Landlords may be sitting pretty with rents on the rise and a tighter supply of rental properties but that's no excuse to take their investment income - and their tenants - for granted.

Putting up the rent too much, taking shortcuts with rental agreements or failure to keep up to date with paperwork are all common mistakes that can hold back your investment.

Follow our six-point checklist as a starting point to making sure you're managing your property in the best way.

1. Find the best

As you'll see from our case studies, managing the property yourself is an option. It will cost you less but will require your time and you'll need to be prepared for unexpected problems.

As case study Fiona says, she's saving on management fees but knows, for example, that if the tenants decide to leave just as she's about to go on holidays, she'll have to deal with it fast or put her own plans on hold.

Some DIY landlords find it best to find tenants through an agent and then take on the day-to-day leasing themselves. But Carolyn Majda of Terri Scheer Insurance Broker warns DIY can backfire.

"Landlords who self-manage their properties clearly have the objective of saving money, but in the process they may take short cuts and be unaware of property management procedures," she says.

2. Know the market

When it's time to find tenants, make sure you know what other similar properties are getting in rent. Go to other open houses to see what else is on offer and whether there are many people looking to rent in the area.

Be very price-sensitive - if you struggle to find a tenant, dropping the price by a little may mean the property is vacant for as short a time as possible.

Weigh up the cost of, say, $5 less over 52 weeks versus having the property unlet for four weeks.

3. Regular inspections

Whether you are managing the property with the help of an agent or by yourself, keep a regular eye on the state of the home.

DIY landlords don't always have the time to do this, Majda believes. "By conducting regular property inspections, the property manager is able to alert the landlord to any maintenance requirements and tenant issues," she adds.

4. Keep your tenants

Good tenants are too good to lose, Majda says, which is why in this high-inflation environment landlords should be careful of increasing the rent too much.

"It's understandable that landlords may need to raise their rents to keep pace with rising costs. However, financial considerations should be balanced against the importance of keeping good tenants in a property."

Increases that are too high may result in your property generating no income for weeks as you look for new tenants. If you do increase the rent, don't forget about topping up the bond as it may no longer cover the original number of weeks' rent.

"You should check with your relevant state authority for guidelines on this," she adds.

5. Insurance

Case study Roger runs his own building company so he says he is comfortable not having landlord insurance - he'd rather save on the premiums and tackle repairs himself when they are needed.

For other landlords who are short on time and expertise in this area, it's probably worth thinking about. Look for a policy that covers malicious damage as well as accidental damage, Majda advises.

And make sure you are covered for loss of rental income if a tenant absconds or leaves your property damaged so you're unable to lease it for a while.

Also be aware of the difference between accidental damage and normal wear and tear.

The former - which can include foot traffic on carpets, scuff marks on floor coverings, minor scratches and scuff marks on paintwork and dirty hand marks on curtains and blinds - will not be covered by insurance.

The latter - accidental breaking of a window, red wine spilled on a carpet, a hole in the wall caused by a tenant moving furniture or cracked floor tiles after a heavy saucepan is dropped - will.

6. Stay up-to-date

Don't leave all your paperwork until tax time - keep up to date as you go along and you'll be much more organised.

If filing doesn't work for you, use a tax diary instead and use it to file receipts or paperwork. Make sure you claim depreciation on your investment property before June 30 and that you're working from an accurate depreciation schedule.

Property group Raine & Horne CEO Angus Raine says landlords who neglect to do so are missing out on reducing their taxable income by thousands of dollars.

Also ensure you are claiming your full depreciation entitlements.

"Often investors depreciate expenses such as carpets, light fittings and blinds, but fail to depreciate property owned by the body corporate that they have a part-share in," says Peter Bembrick, a tax partner with HLB Mann Judd Sydney.

And differentiate between depreciable assets and capital works. "While a cooktop, stove and dishwasher are depreciable, kitchen cupboards and sinks are not, and only eligible for the 2.5 per cent building allowance," he adds.

To use or not use real estate agents

For

Sandra and Roger own two rental properties and although Roger is a builder they prefer to use an estate agent to handle the tenants. They're charged 5 to 7 per cent plus GST for rental management. When new tenants have to be found, the agent pays for the first month's advertising and Sandra and Roger are charged an extra week's rent plus GST.

"The agents know what they are doing; they've usually got [prospective] tenants on their books and it's really nice to have the leasing off our hands and not be involved with the tenants," Sandra says. The couple does not have landlord's insurance, which would cost them about $400 a year, because they feel Roger's building business could adequately handle any damages to the properties.

Against

Fiona has been a DIY landlord of her inner-city terrace for 10 years. "It's too easy to do on my own and agents take too much of a cut," she says. She has a large loan on the property so needs as much income as she can to cover the interest payments. Also, the property is older so maintenance is more expensive. She uses a standard rental agreement from a newsagent and says she has never had problems with tenants.

When assessing prospective tenants, she contacts their employers and previous landlords but feels credit checks are unnecessary. "I always ask the employer what a tenant's monthly salary is and how likely job stability is. Often agents won't consider contract or freelance workers but I find they're high-earning professional people so they're reliable tenants," Fiona says.

She's careful to research comparable properties and would rather lower the weekly rental than go without tenants for a few weeks. At house openings, she doesn't always reveal she is the landlord, preferring some arm's length. She also takes tenants on a first-come, first-serve basis and will never take a deposit because it can lead to complications.