Unforseen mishaps and missed opportunities are two things first-time and veteran landlords can do without, particularly when financial loss is involved.
To help you navigate the world of investment property, we look at some of the common questions you may want to consider before and after your tenants move in.
Am I going to manage the property or pay someone to do it?
If you’re time poor or located a long distance from your investment property, appointing a property manager is an option, although it’ll come at a cost.
Some of the things a property manager will take care of include:
- The screening of potential tenants
- Before and after property condition reports
- Routine inspections
- How and when tenants pay the rent
- Maintenance and repair issues
- Responding to complaints/evictions.
Websites like Local Agent Finder can help you locate property managers in the area and compare fees, services and experience.
What rent should I charge?
Understandably, an investment property is about return on investment, but it’s important to set the rental price at a level where you’ll be able to attract and retain tenants.
Factors that come into play when setting rental fees include location, demand, property size, number of rooms, facilities, parking, and access to shops and transport.
Research your competition and see what information your agent or property manager can provide.
Am I fussy about who the tenants are?
The area your property is in, the suburb demographics and the rent you plan to charge can all impact the type of people—including those with pets—who may apply for the property.
Screening is a key step to finding the right tenants and it typically involves reference checks from previous property managers and employers.
How important is landlord insurance?
The type of coverage and the premiums you will pay can vary greatly depending on the provider and the policy you take out. You can compare landlord insurances at comparethemarket.com.au.
You also need to think about how comprehensive you want your policy to be. Acts of nature, building repairs, contents and loss of rental income are all things to think about.
What other costs are there to consider?
The costs you incur can differ depending on whether you’re leasing out a house or apartment. They may include:
- Body corporate fees (if your investment property is an apartment)
- Council rates
- Water rates
- Land tax
- Repairs, maintenance, other miscellaneous costs
- Interest and other bank fees on the home loan
Am I eligible for tax deductions?
Don’t be too daunted by the costs associated with an investment property. They are commonly tax deductible and there are also a range of other expenses you can claim, such as:
- Advertising for tenants
- Borrowing expenses
- Decline in value of depreciating assets
- Gardening and lawn mowing
- Pest control
- Travel undertaken to inspect or maintain the property, or to collect the rent.
See other things you can claim on the ATO website and don’t forget to keep relevant paperwork and declare all your rental-related income when you do your tax return.
Should I renovate?
Renovating your investment property has the potential to increase its value, but if you don’t have the money to do a complete refurbishment, you may want to consider some DIY jobs.
Painting, rubbish removal and new curtains can all be cost-effective ways to spruce up your rental property. It’s also worth exploring how and where tax deductions can apply to renovations.
What are my legal obligations?
There are various responsibilities that apply to landlords before, during and when ending a tenancy. These can differ depending on which state in Australia the investment property is located.
For further details, check out the appropriate state government or Fair Trading website where your investment property is based.
Like most big investments, planning can play a big part in the returns you generate. We hope some of the information in this article helps you on your way.
Where can I find more information?
Renovating and reselling properties can be a good money-making exercise, or a very expensive one if you go in unprepared.