Protect Your Property: Top Tips for First-Time Landlords
More Australians than ever are leaping into property investing. It's an excellent way to build up an investment income and to grow your wealth. If you have never managed a rental property before, there are numerous traps you can fall into if you are not careful. Follow these tips to set yourself up for success right from the start.
Have the Proper Setup in Place
Before you start looking for tenants for your rental property, you need to prepare the necessary foundation. First of all, you'll need to ensure that you are complying with any local and national regulations with regards to your accounting and tax practices. You'll also need to draw up lease agreements that your tenants will sign. A conveyancer can assist you with this process. Finally, you'll need to obtain landlord insurance coverage. This will protect you if a tenant damages your property extensively or fails to pay rent.
Choose the Right Tenants
When you are first getting started, it can be tempting to rent your property out to the first person that applies just so that you can start generating some income, but this could be setting yourself up for disaster in the future. It is important to take the time to carefully screen prospective tenants through background, rental history and credit checks to ensure that they are desirable renters. Making this extra effort will help minimise headaches and stress for you down the track.
Hire an Experienced Property Manager
A property manager or property management company can help make the day-to-day aspects of managing your rental property easier for you. This is especially true if you don't live in the same area as your property. Having an on-site or locally based property manager can help you address any maintenance or tenant issues as soon as they arise. You'll need to stay in close contact with your property manager on an ongoing basis, so take the time to choose someone you know you can trust.
Focus on Running Your Business
It is crucial to keep in mind that your rental properties are a business, and the primary goal of any business is to generate a profit. When you are considering doing upgrades to your property, make sure you get a return on your investment in increased rental values. Otherwise, you'll end up spending money unnecessarily, which can quickly eat into your profits. While it may be tempting to lower your rental rates to attract more tenants, you need to keep your focus on the bottom line.
Keep Up with Maintenance
You cannot always expect your tenants to alert you to any maintenance issues with your property. You need to have a system in place to handle general maintenance tasks, as well as periodic property inspections. Of course, your tenants will likely notify you of any major problems, but you still need to keep up with the general ongoing maintenance of the property. Any minor issues that you let go could turn into much more costly repairs later on.
Making the Decision to Invest in Property
While all of this may seem a bit overwhelming at first, with careful planning and preparation, you'll set yourself up for success in property investing. Take the time to do plenty of research in the early stages so you know what to expect. Before you know it, you can be generating significant income from your rental properties, which can provide extra money for your family or keep you comfortable in your retirement years.