Have you considered a back up plan, if your tenant stops paying the rent?
We like to ensure that the tenant is always paying the rent on time, but in some instances, this isn't always guaranteed.
The tenants application may have been fantastic, with great references, great jobs etc. but what happens if there are circumstances throughout the tenancy, like a marriage separation, loss of job, where the tenant may struggle to actually come up with the rent per week. Have you considered a back up plan to allow for this worst case scenario?
When having an investment property, there are always unknown risks involved, and therefore having a back up plan is essential. This may include some of the following:
- Having landlord insurance in place, that covers loss of rent. (Be warned, some insurance companies will not cover you if your tenant is on a periodic lease)
- If you have a loan in place on the property, try to pay $100 - $200 into the account every week, to help cover the monthly payments, if the tenant does fall behind in rent. This will also help reduce your interest payment on the account.
The tenant being in arrears is serious, as this will not maximise your return. As a landlord, you have the option to terminate after 14 days in arrears, or placing the tenant into a payment plan, to pay the weekly rent and in addition the arrears. Discuss this option with your property manager and what they think may be best suited for you and your investment.
Feel free to contact our team at KS property to discuss this information further.