The Smart Landlords Way To Guarantee Rental Income (Even If Your Tenant Can’t Pay)

Written by Julie Brownlee on April 16th, 2018

How the world’s savviest landlords solve one of the biggest rental headaches in the property game

It’s one of the worst things that can happen to you as a landlord…

Imagine getting to the end of the month, you’ve done all your calculations, you’ve crunched all the numbers, and then WHAM!

It happens.



“I’m sorry, I can’t pay the rent this month”

Nothing kills a property portfolio faster.

And that’s not even taking your credit record and bond into account. How on earth do you make a plan for those?

Now imagine this happens for two or three months in a row?

Worse yet, imagine it happens on a few of your properties?

Its enough to give you an ulcer.

But what if I told you that there was a rental tool you could use to ensure that no matter what your tenant does, you’ll ALWAYS get your rent.

That’s right, a guaranteed rental income, even if your tenant doesn’t pay!

What is this tool, and how do you use it?

Let me show you…


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REVEALED: The Smart Way To Guarantee Your Rental Cheques!


It all comes down to something called rental insurance.

And let me tell you, rental insurance could turn out to be your saving grace.

Yes, you may pay for it for years and never claim, but it will only take a couple of months of rent arrears for it to be worth its weight in gold.

It’s just like car insurance. You could save money not paying for insurance, but if your car is involved in an accident, you’ll be very glad that you had it.

Rental insurance is specifically for landlords who rent out property to tenants with the sole aim of covering unpaid rent.

As with all forms of insurance, cover is slightly different depending on the provider, but the main factor is it covers the non-payment of rent.

You can find insurers covering up to three months’ worth of rent in the event the tenant doesn’t pay.

You may also find that it includes a rental pay out if your tenant absconds, though this is generally for just one month’s worth of rent.

You may find that the insurer covers for damage a tenant may have caused or for up to a month’s worth of outstanding utility bills.

And some insurers will also provide assistance with legal fees up to a capped amount if you need to evict a tenant.



How Does Rental Insurance Work?


As the landlord, the first step is finding an insurance policy that suits your requirements.

It’s well worthwhile scouring the market and comparing the different policies on offer.

Whilst they may appear similar, there are some stark differences.

You want to get the best cover you can for a reasonable amount of money.

If you don’t have time to look yourself, consider employing the services of an insurance broker to do it for you.

Once you have decided on an insurance company to get your policy from, you’ll have to complete all the necessary paperwork.

Chances are the insurance company will want a copy of your tenancy agreement. And, as with any insurance policy, if there are any changes, you must keep them abreast of it.

You’ll find that insurance companies tend to work in two ways:

Firstly, the insurance company will collect the rent on your behalf and pay it to you, minus their premium.

In this case, if the tenant defaults, you’ll still receive your rent payment on time.

Or secondly, if you take payment from your tenant, you have to notify your insurance company if your tenant defaults.

In this case, they will pay you the missed rent payment as per the policy agreement. This can be within as little as 48 hours.

Your insurance company may insist that they vet prospective tenants before granting cover.

These are likely to be similar to the screening process you carry out with would-be tenants, including:

  • A credit check;
  • Bank statements for the past three to six months; and
  • Speaking to the tenant’s employer.


How Much Does It Cost?


The premiums differ depending on the insurance company you use.

But you can expect to pay a percentage of your monthly rental amount.

There are minimum and maximum coverage amounts, but your insurance company will be able to advise you of this.

Just remember, the cheapest premium doesn’t always equate to the best cover. This is why it’s so important to spend time weighing up exactly what a rental insurance policy covers you for.


Who Offers Rental Insurance?


There are a number of different options on offer, including:

  • Genric Insurance’s Rent Protect;
  • Ooba’s Rent Protector; and
  • Rent Shield.

Ensure that the insurance company you go with is an authorised financial services provider.


The Hidden Profit-Trap Rental Insurance Could Save You From


Of course, the fact that your insurance covers you for missed rental payments is a massive benefit for any landlord, but there’s another top reason why it’s a really good choice…

This is legal fees.

The legislation around tenants and landlords is strict and is getting tighter all the time.

Due to this, it’s vital that you follow the law to the letter if you are dealing with a troublesome tenant.

Many of the providers of rental insurance cover you for legal fees as part of your cover.

Yes, there will be a cap on legal expenses, but your premium will be tiny in comparison to what solid legal advice and action will cost you.



Why Every Landlord Should Use This Profit-Saving Rental Tool


The whole idea of renting out your property is to make a steady income from it.

For instance, a rental property can be a great way of providing an income once you retire.

If things should go wrong with a tenant in your property, not only will missing rent affect you, but the legal costs can leave you more than out of pocket.

If you need to evict a tenant, then you’re facing a journey through the courts. Your rental insurance should cover you for this or at least a large chunk of the cost.

When you decide which provider to go with, ensure you check the legal cover cap. You may be glad you did if the worst should happen with your tenant in the future.


Rental Insurance: How To Get Started


Compare the different offerings and decide on the right one for you.

Ideally, you want a decent cover for missed rent and a decent limit on legal fees.

If you already have a tenant in situ, you may have to wait until you look for a new tenant to get cover. Check with the insurance company.

An additional monthly cost may put you off, but the certainty of being able to pay your bond each month is more than enough reason to opt for rental insurance. 

Until then, here’s to profitable property investing.

Julie Brownlee | The Money Lab

Julie Brownlee
Editorial Contributor
The Money Lab