you impacts the most. Not only do they have access to background check databases that paint an accurate picture of whether or not someone will be a good tenant, but they’ll also be experienced in answering questions and presenting your property in the best light.

Step 4 : Signing the lease and lodging the bond

Congratulations! You have now made it through all the preliminary work and found yourself a tenant. But unfortunately, it doesn’t end there. 

The next step is to prepare two copies of a lease agreement so both parties know what is expected in writing.

Most state authorities provide lease agreements that you can use when you’re signing on a new tenant: 

After signing the tenancy agreement, you’ll need to lodge a certain amount of bond money with the relevant state authority. We’ve linked them all below for your convenience: 

Note that in the Northern Territory, there is no centralised bond authority, so bonds should be paid directly to the owner and be held in trust. For more details on this, visit Northern Territory Government information and services.

💡 People often hire an agent for their experience and knowledge, as it can be extremely difficult and time-consuming when understanding and keeping up with the ever-changing rules, regulations and various legislations in place. A property manager will be able to advise you on the rights of owners and tenants and make sure that you’re abiding by the laws.

Bonus: Attending Tribunal

If (despite all your efforts) you realise the tenant you’ve found is actually not a great tenant at all, a sad reality is that you might be faced with having to evict your tenant. While you won’t want to make this decision lightly, it would be the course of action if your tenant consistently fails to pay rent on time, or has breached the tenancy agreement.

This can be a difficult and lengthy process for independent owners, as it often involves taking the case to the Tribunal - which can result in legal costs and further financial losses.

Having a capable property manager will help reduce the headache, should you have to take the tenant to court. More importantly, they’re trained to ensure that only good tenants rent your investment property, which reduces the chance of issues from the get-go.

Full-service property management for $100

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Case Study: How much can I save if I rent out my property without an agent?

It might seem like you would be saving massively on property management fees by renting out your property yourself, but in the long run, it’s not quite as black-and-white as you might think.

Cost vs benefit of an independent owner vs using a property manager

Responsibility

Independent

:Different

Advertising

Cost:

$0-$300 for photography

$0-$143 for basic listing

Notes:

Can be free depending on how much time and effort you are willing to invest

Cost:

$500 ($400 in QLD) for professional photography and premium advertising 

Notes:

Greater reach through listings on more popular sites

Experience in knowing how to attract the right kind of tenants

Hassle-free for the owner

Leasing

Cost:

$0-$100 for transport

Notes:

Frequency of inspections can be affected by your availability

A lot of time and effort spent going back and forth between your properties

Likely to experience longer vacancies if you are busy, meaning less rental income

Cost:

$500

Notes:

Services include weekend, mid-week and private inspections, tenant database checks, background checks, and key handovers

Experience in finding good-quality, long-term tenants

Proven track record of placing tenants quickly (average number of days on the market in Sept 2020 was 25 days in NSW, and 23 days in VIC)

Ongoing property management

Cost:

$0.

Notes:

Must be available to promptly respond to tenant requests or problems

Must stay on top of relevant laws and legislations

Should problems arise, you need to deal with it yourself

Cost:

$100 per month for when a tenant is occupying the property

$0 when the property is vacant

Notes:

Takes care of your day to day property management needs whilst keeping you updated.

Has access to a wide range of contacts and can sort out problems with the property the minute they arise.

A middle-man between you and the tenant which frees up your time.

Legal Costs

Costs:
Tribunal application fee - this can range from $26.95 in Queensland to $162 in the ACT.
Applications for a Warrant of Possession can set you back a further $114 if you’re in Victoria, and having authorities enforce the warrant will cost you more if you’re in NSW.

Costs:
Covered in the $100 monthly ongoing property management fee.

However with an agent like :Different, the chances of escalating to Tribunal are rare as we go through a strict process to find the best tenant for your property.

So is it worth going DIY?

At the end of the day, you don’t need an agent to rent out your property - and indeed, you might be able to save more from renting out your property yourself. However, being a DIY owner is extremely time-consuming, and juggling owner duties alongside a full-time job can be extremely cumbersome. Many DIY owners are unable to work full-time jobs due to the time and commitment needed to manage their own property. So is the trade-off really worth it?

Did you know that 80% of investment property owners engage property managers in Australia?

Property investment should be a hassle-free form of income generation and having a good agent will go great lengths to bring this to life. While this may come at a monetary cost, the benefits a dedicated agent brings for $100/month allows for you to dedicate your time to other pursuits.

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Disclaimer: The views, information, or opinions expressed in this blog post are for general information purposes only and should not be relied upon. We have not taken into account specific situations, facts or circumstances, and no part of this blog post constitutes personal financial, legal, or tax advice to you.

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