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Importance of Rental Property Entry Condition Reports

Beachside - Importance of Rental Property Entry Condition Reports

Principal Liz Malthouse of Beachside Property Rentals, a mobile property management agency servicing the magnificent Sunshine Coast in Queensland, discusses the importance of having a detailed entry condition report, documented not only for the protection of the owner but of the tenant as well.

Liz points out that short notes and comments made on each room and space leaves a big room for interpretation on the person reading the entry report and so it is important to provide a very detailed description, accompanied by photos. Creating such report requires time and focus to be certain that the property has been thoroughly checked.

Beachside Property Rentals manages properties around the Sunshine Coast in Queensland which include the magnificent areas of Sunshine Beach, Sunrise Beach, Peregian Beach, Marcus Beach, Coolum Beach, Mount Coolum, Yaroomba Beach, even down to Cotton Tree and Maroochydore.

More on this interesting topic of entry condition reports of rental properties in the full interview.

 

Wayne Bucklar: Today I’m joined by Liz Malthouse from Beachside Property Rentals. Liz has been a regular guest on the show. Liz, welcome to the program.

Liz Malthouse: Hi Wayne, how are you?

Wayne: I’m very well, thank you. Now you’re on the magnificent Sunshine Coast in Queensland, what are some of the beaches around there that you would service?

Liz: Sunshine Beach, Sunrise Beach, Peregian Beach, Marcus Beach, Coolum Beach, Mount Coolum, Yaroomba Beach, even down to Cotton Tree and Maroochydore.

Wayne: Now I love the way you can just rattle them off because for many of us, who only get to the Sunshine Coast for the odd holiday, any one of those is an adventure in itself in surf and sand. So it’s a very nice part of the world you’ve chosen to live in.

Liz: It’s a beautiful backdrop, it’s lovely.

Wayne: Liz, Beachside Property Rentals, your company does property rentals. But you’re a mobile property rental agent, why did you choose to go mobile?

Liz: We just wanted to be connected to our clientele. I felt as if the old shop front is really for sales agents because generally, there’s no photos of property management or any properties that are currently available for rent in the marketplace in the window. So we just felt as if there was no need because of property management tends to be at the back of the building, so really we want to be in the forefront. We want to be out and about .

Wayne: And of course once upon a time you had to go to the office to pay the rent, but no one does that anymore.

Liz: No with technology everyone does direct credit.

Wayne: Yes.

Liz: My office is great, it’s safe and it’s secure and because of trust monies, everything is accounted for I love getting rent directly credits into my trust account, it’s just that simple.

Wayne: Now Liz I want to take you into what might be a controversial topic but certainly when I talk to tenants and when I talk to landlords, there is always a dispute or a sense of anxiety about damage to the property and deterioration of the condition of the property and that brings me I guess to entry condition reports. Now I know as a property rental agent these will be close to your heart, what’s the importance of an entry condition report?

Liz: Well it really is there to protect the owner, protect the tenant and protect the agency. Everyone is covered but it’s important that the bible to the tenancy and provided a good overview of the condition on the property when the tenant takes possession.

Wayne: Now doing an extremely detailed report on a house or even an apartment with a couple of bedrooms is a major piece of work to record every nail hole and every every bit of damage in paintwork and every bit of frayed carpet. And I want to know if you say the carpet is frayed, how do you detect more frayed or less frayed or unreasonably frayed? What are the rules around this?

Liz: Well that is a great question and one that I’m quite passionate about. I’ll show you a little example of a property that I’ve just recently taken over and this is what’s called an entry condition report. I’ve just hidden all the details of the names and we actually go over it room per room and this is not mine, this is another agency’s and the tenant has an opportunity to make their comments if they disagree against this document. So this document as you can see is probably about six pages long and that has to be given to the tenant at the start of the tenancy and they have three days to make their comments and that’s why they have made their comments on this side.

Wayne: And it’s 20 or 30 items per page, so it’s less than a couple hundred items I guess.

Liz: Yes. So this property is unfinished, so it’s important to go by the wall but walls, doors, floors, as you said carpet fraying and bits and pieces like that. Giving someone a document they may not know on a particular wall that might have a nail hole and it actually could have an indentation of the wall. So trying with a little space trying to spend the time and the energy to record it correctly and to have supporting evidence of your entry condition report takes longer than an hour to do. I’ll just show you an example of one of mine, this is one of mine. This is, if you can all see how thick it is.

Wayne: That’s a centimeter and a half of paper pile up there.

Liz: Yeah, well I do go through a lot of paper and I definitely go through a lot of ink. And this is the entry, okay, so as you can see here, we’re talking about the front door, so the entry into the property. And you can see there’s a lot of writing a lot there, there are a lot of things, the defects of the property that had to be noted down. Down the bottom underneath here, there’s a notation of photos so it’s LM 1, LM 28, so I’ve actually taken 28 photos just to the entry. Now they’re not pretty photos, but they’re realistic photos. So if we go to here, we’ve got all the photos giving to the tenant which are stamped dated and they’re all itemized. So this document, this is actually given to the tenants and so this whole document, they get to keep it. And the way that I do my entry condition reports for that property, it took me 10 hours to do.

Wayne: Yeah, I can believe that. That’s an enormous amount of work in that.

Liz: It is but then I’m protecting my owner. That’s my responsibility, to protect my owner and also maybe to protect my tenants because I don’t have any bad owners. I must admit, I’m very blessed but there are some people out there that I have met in the industry that try and blame the tenants for a lot of things as well so this protects them and my tenants just love it. They just can’t believe that I’m giving them such a detailed report so the information that I get back from them is quite positive. And obviously when the tenants vacate, then we need to ensure that the property is in the same condition as it was handed in because we have that supporting document to prove the walls were like, what the ceiling was like, if there was a hole in that particular wall and if there wasn’t a hole, well then it prevents us going to court because we have evidence and they can see clearly that they’re in the wrong and then we address it and we get a good resolution.

Wayne: Now Liz, what about fair wear and tear? Because it is provisioned in most leases for this idea of fair wear and tear and particularly if you live in a house for a couple of years, things are bound not to be the same as they were two years ago when you moved in. How do you address that?

Liz: Well I think when you do your routine inspections, you see different things during that process and and you pick them up as you go along. The idea is to not wait until the end when a tenant leaves. If the tenant has done some damage, we will address it then. The owner at the end of the lease should not be surprised that there is fair wear and tear on the property because during the routine inspections again with myself, is I take a lot of photos and I actually send that through to them. For instance, if the place the paint is looking a bit thin and needs to have a paint, I would let them know. But I think it’s about communicating with your owners, letting your owners know and working with them to understand what is classified as fair wear and tear. A few marks on the walls, generally the tenants can get it off, there’s little magic cubes that can rub things off these days so there’s a lot of things that we can do that the tenants don’t necessarily have to spend all out of money to bring it back up to where it should be but of course the owner has to expect wear and tear because if they are in the property, the same thing would have happened.

Wayne: Liz, I guess tenants have experience of different property managers because as they’ve moved around or gone from property to property, every one of them has a different property manager. What about owners, do they get experience with different property managers? Do they understand how good your services or have they nothing to compare it with?

Liz: A lot of my owners probably have been with other people before and they’re long-term investors or they know of me, I think I actually explain it to people who have never rented before that I think it’s important to have continuity of one person looking after your property or one person overseeing it. I think it’s really important and it gives the owners confidence because I don’t want chop and change all the time. I don’t want someone to know what their property was like and then all of a sudden, they’ve left for another agency and then they’ve got a new property manager who has no idea of any maintenance or the history of the property. So it’s really important for any owner I think to have continuity, have trust in your property manager and to be able to have that rapport that you can call on if you need be.

Wayne: Just looking at that first example of an entry report you had there where it was just narrative, a few words of description item by item. If you change property managers, a property manager leaves an agency as you say, it’s happens regularly and a new property manager comes in, there’s got to be a lot of room for interpretation in some of those descriptions.

Liz: Absolutely. Like for instance with this one from the other agent, walls, ceiling and doors, they’ve got painted white walls and ceiling.

Wayne: Yes.

Liz: What does that mean? And where’s the photo evidence to support that? And then the tenant has commented ‘ceiling damaged above bridge area,’ this is in the kitchen.

Wayne: And what does ‘damaged’ mean? Well it has a huge hole in it, it had a little nick in it, had a bit of paint missing. It’s not a very useful process without the photos, is it?

Liz:  I don’t think so because the photos is a thousand words and it is really difficult to sit down in a property and do an entry condition report because you’re looking, you go in every room and you go through the walls, the doors, what have you, and you have to really look and it has to be the attention to detail. And don’t forget many of these investment properties are over 600-700, even over a million dollars so it’s quite a big investment for these owners to be allowing and giving other people the opportunity to rent their property so the owners I feel need to install that they’re getting value and protection of their property and someone who nurtures it and respects it and is quite passionate about what they do and is protecting their best interest or one of their biggest investments that they have so I really believe that it’s really important.

Wayne: Liz, if you’re advising owners who are thinking about picking a property agent, would you advise them to ask to see an entry report that’s been done by that agency?

Liz: Yeah, I do. I always show my entries to any people and it says a thousands words. It just shows that you care and for me, it’s not my job, it’s my career, it’s my passion so there lies the difference. It takes a long time to do those entries and yeah it’d be great to do it in an hour. an hour and a half like a lot of agencies do, but I just can’t. I just break it up and I don’t do it all in one day because you lose focus because you’re in the home so I know that seems a bit crazy but I usually break it up over three days. Like this morning, I’ve been out doing an entry and then I might go back to this afternoon and just finish it off because I’ve nearly finished it or I’ll do it first thing in the morning because you’re fresh and your attention to detail is a lot better in the morning than it is later on in the afternoon. So I pick my times when I do things so I’m maximizing any losses to my owners which I think is important and to my tenants as well.

Wayne: And I think that protection of your owners is probably one of the admirable characteristics of Beachside Property Rentals.

Liz: Yeah.

Wayne: Liz Malthouse from Beachside Property Rentals, for people I’ve been listening to you and watching you today, how can they reach out to you?

Liz: Please feel free to give me a call on 0438 409 842. If it’s easier for you to call after hours because you’ve committed to work, that’s fine. Or you can shoot me an email at [email protected]

Wayne: Liz, thanks for your time today.

Liz: Thanks Wayne, have a good day.


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