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Renting out your property may seem like a financially rewarding way to generate income from your investment asset. However, we have also heard plenty of horror stories of nightmarish tenants.

From tenants who constantly default on rent to tenants who leave the property in a disastrous state, renting out your property comes with a myriad of risks that may cause financial loss and mental stress if not managed the right way.

How can landlords protect their investment properties from harm? PropAdvisor provides you with 5 easy tips to avoid the pitfalls before it happens.

1. Choose your tenants wisely

Screening your tenants is a MUST-DO. The best way for landlords to protect themselves from incurring loss starts at the very beginning of the landlord-tenant relationship.

This may seem like a logical thing to do, but many landlords do not perform background checks on their prospective tenants. This may mean having to come up with a rental application form. With a rental application form, you will be able to further understand the tenant’s lifestyle, rental history, employment and other details which may be helpful in identifying any potential red flags.

If the information provided appears to be fishy, move on as it is better to be safe than sorry.

2. Know your rights

Research, research, research. Before you agree to rent out your property, make sure you know your rights as a landlord and is aware of the rules and regulations that come with this responsibility.

Did you know that you can terminate the tenancy agreement if your tenant does not pay on time? In light of this, it is crucial that landlords draw up a good tenancy agreement. Since there is no Tenancy Act in Malaysia, the sole governing document would be the tenancy agreement. Read here for a brief write-up on the law of landlord and tenant on the Malaysian Bar website.

3.Put it in writing

Although it isn’t mandatory to provide a tenancy agreement, it is advisable to do so. Be clear about the tenancy requirements and regulations in the agreement. Your written agreement should contain your rental rates, the mode of payment, termination clauses etc.

If you don’t want loud parties, pets or any form of redecoration, state so in your agreement! By signing this document, your tenants are bound to uphold the standards for the property whereby failure to comply may result in penalization.

4. Do routine inspections

Do routine inspections on your property. It may be helpful to come up with a documentation or inventory list from the get-go as this will allow you to keep tabs on the upkeep of your property.

To protect your property, you may wish to include routine maintenance in the monthly rental amount. This way, you would be able to ensure that the property is regularly maintained.

5. Security is key

The security deposit usually amounts to two months rental and would be payable to the landlord once the tenancy agreement is signed. As long as the tenant complies with the terms of the tenancy agreement, the security deposit would be returned at the end of the tenancy.

For a landlord, security deposits are necessary to take into account any breach of the tenancy agreement by tenants. This would cover situations when the landlord is allowed to forfeit the security deposit, for example, when the tenant breaks their lease, when the tenant causes damage to the property or when the tenant default on payment for utilities etc.

Prevention is better than cure. Therefore, landlords need to be mindful to take measures to ensure that their property don’t fall into the wrong hands.

Worry no more! PropAdvisor offers landlords a hassle-free way to screen through their potential tenants with a score rating. Click here to find out how you can make the best decision for your property.