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Winning a rental application

By George Hadgelias

A bad tenant is the last thing a landlord wants, so you must present yourself as a desirable renter to get your foot in the door. But what exactly are agents and landlords looking for?

What landlords and agents are looking for

Most agents agree that security is paramount, so proof of employment and the ability to pay the rent is number one.

Trust is also important. Property managers and landlords want to know that the property is going to be looked after.

Some renters worry that they may also be on the backfoot because of their circumstances.

For example, it’s a common misconception that landlords don’t like having kids in their properties, but families often prove to be reliable tenants.

To help you prepare for an inspection, here is a checklist of what agents or landlords want:

  • Longer term employment with payslips as evidence.
  • A good rental history.
  • Tenants that have manners and show respect to the property during the inspection.
  • Tidiness in appearance.
  • A truthful and comprehensive application.

First time renters

One of the biggest challenges in a ruthless rental market is getting your foot in the door for the first time.

But everyone has to start somewhere, and agents are quite willing to take on newbies.

It might pay to think outside of the box if you fear you may be at a disadvantage being a first-time renter.

Most commonly, people who have never rented before will join an established share house to build up a rental history – just make sure you’re officially registered on the lease with the landlord or property manager.

If you’re starting a share house with other occupants with no leasing experience, you might offer to sign a short-term lease (six months) that can be extended once you’ve proven yourself to be good tenants. Make sure that you have good, independent references who can vouch for your character.

Don’t forget to let your referee know to expect a call so they’re prepared, and available. This will minimise the risk they’re caught off guard or your application is skipped over because your referees could not be contacted.

Pros and cons of renting

Owning a home is often touted as the “Australian dream” but renting has plenty of advantages and is often underappreciated. In fact, most people will rent for a large part of their adult life and have positive experiences in a range of properties before going on to own their own home. While your personal circumstances will largely influence whether renting is the right path for you, here are some of the upsides and downsides of leasing a property.

Pros

  • Freedom – when leasing, a contract typically lasts between six months and two years. This gives you plenty of flexibility to choose to renew or go elsewhere, unlike a home you have bought where you are locked into a mortgage for up to 30 years.
  • Less maintenance – while renting, you might be expecting to keep a house in working order, however, the responsibility of maintenance – such as repairing exteriors and addressing plumbing – falls to the landlord.
  • Low upfront cost – saving a deposit for a house takes years. Leasing only requires funds to pay as little as one month’s rent upfront and your bond.
  • Good for short term – homes aren’t always meant to be forever and you might be testing out an area or relocating for a short period of time for work. In these cases, rentals are perfect.
  • Social – renting usually comes with the opportunity to get housemates to share the load which can be great fun, especially in your younger years.

Cons

  • Lack of security – even though a lease will create some protection, often renters can experience change they can’t control. For example, if a landlord chooses not to renew a lease you must leave.
  • If they sell the property during your tenancy, you could be required to vacate earlier than planned.
  • No investment potential – unfortunately, rent is paying off your landlord’s mortgage – not yours – so if the house gains value while you are living in it, you don’t benefit.
  • Renting may cost more – it’s a common misconception that mortgage repayments are higher than rent. While owning a home may have upfront costs, as you pay down your mortgage over time you increase the equity in your property.
  • Rent rises – landlords can legally increase your rent at the end of your lease agreement. The amount it can increase is restricted in each state, however you will likely see the cost of rent increase over time.
  • Restrictions – if you want to hang a picture, paint a wall or get a pet, this cannot be done in most states unless you’re given prior approval from your property manager or landlord.

Rent to own

With skyrocketing real estate prices, it can be hard for first time buyers. Often young Australians are struggling to save up a deposit in a rising market but there is one alternative option that is becoming more commonplace to combat this – the rent-to-own scheme.

A rent-to-own agreement is a lease that gives the renter the right to buy the home at the end of the rental period at a price agreed on when the contract was signed. In theory, this will shield the buyer from the usual upfront cost of buying a home as they can benefit from the equity in the home when it comes time to buy.

However, there are downsides. The buyer is not on the title and usually the deal includes paying above market rent in return for locking in a sale price.

If the market takes a downturn, you will be left with an agreement to buy a house priced well above the market average. A small upfront deposit – which people can lose if they are unable to make a payment when the agreement expires – is also required.

Regardless of the risks, these types of deals are becoming more common for aspiring home buyers and may be the perfect answer for someone super keen to get a foot in the property ladder.

Rentvesting

Rentvesting is a path to home ownership where you buy an investment property but live in a rental home that suits your lifestyle – usually in the inner city.

It’s useful if where you want to live is out of your price range, or what you can afford is not big enough for your family, but you still want to get your foot on the property ladder.

Any profit, or capital gain from the increase in value of the property, will also come in handy when you want to upgrade to your forever home down the track.

How to negotiate your rental

Renters commonly think the terms of the lease are set by the agent but like all real estate, everything is on the table for negotiation.

First you must consider the market. If there is plenty of competition and a rental is in high demand, then obviously trying to thrash out a deal with the agent on lower rent will not work in your favour.

But negotiating is still an option as it may help you win the property by offering more appealing terms. This may include offering to sign a longer lease agreement.

Try and speak with the property manager on the phone. Alternatively put your offer in a short email. If the market is slow, then you can absolutely ask for a better deal. You can do this by approaching the agent and confidently suggesting a rental value that is below what is currently on offer but in line with market value.

Arm yourself with knowledge before you start bargaining by checking other rentals in the area, comparing how much rent is being asked and learning how long they have been on the market. There is no harm in asking for what you want and if you successfully negotiate a new deal, make sure you get the agreement in writing.

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