1. Choose wisely when Buying. Location/ Type/ROI Think about the location of the property, is it convenient? Does it have easy access to public transport, schools and shops? Think about the demographic of the neighbourhood, look at the rental statistics for that area, is it occupied mostly by home owners or tenants? Once you are armed with this information and know the target market for the area look at the rental statistics for property types in the area, what property types are performing stronger in that particular suburb? What types are performing weaker at the moment. When researching the type of property you will also need to consider maintenance of a garden etc. in the case of a house or payment of Body Corporate levies in the case of an apartment. The selling agent should be able to give you an idea on the ROI for the particular property you are interested in but it would be wise to seek the advice of a Property Manager during these very early stages who have first hand experience with that particular market place. You will find further advice in my blog “How to choose the best investment property”
2. Do your research before selecting an agent Reputation and word of mouth are two very valuable items, more valuable than the social marketing companies spend millions on every year. Check reviews online, on comparison websites and google and shop around to find the best agent that suits your particular needs. This is extremely important. More on this can be found in my blog “How to choose a Property Manager”
3. Bring yourself up to speed with your market Sign up to your local Real Estate agents websites and mail lists, follow them on social media and look out for “market reports”. Your local Real Estate Institute (REINT in the NT) will also be able to provide an over view of the market place with their quarterly RELM reports which you should sign up to. For more advice on this topic see my blog “The importance of your knowledge in this market place”
4. Landlord Insurance – It’s a priority There are many different providers of landlord insurance that offer cover for a wide range of items. Shop around and find the most suitable cover for you. Landlord insurance can cover things such as loss of rent sometimes right through to pet damage, each policy differs so do your research on this. Read my blog “The importance of landlord insurance” for more in depth advice on this.
5. Be selective when choosing a tenant regardless of market conditions Tenant selection is very important, it will be extremely appealing to sign up the first applicant that comes along especially in a trying market or if this is your first time dealing with a leasing experience. You need to be 100% happy with your tenant selection, no red flags at all. Trust your instinct on this. If you have engaged a Property Manager (which I hope you have) they will be able to advise on this. My blog “Selecting the best tenant for your investment property” has some further information on this.
6. Have a Maintenance Schedule and Budget As soon as you think of purchasing an investment property or becoming a landlord you should be putting a maintenance schedule and budget in place. Things can happen, things break, tenants can get sick or lose their jobs and you need to be prepared for this. Always have a float in place and schedule routine maintenance such as air conditioner servicing, pest inspections and smoke alarm checks in advance annually. Ready my blog “New Year, New Habits” for a detailed insight into this.
7. Always plan ahead for uncontrollable circumstances (lost job) Things don’t always go to plan, you as a landlord and your Property Manager as a trained professional cannot control everything. If your tenant becomes unable to pay rent you need to be prepared and have a contingency in place. See my blog “What to do if my tenant has stopped paying rent”.
8. Keep your mortgage broker or financial planner in the loop at all times Financial advisers are definitely someone you want to have in your network, if you have an investment portfolio it is always best to get some financial health checks done by a trained professional annually. It is always best to keep your financial adviser in the loop with any changes to your finances or potential changes so they can mitigate any risk or improve your circumstances.
9. Be prepared for tax time – EOFY Statements, Depreciation Schedules and the list goes on. Most expenses with an investment property are tax deductible, your Property Manager will have these listed on your EOFY statement which they will provide to you at the end of each tax year, if you are going it alone however you need to keep track of everything yourself. This can be quite taxing (haha get the pun?) but come the end of the tax year your accountant will request a full over view of expenses for your investment property so you need to be prepared.
10. Use a Property Manager, the cost will outweigh the potential cost of a vacant or damaged property which by using a Property Manager is dramatically reduced.