Article DetailsAre you considering managing your investment property? |
| Date Added: April 14, 2009 08:15:25 AM |
| Author: Fred Haggar |
| Category: Real Estate |
| Do not take your rental income and the customer (tenant) for granted. Inflating the rent, cutting corners with the rental terms, neglecting record keeping or ignoring the current laws as legislated by the Office of Fair Trading could hold back what should be a rewarding investment. Quality vs Quantity Whether you advertise the property yourself or pay a one-off fee to a real estate agent to find you a tenant, evaluate the financial capacity of the propsective tenant (s) to pay the full rental amount every week of the tenancy period, yourself. Sometimes you are better off in the long run to select a reliable tenant who will pay slightly less than your expected rent. Market knowledge inspect as many as possible (ideally up to 30) comparable properties within a 500 meter radius to assess the quality of renters in the area and the rental level they will pay. There is no point to budget for a $500/week rent when the type of property in the area attracts renters who will pay up to $435/week.Be realistic. If the level of response to your property is low, lowering your expectation by a little could mean a shorter vacany period resulting in less drain on your personal cashflow. Example: calculate lowering the desired rent of $500 by say $10 over 52 weeks versus having the property unlet for four weeks at the desired rent ($2,000 - $520 = $1,480 better off). Tenancy maintenance Not hearing from the tenant while the rental income is deposited in your bank account every should not give you a level of comfort. It is vital you regularly inspect the property and speak to the tenant, preferrably every 3 months or less. Make sure you give them a formal notice in advance. Check the current regulations in your state.Firstly, you develop a personal rapport with the tenant. As in business, they are your customer and direct communication is a pro-active problem solver. Secondly, You will be alerted of maintenance requirements that the tenant might not consider as problematic to them, but could be expensive to you in the long run if they are not attended to promptly. Thirdly, the neighbours might alert of what possibly could be an issue with your tenant.Retain your tenantA reliable tenant is gold. Carefully consider increasing rent for the sake of increasing it. Higher rent may result in your property generating no income for weeks as you look for new tenants. However, if rent needs to be increased to keep up with increasing costs, do not forget to top up the bond as it may no longer cover the original number of weeks' rent.Landlord insuranceIt amazes me the number of landlords who take uncalculated risk by saving few Dollars being the cost of insuring the tenancy against malicious damage, accidental damage, loss of rental income if the tenant absconds or leaves the property damaged to the extent of being unable to lease it for a while. Book-keeping / Maintain records – both physically and electronically. It will be a hell of a lot easier when tax time arrives all of a sudden and ensure you or your accountant claim the accurate depreciation amount. It could be worth Thousands of Dollars every year. Fred Haggar is founder and Managing Director of Property Search 4U, a buyers agency that has won for the second year in a row, the "highly recommended" award in the 2008 Australian Achiever Awards for NSW's Real Estate Services category. Property Search 4U is an active member of the Real Estate Institute of NSW (Sydney based) and the International Real Estate Federation (Paris based). |
