Being a landlord is an accomplishment in Australia with only 7.9% of Australian citizens able to own an investment property.
As difficult as it is for first time property investors, there are certain things you need to know about property investing that will help you with great returns and stress free tenancies in the future.
1. Maximise your profit
Owning an investment property is like owning a business and
your rent is your income. Focus on building your rental returns and making sure your rent is paid on time. You will have costs (mortgage repayments, council rates, insurance, maintenance etc.) so it’s important to make sure that slow or incomplete rental payments
don’t interfere with your investment property cash flow.
Most tenants will do the right thing and pay their rent on time
but you need to be ready to act when they don’t and be willing to start the eviction process if the behaviour continues.
2. Tough tenancy checks
A good tenant will be a stress free tenancy but a bad one can be extremely expensive and a hassle for you.
Take the time to check each applicant’s rental history, employment
history and don’t be afraid to research online and check social media for any extra hints as to who you’re about to let live in your property.
A history of slow, incomplete rental payments or damages to property is more often than not, not going
to change so be vary weary when that’s the feedback you get from previous agents.
Also be mindful as some tenants use friends or family members as
their agent or employer.
3. Consider the Positives and Negatives of accepting pets
Is your property pet friendly? Some people are against leasing to pet owners and some are happy to. .
Positives:
Most people want pet friendly.
Pet owners usually at properties for longer
Most leases will include specific clauses to include any damage caused by pets
You’re making the list of prospective tenants up longer which can reduce your vacancy periods.
Negatives:
Pets can cause a lot of damage to properties – especially to floors
and gardens.
Pet friendly properties could turn off applicants with allergies
Some pet odours can be hard to get rid of.
4. Look at a few different income opportunities
Most property owners will offer their property up for a long term
lease once they’ve bought and then forget about the property for the length of the lease. Depending on how involved you want to be, there are some other ways:
Short term lease – AirBNB’s are very popular and bring in good cash flow.
Long term furnished property
These options may not suit every homeowner or all properties for that matter but they’re worth speaking to your agent about.
5. Know the Law
Knowing your rights and responsibilities as a landlord
is important to make sure you don’t end up in an extremely costly situation. Consumer Affairs provides a great breakdown of the responsibilities of tenants, landlords and agents and is a great starting place for first time landlords.
Get your copy here.
If you’re going to manage the property on your own, it’s important
to know what you can and can’t do and more importantly what to do when things go bad.
6. Present your property to attract the perfect tenant
Good properties will bringing good tenants.
If you want to attract tenants who’ll keep your property clean
and well looked after then it should be shown as clean and well looked after. Touching up paint, cleaning the property well and making sure all the fixtures work will go a long way in finding good quality tenants. Not only will you attract better tenants
but your property will stand out in a competitive market.
7. Don’t over Spend
It’s important to make sure you renovate with your income in mind. The trick is to save where you can but spend your money where you’ll get the greatest return.
Look at what’s currently leasing
in the surrounding area in the rental price they’d like to receive after the renovation. This shows how much they need to spend and what parts of the house require the attention to get the income you want.
8. Have a Great Team
Spend the time on finding a good mortgage broker, accountant and property manager. A good team will add value to your property instantly with hints, tips and professional advice.
9. Good Marketing is Important
You can’t lease your property if nobody knows about it – so having a good marketing plan for your property will stop you from having tenant free periods and also help you bring in lots of good tenants.
Invest in HD professional photos and advertising packages on real estate portals to give yourself the best chance of leasing your property as quickly as possible.
10. Regular Inspections are Necessary
Most landlords who manage their own properties feel uneasy conducting a routine inspection of their property. it’s essential to make sure your property is being maintained and no maintenance is going unfixed
Make sure you inspect the property every 6 months and keep an
eye out for any damage (cracks in walls, squeaky floorboards, building movement), excessive wear and tear or tenants who aren’t looking after your property.
You
should keep the condition of the property in mind when considering extending the tenants lease or increasing their rent in the future.
If you own a property and would like to know what it may be worth in today’s market, I’d be happy to give you a FREE market appraisal.
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