Are you thinking seriously about buying your first investment property, or have you just purchased one and you are in that first flush of excitement? Residential property is still one of the most popular methods of building wealth in Australia. However, there are a few things you should be aware of to avoid making the most common landlord mistakes.
An Investment Property is not a Hobby
At first, many investors think of their property as a hobby or a side-bet against possible future insecurity. From day one, you must look at this property as a business. Take it seriously and access the right resources to support the large sum of money you have committed if you want the property to achieve its full potential.
Keep it Maintained
The next mistake, and a frequent one, is to skimp on repairs and maintenance. New landlords often try to build early cash flow by not replacing things like worn floor or window coverings, leaking taps or shabby bathrooms. Good tenants will pay a higher rental for a comfortable living environment, and maintenance increases the value of the asset.
Personal Relationships with Tenants
This can be a tricky one, especially if you intend letting to a relative or friend. If your relationship is a close one, your tenant may take advantage of it by falling into arrears with their rent, or objecting to a legitimate rent increase. Remember the earlier advice that an investment property is just like a business and you need to treat it as such.
Delegate Property Management to Professionals
There is a way to keep the tenants you know personally at arm’s length and that is to engage a property management agency. Looking after an investment property requires knowledge of tenancy laws and the ability to select quality tenants. Do-it-yourself landlords have high vacancy rates because they don’t have the professional systems in place to manage their properties effectively.
This is something we see first-hand all the time. Bunbury Real Estate employs experienced property managers who understand the tenancy legislation and know the local rental market. We have systems in place to reference check prospective tenants, advertise our rental properties to the widest possible market and do regular inspections. Our management fees are also tax deductible.
If You Don’t Have an Accountant, Get One!
Now that we have mentioned tax, you will get the best value out of your investment if you get a good accountant, preferably one who knows property. Accountants know the legitimate tax deductions applicable to investment properties, as well as the intricacies of negative gearing and depreciation.
Follow these few guidelines and you will enjoy owning an investment property so much that you will soon be buying another one.