According to figures from the latest Onthehouse/Residex survey it has never been a better time to buy an investment property with the purpose of renting it out, as in most capital cities the data suggests that it is now cheaper to rent than pay off a mortgage[i]. With average property prices rising and a high chance of interest rate rises in the future, this is likely to continue for some time to come.
Buying a residential property investment that you then rent out can be a sensible part of a long-term investment strategy, helping you to build your wealth through capital growth and income. Being a landlord can bring with it a unique set of challenges; however over time the benefits of renting your property can be considerable. In this article we look at some of the key issues you’ll need to know before becoming a landlord .
Your Role And Responsibilities
Becoming a landlord means assuming a number of roles and responsibilities pertaining to your property and to your tenant. While it is possible (and often sensible) to outsource much of the day-to-day management of your property to an investment management team or real estate agency, it is a good idea to become familiar with the general regulations and legislation surrounding rental properties. As a rule, you’ll be asked by your property manager to make a number of decisions on a diverse range of issues, such as:
- The amount of the rent, and the frequency with which it should be paid (weekly, fortnightly or monthly)
- The amount of the bond (normally one month’s rent but can be higher or lower depending on circumstances)
- The length of the lease
- The utility and service costs including water
- The type of tenant you would like to live in your property – this can be a very important decision and can effect not only the condition of your property in the long-term, but also its value when you eventually come to sell the investment
Apart from deciding these issues, you will also need to be aware of your responsibilities in terms of gaining access to your property, tenant complaints or disputes, urgent and non-essential repairs around the property, and when you can increase the rent, as well as a host of other matters. As well as having a clear and well-defined lease and an efficient and effective property manager, knowing your rights and those of your tenants will normally help to resolve any issues before they become serious problems.
Finding The Right Property Manager
Some people decide to take on the full responsibilities of a landlord by themselves, without the aid of a property manager. While this is certainly an option when you have an investment property, it is generally not recommended by investment experts, as the responsibilities of a landlord can be complex, onerous and time-consuming.
Many states have different legislation surrounding the roles and responsibilities of a landlord, and professional property managers who have people on the ground locally will be best suited to advise you and manage your property. Look for a reputable, trust-worthy company that has experience in managing the type of investment property you are buying, and has a dedicated team who can provide you with the assistance and support you need.
Finding the right property manager means finding a company who you can trust to manage your property and your tenants so that you can sit back and reap the rewards of a successful investment.