What are the most common risks faced by landlords?

Investing in residential property is becoming an increasingly popular option across Australia, with people recognising the benefits of renting out real estate to tenants.

However, being a landlord also has its pitfalls. There's a certain degree of trust that goes into allowing other people to live in your investment property, and they might not always take this as seriously as you would like.

Although you may face some unforeseen incidents as a landlord, there are some common pitfalls that people tend to come up against.

Being aware of what these are and taking steps to prevent them - and mitigate the effects - is just what you need to make your investment as successful as it can be.

Screening tenants

How do you know that a tenant is going to be right for your property? The short answer is that you don't, but there are steps you can take to increase your chances of choosing the right person.

Some landlords enlist the help of a property manager to do this on their behalf. Otherwise you will need to perform reference checks and meet potential tenants face to face.

Getting an idea of their rental history is also a good idea, as this may help you understand if they're in it for the long haul or likely to move as soon as their tenancy is up.

Payment issues

While you would hope that your tenants will be on time with making their rental payments, this isn't always going to be the case.

It might be that they're experiencing a particularly difficult month that means they can't pay on the usual date, or it could be the start of a bigger problem.

Making it clear when you expect to receive rent is essential at the start of the lease and it's also a good idea to tell your tenants what the process will be if they miss a payment.

If you've got landlord insurance in place, this should help lessen the financial blow of missed payments and can be a worthwhile investment for anyone entering the market.

Damage to property

Another common issue you may come up against as a landlord is damage to your property, whether it's unintentional or malicious.

Although you'd like to think that your tenants will keep your home in a decent state of repair, this might not always be the case so it's important to protect yourself.

It might be that they cause damage to fixtures and fittings, or perhaps more permanent problems for the structure of the property. In either case, landlord insurance should have you covered.

Injuries

An aspect of your rental property you might not even have thought about is the potential of it causing injury to your tenants.

If someone had an accident and you were the legal owner of the real estate, it's likely they will want to take some sort of legal action against you.

You will need to think carefully about having liability cover in place, which will offer protection should someone experience injury, illness or even death as a result of your property.

It should also offer protection against loss or damage to someone else's property, providing you opt for a comprehensive policy.

Tenancy changes

There may come a time when you need to make changes to the terms of the tenancy you've agreed. In which case, you must make sure this is done in a way that's legally compliant.

For example, you might need to increase the amount of rent you're charging, ban pets from the property or make any other sort of decision that impacts your tenants.

No matter what changes you choose to implement, make sure you seek expert advice to assure yourself that they're legal before setting to work on letting your tenants know.