When You Are A Landlord Renting Out A Property

All property transactions are sizeable when compared with most other decisions.

It follows then that we should give these transactions the extra time and attention that they warrant, but this does not always happen.

In many instances it isn’t so much an issue of motivation, but rather not knowing the right questions to ask.

This series deals with key questions that we can, and sometimes should, ask. Knowing the answers to these questions can help to avoid misunderstandings and, in many cases, will save time, money or both.

The Most Important Questions To Ask When You Are A Landlord

Renting out a property can be both stressful and risky, especially if you are unfortunate enough to encounter a bad tenant.

The trouble is, even though you own the property you are also very busy during the day and want to minimize the issues with this and any other apartment.

If you are looking for an Agency to lease out your property and a Property Administrator to take care of it whilst it rented, it is important to do your homework and look for an established and professional company with strong systems.

The list below is in no particular order, and is intended as a starting point to help identify which questions to ask. Here are the first 5 of 20 questions;

  1. Can I See A Sample Tenancy Agreement ?

  2. Before you lease out your property, it pays to go through the Tenancy Agreement carefully and make sure everything that is important to you is covered.

    There are many variations on a Tenancy Agreement, some are as short as one page and others spread over 20 pages or more.

    Regardless of the length, it is advisable to go through the agreement and make sure the main points such as payment schedule, maintenance and deposits are all clearly documented.

  3. What Insurance Arrangement Should Be Made ?

  4. Generally speaking, the tenant is responsible for the goods inside the apartment and the owner / landlord is responsible for the infrastructure and rebuild should something happen to the property.

    As such, insurance packages should be purchased accordingly.

    It's a good idea to cover this point in the Tenancy Agreement to avoid any mis-understanding.

  5. What Happens If A Tenant Reserves The Apartment And Then Changes Their Mind ?

  6. Generally the process in taking an apartment includes paying an initial deposit, without which the property will not be taken of the market.

    Once the initial deposit is received the agent should give a very specific time frame to the tenant to let them know the timeframe for signing the agreement and paying the full security deposit (usually 2 months rent).

    If the tenant changes their mind, the deposit remains with the landlord and the property goes back on the market.

  7. What Price Do I Want To Achieve ?

  8. Asking this question will give you your top price, and answering the next question will give you the bottom price. You then have a rental ‘range’.

    Achieving the best price is not always the no 1 objective. The equation depends also on the quality of the tenant and their treatment of your property.

  9. What’s The Minimum Rental Amount I Am Willing To Accept ?

  10. Following on from question 4, the minimum rental or your ‘bottom line’ is important to know in case you are presented with a high quality tenant.

    In this scenario, a high quality tenant willing to ay the minimum rental may end up being a far better outcome than a low quality tenant paying top rent, but not looking after the property, paying late etc.

    The other reason for knowing your bottom line is so that you don't always accept the first offer that comes your way, especially if it is lower than expected.

    If you have not seen the earlier articles on this subject, here is a brief introduction to the series. Of course you can find the articles online on the Macau Daily Times website.

    Renting out a property can be both stressful and risky, especially if you are unfortunate enough to encounter a bad tenant.

    The trouble is, even though you own the property you are also very busy during the day and want to minimize the issues with this and any other apartment.

    If you are looking for an Agency to lease out your property and a Property Administrator to take care of it whilst it rented, it is important to do your homework and look for an established and professional company with strong systems.

    The list below is in no particular order, and is intended as a starting point to help identify which questions to ask. This week we look at questions 6-10

  11. What Target Market Am I Aiming At ?

  12. This question is best asked before buying an investment property, but nevertheless it is better to ask it when you are thinking of renting it out that not to ask it at all.

    The property should be appropriately furnished for the target market. If that's means a family, they will need a washer and a dryer, at least 2 flat screen TV’s, and don't put china vases everywhere.

    If you are aiming at an executive couple or management level bachelor pad, the apartment will require an entirely different look and feel. The key is to work out the target market with your agent.

  13. Who Will The Rent Be Paid To ?

  14. Many owners / landlords use a Property Administration company like JML to collect rents, and some prefer to collect rents themselves.

    As long as this is stated clearly on the contract along with the bank details, it makes no difference to the tenant who the rent is paid to.

    Using a Property Administration company to track rents closely, monitor payments / late payments and conduct the administration process is an advantage if owners are busy or traveling regularly.

  15. How Often Can We Conduct Inspections During The Tenancy ?

  16. Strictly speaking, once the tenancy agreement starts, you can only enter the premises with the permission of the tenant.

    This may be difficult to accept for some landlords, but it does of course make a great deal of sense. The tenant does not want someone walking in the front door invading their privacy any more that you do.

    Inspections are best conducted before a tenancy agreement is renewed, and should be arranged directly with the tenant prior to signing a new lease so that you can see what sort of condition the property is being kept in.

    Once again, if you have a Property Administration company to represent you, they will do this for you.

  17. How Do You Handle A Tenant Who Does Not Pay Rent On Time ?

  18. Rental payment is a sensitive issue, and the most important point to be absolutely clear about what is expected.

    As there are weekends and public holidays, it follows that its possible to have a holiday period that starts Fri 1st and ends on Mon 4th, so we always say that rent is due on the 1st and late if it has not arrived by 5th.

    You can include penalties for late payment, and note the government allow you to charge 50% of the rent as a penalty if the rent is 9 or more days late, and 100% of the rent if you are 30 days or more late.

  19. Do I Want To Sell The Apartment Within The Next 2 Years

  20. Selling the apartment whilst it is rented is not as easy as selling it when it is vacant.

    To enter the apartment, you will require the permission of the tenant, and entering into someone’s home with an entourage of people is never a good idea.

    If you are thinking about selling the apartment, let the tenant know before they sign the 2-year tenancy agreement and ask them if you can have a gentlemen’s agreement to bring people to view the apartment provided it does not exceed once per week.

    This will also help you figure motivated buyers from people who are just browsing.

    If you have not seen the earlier articles on this subject, here is a brief introduction to the series. Of course you can find the articles online on the Macau Daily Times website.

    Renting out a property can be both stressful and risky, especially if you are unfortunate enough to encounter a bad tenant.

    The trouble is, even though you own the property you are also very busy during the day and want to minimize the issues with this and any other apartment.

    If you are looking for an Agency to lease out your property and a Property Administrator to take care of it whilst it rented, it is important to do your homework and look for an established and professional company with strong systems.

    The list below is in no particular order, and is intended as a starting point to help identify which questions to ask. This week we look at questions 11-15

  21. What Tax Should I Pay ?

  22. There are 2 types of tax to pay in Macau.

    Land Tax is the standard yearly tax on the land upon which the property is built. This tax is shared by all owners of the properties that stand on that land, and tends to be relatively inexpensive.

    Property tax is the other type of tax, and this itself takes on 2 forms; It is charged when you are a resident of the property, and is calculated by the government according to the size and type of the property.

    However, if the property is rented, the property tax reverts to a straightforward 10% tax on the rental income.

  23. Who Will Liaise With The Tenant ?

  24. This depends on whether you have a Property Administration or Property Management company to look after your property for you.

    If you have engaged a company, they will handle all liaison with the tenant. If not, the tenant will usually contact the owner directly.

    In some cases the tenant will contact the agent who must then contact the owner.

    However, whilst this seems to be convenient for the owner, it often means that the owner ends up spending more money than necessary as the agent fails to understand the nature of the problem, and cuts corners to solve it in the quickest way possible instead of protecting the owners interests.

  25. Who Will look After The Apartment ?

  26. The starting point for who takes care of what is reasonably clear under Macau Law.

    The tenant is responsible for returning the apartment in the same condition in which the apartment was handed over with some fair allowance for wear and tear.

    The landlord’s task is to look take responsibility for the infrastructure such as plumbing, walls, electrical systems and so forth.

    As part of the initial negotiation it is a good idea to make this as clear as possible amongst both parties to avoid arguments and conflicts further into the contract.

  27. Who Will Check The Tenant’s Background ?

  28. Tenants backgrounds should always be checked.

    In some cases the agent conducts a background check. However, you should be wary if the agent is representing the tenant. This kind of mistake happens all the time in Macau, an owner thinks he is saving money by not paying an agency fee.

    In reality, he now has no-one looking after his interests, and the downside of this mistake is a huge cost to the owner either through lost revenue or delinquent payments from tenants.

  29. Can The Tenant Provide References ?

  30. Tenants should always provide references, and in extreme cases tenants may be asked to provide a guarantor as well.

    Whilst there is no such thing as a bad reference (any reference that was unfavorable would not be shown by the tenant), a reference gives the tenant something to live up to, and if you are unable to obtain a reference from previous landlords this would also be a red flag of course.

    If you have not seen the earlier articles on this subject, here is a brief introduction to the series. Of course you can find the articles online on the Macau Daily Times website.

    Renting out a property can be both stressful and risky, especially if you are unfortunate enough to encounter a bad tenant.

    The trouble is, even though you own the property you are also very busy during the day and want to minimize the issues with this and any other apartment.

    If you are looking for an Agency to lease out your property and a Property Administrator to take care of it whilst it rented, it is important to do your homework and look for an established and professional company with strong systems.

    The list below is in no particular order, and is intended as a starting point to help identify which questions to ask. In this final installment we look at questions 16-20

  31. Is The Tenant Legally Entitled To Stay / Work In Macau ?

  32. You want to know if the tenant has legal status in Macau. In other words, do they have the right to live here, work here or both ? If the answer is neither, you could face prosecution for leasing to an illegal immigrant.

    You may find that that such people are willing to pay a premium to lease the apartment, and this should be a red flag.

    In the most extreme cases, property in Macau has been used in connection with prostitution and human trafficking, neither of which you would want to be associated with and both of which may send you to jail without passing ‘go’ !

  33. Has The Tenant Been Informed That They Cannot Sub Let or Advertise the Property In Any Way

  34. The Tenancy Agreement may state clearly that the property cannot be sub-leased, or it may not state anything directly related to this point.

    If a tenant wants to sub-lease part or all of their property, they must have written permission from the owner. This can be stated in the Tenancy Agreement or in a separate statement.

  35. Has The Tenant Been Informed On Our Rules Regarding Pets ?

  36. Many landlords do not allow pets, mainly because of the potential damage they can cause to an apartment and of course the difficulty of returning the apartment to the owner in the same condition it was received.

    If you want to allow pets, it is better to state this in the agreement so that there are no misunderstandings.

    In such circumstances, you might also want to put a clause in the agreement that they pay for a deep clean of the apartment when the tenant leaves.

  37. How Many People Will Be Living In The Property ?

  38. With the lack of space in Macau, it is not uncommon for workers to share accommodation.

    Whilst there is nothing wrong with this is principle if the landlord is informed, you want to avoid the property being used as a ‘dormitory’.

    We recently purchased a 600 sq ft apartment housing more than 10 people. It will make a nice home for a professional couple, but not for 5 x professional couples !

  39. Who Will Deal With The Lease Renewal When The Initial Tenancy Agreement Ends ?

  40. The lease renewal must be tracked and handled professionally, or it will cost you money.

    If a Property Administration company is not handling this, you will want to set up a reminder when the lease is set to expire in 6 months. At this point you should contact the tenant and ask about their intentions to either stay or leave the apartment.

    If the tenant is going to stay, there are two choices, you can either renew the existing lease or create a new one;